<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. 10
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 11
FINANCIAL HORIZONS INVESTMENT TRUST
(Exact Name or Registrant as Specified in Charter)
Three Nationwide Plaza
Columbus, Ohio 43215
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (614) 249-7855
Ms. Rae Mercer Pollina Send Copies of Communication to:
Three Nationwide Plaza Druen, Rath & Dietrich
Columbus, Ohio 43215 One Nationwide Plaza
(Name and Address of Agent for Columbus, Ohio 43215
Service)
It is proposed that this filing will become effective on February 28, 1997,
pursuant to paragraph (b) of Rule 485.
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, 1996, on December 27, 1996.
<PAGE> 2
FINANCIAL HORIZONS INVESTMENT TRUST
CROSS REFERENCE SHEET
N-1A Item No. Location
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.
* Not applicable or negative answer
<PAGE> 3
FEBRUARY 28, 1997
FINANCIAL HORIZONS INVESTMENT TRUST
-- CASH RESERVE FUND
-- GOVERNMENT BOND FUND
-- MUNICIPAL BOND FUND
-- GROWTH FUND
FINANCIAL HORIZONS INVESTMENT TRUST
P.O. BOX 1492
THREE NATIONWIDE PLAZA
COLUMBUS, OHIO 43216-1492
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>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
SUMMARY OF TRUST EXPENSES........................... 2
FINANCIAL HIGHLIGHTS................................ 3
INVESTMENT OBJECTIVES AND POLICIES.................. 4
MANAGEMENT OF THE TRUST............................. 8
HOW TO INVEST....................................... 9
PRIVILEGES AND SERVICES............................. 10
HOW TO REDEEM SHARES................................ 12
ADDITIONAL INFORMATION.............................. 14
NET INCOME AND DISTRIBUTIONS........................ 14
TAX STATUS.......................................... 15
DESCRIPTION OF SECURITIES........................... 16
INVESTMENT TECHNIQUES............................... 18
</TABLE>
- --------------------------------------------------------------------------------
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 28, 1997, 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 Advisory
Services, Inc., P.O. Box 1492, Three 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 28, 1997,
IS INCORPORATED HEREIN BY REFERENCE.
<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>
GOVERN- MUNICI-
CASH MENT PAL
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 PERCENTAGE OF
PURCHASE REDEMPTION
PAYMENTS MADE 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% 0.00%* 0.50%* 0.50%*
Other Expenses 0.25% 0.19% 0.21% 0.29%
------- --- --- ------
Total Fund
Operating
Expenses** 0.65% 0.84% 1.36% 1.44%
</TABLE>
The expenses and fees set forth in the preceding table and the following example
are for the fiscal year ended October 31, 1996.
* The Distributor waived .25% of the total .75% 12b-1 fee on the Government
Bond, Municipal Bond, and Growth funds and waived an additional .50% of 12b-1
fees on the Government Bond Fund pursuant to NASD guidelines which limit sales
charges and distribution fees.
Effective November 8, 1996 until further written notice, the distributor will
waive the entire .75% 12b-1 fee on all applicable funds.
** During the year ended October 31, 1996, total fund operating expenses if no
expenses were waived would have been 1.59%, 1.61%, and 1.69% respectively on the
Government Bond, Municipal Bond, and Growth Fund.
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 $ 67 $ 83 $ 86
5 Years $36 $ 67 $ 94 $ 99
10 Years $81 $104 $ 164 $172
</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 $ 27 $ 43 $ 46
5 Years $36 $ 47 $ 74 $ 79
10 Years $81 $104 $ 164 $172
</TABLE>
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
FINANCIAL HIGHLIGHTS
(YEARS ENDED OCTOBER 31,)
- ------------------------------------------
<TABLE>
<CAPTION>
Net Distributions
Realized from
Net Gain (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
- ------------------------------------------------------------------------ -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
$ 10.00 $ .25 $ .34 $ .59 $ (.11) $ -- $(.11) $10.48
- -----------------------------------------------------------------------------------------------------------------------------------
10.48 .32 (1.90) (1.58) (.25) -- (.25) 8.65
- -----------------------------------------------------------------------------------------------------------------------------------
8.65 .17 3.72 3.89 (.30) (.25) (.55) 11.99
- -----------------------------------------------------------------------------------------------------------------------------------
11.99 .22 .43 .65 (.18) -- (.18) 12.46
- -----------------------------------------------------------------------------------------------------------------------------------
12.46 .08 1.73 1.81 (.10) -- (.10) 14.17
- -----------------------------------------------------------------------------------------------------------------------------------
14.17 .03 .95 .98 (.04) -- (.04) 15.11
- -----------------------------------------------------------------------------------------------------------------------------------
15.11 (.01) 3.23 3.22 (.01)+ (.15) (.16) 18.17
- -----------------------------------------------------------------------------------------------------------------------------------
18.17 .01 3.28 3.29 -- (1.99) (1.99) 19.47
===================================================================================================================================
MUNICIPAL BOND FUND
$ 10.00 $ .51 $ .19 $ .70 $ (.51) $ -- $(.51) $10.19
- -----------------------------------------------------------------------------------------------------------------------------------
10.19 .68 (.15) .53 (.68) (.04) (.72) 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
10.00 .65 .61 1.26 (.65) -- (.65) 10.61
- -----------------------------------------------------------------------------------------------------------------------------------
10.61 .61 .07 .68 (.61) (.04) (.65) 10.64
- -----------------------------------------------------------------------------------------------------------------------------------
10.64 .56 1.22 1.78 (.56) (.11) (.67) 11.75
- -----------------------------------------------------------------------------------------------------------------------------------
11.75 .49 (1.62) (1.13) (.49) (.27) (.76) 9.86
- -----------------------------------------------------------------------------------------------------------------------------------
9.86 .50 .90 1.40 (.50) -- (.50) 10.76
- -----------------------------------------------------------------------------------------------------------------------------------
10.76 .48 .01 .49 (.48) -- (.48) 10.77
===================================================================================================================================
GOVERNMENT BOND FUND
$ 10.00 $ .73 $ .41 $ 1.14 $ (.73) $ -- $(.73) $10.41
- -----------------------------------------------------------------------------------------------------------------------------------
10.41 .96 (.28) .68 (.96) -- (.96) 10.13
- -----------------------------------------------------------------------------------------------------------------------------------
10.13 .90 .68 1.58 (.89) (.01) (.90) 10.81
- -----------------------------------------------------------------------------------------------------------------------------------
10.81 .89 .25 1.14 (.89) (.06) (.95) 11.00
- -----------------------------------------------------------------------------------------------------------------------------------
11.00 .63 .50 1.13 (.66) (.16) (.82) 11.31
- -----------------------------------------------------------------------------------------------------------------------------------
11.31 .58 (1.10) (.52) (.58) (.09) (.67) 10.12
- -----------------------------------------------------------------------------------------------------------------------------------
10.12 .68 .95 1.63 (.68) -- (.68) 11.07
- -----------------------------------------------------------------------------------------------------------------------------------
11.07 .68 (.15) .53 (.68) -- (.68) 10.92
===================================================================================================================================
CASH RESERVE FUND
$ 1.00 $ .06 $ -- $ .06 $ (.06) $ -- $(.06) $ 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
1.00 .07 -- .07 (.07) -- (.07) 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
1.00 .05 -- .05 (.05) -- (.05) 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
1.00 .03 -- .03 (.03) -- (.03) 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
1.00 .02 -- .02 (.02) -- (.02) 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
1.00 .03 -- .03 (.03) -- (.03) 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
1.00 .05 -- .05 (.05) -- (.05) 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
1.00 .05 -- .05 (.05) -- (.05) 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Net Net
Investment Investment
Income Income
Expenses (Loss) to Expenses (Loss) to Net Assets
to Average Average to Average Average Average at End of
Total Net Net Net Net Portfolio Commission Period
Return Assets Assets Assets* Assets* Turnover Rate Paid (000's)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
6.5% 1.48% 2.62% 2.17% 1.73% 22.4% -- $ 531
- -----------------------------------------------------------------------------------------------------------------------------------
(15.5) 1.42 3.49 2.17 2.73 47.5 -- 526
- -----------------------------------------------------------------------------------------------------------------------------------
46.7 1.20 2.01 1.95 1.26 5.7 -- 1,175
- -----------------------------------------------------------------------------------------------------------------------------------
5.4 1.27 1.45 2.02 .70 12.1 -- 3,095
- -----------------------------------------------------------------------------------------------------------------------------------
14.6 1.44 0.63 2.03 .05 13.0 -- 5,165
- -----------------------------------------------------------------------------------------------------------------------------------
6.9 1.59 0.21 1.90 (.82) 14.1 -- 6,787
- -----------------------------------------------------------------------------------------------------------------------------------
21.6 1.47 (.05) 1.72 (.30) 29.2 -- 7,594
- -----------------------------------------------------------------------------------------------------------------------------------
19.4 1.44 .03 1.69 (.22) 17.2 5.9080(cents) 9,095
===================================================================================================================================
MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
8.2% 1.43% 5.79% 2.12% 4.65% 34.5% -- $1,073
- -----------------------------------------------------------------------------------------------------------------------------------
4.8 .69 6.63 2.10 5.25 16.1 -- 1,709
- -----------------------------------------------------------------------------------------------------------------------------------
13.0 .30 6.28 1.69 4.85 45.1 -- 5,632
- -----------------------------------------------------------------------------------------------------------------------------------
6.6 .65 5.65 1.62 4.68 58.0 -- 14,641
- -----------------------------------------------------------------------------------------------------------------------------------
17.2 1.01 4.81 1.61 4.11 47.0 -- 25,858
- -----------------------------------------------------------------------------------------------------------------------------------
(10.1) 1.27 4.58 1.57 4.28 69.7 -- 26,412
- -----------------------------------------------------------------------------------------------------------------------------------
14.5 1.35 4.82 1.60 4.57 60.8 -- 25,806
- -----------------------------------------------------------------------------------------------------------------------------------
4.7 1.36 4.53 1.61 4.28 38.8 -- 20,500
===================================================================================================================================
GOVERNMENT BOND FUNDS
- -----------------------------------------------------------------------------------------------------------------------------------
13.5% 1.42% 8.33% 2.11% 6.98% --% -- $1,119
- -----------------------------------------------------------------------------------------------------------------------------------
6.9 -- 9.32 1.98 7.37 51.0 -- 3,150
- -----------------------------------------------------------------------------------------------------------------------------------
16.3 -- 8.22 1.73 6.49 95.3 -- 25,873
- -----------------------------------------------------------------------------------------------------------------------------------
10.9 .65 8.18 1.66 7.17 87.7 -- 64,249
- -----------------------------------------------------------------------------------------------------------------------------------
10.8 1.00 5.55 1.61 4.93 143.6 -- 84,602
- -----------------------------------------------------------------------------------------------------------------------------------
(4.8) 1.28 5.42 1.58 5.12 174.4 -- 70,218
- -----------------------------------------------------------------------------------------------------------------------------------
16.7 .89 6.42 1.58 5.73 140.6 -- 69,190
- -----------------------------------------------------------------------------------------------------------------------------------
5.0 .84 6.26 1.59 5.51 21.0 -- 58,737
===================================================================================================================================
CASH RESERVE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
7.5% 1.53% 7.39% 2.23% 6.17% --% -- $2,133
- -----------------------------------------------------------------------------------------------------------------------------------
6.9 1.46 6.64 2.21 5.87 -- -- 2,413
- -----------------------------------------------------------------------------------------------------------------------------------
5.3 1.06 5.10 1.81 4.34 -- -- 2,416
- -----------------------------------------------------------------------------------------------------------------------------------
3.1 1.06 3.02 1.82 2.28 -- -- 2,538
- -----------------------------------------------------------------------------------------------------------------------------------
2.1 1.17 2.04 2.20 .79 -- -- 2,788
- -----------------------------------------------------------------------------------------------------------------------------------
3.1 .84 3.14 1.06 2.92 -- -- 3,950
- -----------------------------------------------------------------------------------------------------------------------------------
5.4 .65 5.29 .65 5.29 -- -- 4,150
- -----------------------------------------------------------------------------------------------------------------------------------
5.0 .65 4.86 .65 4.86 -- -- 4,243
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S
GROWTH FUND
- --------------------
1989**
- --------------------
1990
- --------------------
1991
- --------------------
1992
- --------------------
1993
- --------------------
1994
- --------------------
1995
- --------------------
1996
====================
MUNICIPAL BOND FUND
- --------------------
1989**
- --------------------
1990
- --------------------
1991
- --------------------
1992
- --------------------
1993
- --------------------
1994
- --------------------
1995
- --------------------
1996
====================
GOVERNMENT BOND FUND
- --------------------
1989**
- --------------------
1990
- --------------------
1991
- --------------------
1992
- --------------------
1993
- --------------------
1994
- --------------------
1995
- --------------------
1996
====================
CASH RESERVE FUND
- --------------------
1989**
- --------------------
1990
- --------------------
1991
- --------------------
1992
- --------------------
1993
- --------------------
1994
- --------------------
1995
- --------------------
1996
- --------------------
</TABLE>
* Ratios calculated as if no expenses were waived.
+ Distribution in excess of net investment income.
** 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 thereon, insofar as it
relates to each of the years in the five year period ended October 31,
1996, 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 including Managements
Discussion of Fund Performance may be obtained free of charge by
calling 1-800-848-0920.
<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
4
<PAGE> 7
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, U.S. dollar denominated
obligations of foreign governments, or any federally chartered corporation.
- 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 Corporation, 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
5
<PAGE> 8
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.
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. 16). 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. 17) or
mortgage-related securities (see Description of Securities, Mortgage-Related
Securities, p. 17) 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. 19). The Government Fund may also enter into
repurchase agreements (see Investment Techniques, Repurchase Agreements, p. 18)
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. 16).
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
6
<PAGE> 9
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. 18): (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 a "forward delivery" basis (see Investment Techniques,
When-Issued Securities, p. 19). 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. 16.) 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. 15, 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)
quality of management and sufficient financial wherewithal to successfully
exploit the company's business opportunities, b)social, economic, demographic,
and/or technological trends that present the company with significant future
business opportunities, and c)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.
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,
7
<PAGE> 10
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.
=================================================
-------------------------------------------------
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 Advisory
Services, Inc. ("NAS" or "Adviser"), Three 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. NAS, an Ohio corporation, is a wholly owned
subsidiary of Nationwide Life Insurance Company, which in turn is a wholly owned
subsidiary of Nationwide Financial Services, Inc. NAS was incorporated in 1960
and has served as a registered investment advisor for 37 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. NAS, 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 with a major in Economics and
Statistical Analysis 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
8
<PAGE> 11
Investment Company Act of 1940. The Plan provides that the Trust will pay NAS,
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, NAS began waiving .25% of the total .75% annual 12b-1
fees for the Growth, Municipal Bond and Government Bond Funds. Effective
November 8, 1996, the Distributor began waiving the entire .75% annual 12b-1 fee
and will continue to waive all the 12b-1 fee until further written notice. 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 NAS under the Trust's Plan is to compensate NAS
for its distribution services to the Trust. Distribution expenses paid by NAS
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"), Three Nationwide Plaza, Columbus,
Ohio 43215, serves as transfer agent and dividend disbursing agent for the
Trust. NIS is a wholly owned subsidiary of NAS.
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 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.
=================================================
-------------------------------------------------
MANAGEMENT'S DISCUSSIONS OF
FUND'S PERFORMANCE
The 1996 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 1996 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
9
<PAGE> 12
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 transmit 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.
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. Money market instruments held by the Cash
Reserve Fund are valued at amortized cost in accordance with the rules of the
Securities and Exchange Commission. Expenses and fees are accrued daily. The net
asset value per share of the Cash Reserve Fund is ordinarily $1.00.
=================================================
-------------------------------------------------
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
10
<PAGE> 13
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,
Three 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 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,
11
<PAGE> 14
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.
=================================================
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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:
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 NAS 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 NAS 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
12
<PAGE> 15
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 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 NAS 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.
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<PAGE> 16
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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.
=================================================
-------------------------------------------------
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
14
<PAGE> 17
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 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 28, 1997, 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 28, 1997, individual and corporate
shareholders may be
15
<PAGE> 18
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 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
16
<PAGE> 19
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 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
17
<PAGE> 20
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
18
<PAGE> 21
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. Each Fund only will enter into
repurchase agreements involving securities in which it 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.
19
<PAGE> 22
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Nationwide Investors Services, Inc.
P.O. Box 1492
Three 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 Advisory Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43215
20
<PAGE> 23
APPLICATION INSTRUCTIONS
(1) You may choose to invest in any or all of the Funds using one check and
entering here the dollar amount you with to invest in each Fund.
(2) Check the appropriate box.
If a Custodial Account, lists custodian's name. A Social Security or Tax
Identification Number is required by federal law. For an individual
registration, use a social security number; for a Joint-Tenant, either
social security number; for a Trust, the owner's social security number or
tax identification number; for a Gift to Minors Act, the minor's social
security number.
(3) Complete if the account is to be established under the Uniform Gift to
Minors Act.
(4) Check how you wish to receive your dividends.
(5) By checking the box, you may phone the Fund and have amounts of $1,000 or
more wired to your bank from your Fund account. A fee of $5 applies.
(6) Telephone Redemptions up to $10,000 can be authorized with the appropriate
box marked.
(7) Systematic Investment Plan authorizes your bank to make monthly
investments directly from your checking account.
(8) Complete to receive checks for $50 or more monthly or quarterly from your
account.
(9) You must initial this box in order to exchange shares of any FHIT Fund for
shares of any other FHIT Fund free of charge by telephone.
(10) All owners shown in the Account Registration, Section 2, must sign.
<PAGE> 24
[THIS PAGE LEFT BLANK INTENTIONALLY]
<PAGE> 25
APPLICATION
FOR RETIREMENT PLANS USE IRA APPLICATION ON NEXT PAGE.
MAKE CHECKS PAYABLE TO:
FINANCIAL HORIZONS INVESTMENT TRUST
Mail application and check to:
FINANCIAL HORIZONS INVESTMENT TRUST
P.O. BOX 1492
THREE NATIONWIDE PLAZA
COLUMBUS, OHIO 43216-1492
For assistance in opening an account call toll-free between 8:00 a.m. and
5:00 p.m. EST
All states 1-800-848-0920
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
1 FUND SELECTION CASH RESERVE FUND GOVERNMENT BOND FUND MUNICIPAL BOND FUND GROWTH FUND
INITIAL $ --------------- $ --------------- $ --------------- $ ---------------
INVESTMENT Minimum $1,000 Minimum $1,000 Minimum $1,000 Minimum $1,000
- ------------------------------------------------------------------------------------------------------
2 ACCOUNT [ ] INDIVIDUAL [ ] JOINT TENANT [ ] OTHER (corp., [ ] TRANSFER
REGISTRATION & [ ] GIFTS TO MINORS WITH RIGHT OF assoc., partnership, ON DEATH
TAXPAYER (Complete #3) SURVIVORSHIP trust, custodial acct., (Complete
NUMBER etc. For TOD Form)
assistance, call
the toll- free
number above.)
</TABLE>
Social Security or Tax Identification Number (TIN) -------------------------
Name of individual (first name, middle initial,
last name), Corporation or Trustee. -------------------------
<TABLE>
<C> <S>
[ ] The Internal Revenue Service has notified me that I am subject
--------------------------------- to 31% back-up withholding due under-reporting of income.
Joint Tenant
TELEPHONE
ADDRESS ---------------------------------------------------------------------------- Business (----) ----------
Street City State Zip
I am a [ ] U.S. citizen [ ] Other (Specify) ----------------- Home (----) ----------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
3. GIFT
TO MINORS custodian for
--------------------------------- ---------------------------------------------
Custodian (one only) Minor (one only)
under the Uniform Gift to Minor Act
--------------------------------- ---------------------------------------------
(State of Residence) (Minor's Date of Birth --
month/day/year
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
4. DIVIDEND OPTION [ ] Reinvest Dividends and Capital Gains [ ] Pay Dividends and Capital Gains in
Cash
Check One [ ] Pay Dividends in Cash and Reinvest Capital Gains
</TABLE>
SPECIAL PAYEE: If you would like you cash distribution checks made payable to
someone other than the registered owner and/or have your checks mailed to an
address other than the account registration address, please complete below:
Name of Payee: ------------------- Acct. No. (if applicable): --------------
Street of Address: -------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
[ ] The Transfer Agent is authorized to honor telephoned requests from any person for
5. WIRE REDEMPTIONS the redemption of Fund shares (minimum $1,000) provided that proceeds are transmitted ONLY
(OPTIONAL) to this bank account.
Bank Name ------------------------------------- Acct. No. ---------------------------------
(Must be a member of the Federal (A voided check from this account
Reserve System) must be sent with this form.)
Bank Address ---------------------------------------------
City State Zip
</TABLE>
- --------------------------------------------------------------------------------
Continued on Back
<PAGE> 26
<TABLE>
<S> <C>
6. TELEPHONE REDEMPTIONS [ ] Yes [ ] No
(OPTIONAL) The fund or the agents are authorized to honor telephone or other instructions
from any person for the redemption of fund shares. The amount of the redemption
shall not exceed $10,000 and the proceeds are to be payable to the shareholder of
record and mailed to the address of record. Refer to page 12 of the Prospectus to
read the terms and conditions for this privilege.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
7. SYSTEMATIC [ ] Yes, I wish to establish a Systematic Investment Plan. (Submit voided check
INVESTMENT PLAN and signed Bank Authorization Form.) Please see the "Systematic Investment Plans"
section on page 11 to determine when the first withdrawal will occur from
your bank account.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
8. WITHDRAWAL PLAN Please issue a check for $____________ beginning on the 25th day of
($50 minimum) month/year
each [ ] month [ ] quarter. Please see the "Withdrawal Plans" section on page
11 for restrictions and information on receiving withdrawal plan checks from your
account.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
9. TELEPHONE EXCHANGE I authorize exchanges between the Funds upon instruction from any person by
telephone: [ ] yes [ ] no
If neither box is checked the telephone exchange privilege will be provided.
Refer to page 10 of the Prospectus to read the terms and conditions for this
privilege.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
10. SIGNATURES I am of legal age, have received the Trust prospectus dated February 29, 1996 and
agree to its terms. I understand that I will receive a confirmation of all
transactions. I certify under penalties of perjury, that I am not subject to
back-up withholding unless indicated above and that the information regarding tax
identification and Social Security number and back-up withholding is true,
correct and complete.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATION REQUIRED TO AVOID BACKUP WITHHOLDING.
X________ Date ________ X _________________
(Signature (with title, if any) of ALL Owners Shown in Account Registration
Above)
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ACCOUNT
REPRESENTATIVE
(place agent
information
sticker here,
if available) Signature _____________________________________
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<C> <S> <C> <C> <C>
HOME OFFICE USE
-------- --------------- ------------------------------ ------------------------------
A
-------- --------------- ------------------------------ ------------------------------
TAX CODE SOCIAL CODE INSTITUTION REPRESENTATIVE NO.
---------------------------------------------
------------------------ ---------------------------------------------
DATE RECEIVED AMOUNT
</TABLE>
<PAGE> 27
IRA APPLICATION
To open your IRA account, simply follow these 6 steps.
For additional assistance in completing this form, call 1-(800)-848-0920 between
8:00 a.m. and 5:00 p.m. Eastern Time.
- --------------------------------------------------------------------------------
1. NAME AND ADDRESS OF DEPOSITOR
Name ___________________________________________________
Address ________________________________________________
City ___________________ State ___________________ Zip ____________________
Social Security Number ____________________ Date of Birth ________________
[ ] Check if spousal IRA Name of non-employed spouse ___________________
(Two applications are needed for spousal plan.)
2. FUND SELECTION I wish to make the following initial purchase of shares and
authorize all subsequent purchases, dividends and capital gains be invested in:
[ ] Financial Horizons Cash Reserve Fund $ (Min. $1,000)
[ ] Financial Horizons Government Bond Fund $ (Min. $1,000)
[ ] Financial Horizons Growth Fund Fund $ (Min. $1,000)
3. BENEFICIARY. I wish to name the following person(s) as my beneficiary(ies)
of this account, to share equally unless otherwise specified. I further reserve
the right to revoke this designation of beneficiary without notice to any
beneficiary. No change shall be effective until received in writing by
Nationwide Advisory Services, Inc.
FULL NAME ADDRESS
SOC. SEC.
NO. RELATIONSHIP BIRTHDATE PERCENTAGE
FULL NAME ADDRESS
SOC. SEC.
NO. RELATIONSHIP BIRTHDATE PERCENTAGE
If no beneficiary is named or all named beneficiaries are deceased, distribution
of all shares shall be made to my estate.
4. ROLLOVER ACCOUNT ONLY. The amount stated above is a rollover contribution
from:
[ ] Qualified Corporate Plan [ ] Keogh Plan [ ] IRA
Plan
[ ] Other Qualified Plan, and (a) does not include any contributions made by me
(except for IRA Plan), and (b) it has not been more than 60 days since I
received the distribution.
5. TELEPHONE EXCHANGE PRIVILEGE: I authorize exchanges between the Funds upon
instruction from any person by telephone:
[ ] yes [ ] no
If neither box is checked, the telephone privilege will be provided. Refer to
page 11 of the Prospectus for terms and conditions of this privilege.
- --------------------------------------------------------------------------------
ACCOUNT
REPRESENTATIVE
(place agent
information
sticker here,
if available Signature _________________________________________
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
HOME OFFICE USE
-------- --------------- ------------------------------ ------------------------------
A
-------- --------------- ------------------------------ ------------------------------
TAX CODE SOCIAL CODE INSTITUTION REPRESENTATIVE NO.
--------------------------------------------- ----------
Y N
------------------------ --------------------------------------------- ----------
DATE RECEIVED AMOUNT ROLLOVER
</TABLE>
6. ACKNOWLEDGEMENT Depositor
and Custodian hereby adopt an
agreement establishing an
Individual Retirement Account
utilizing the language of the
Individual Retirement Account
Custodial Agreement and as
supplemented by the provisions
of this application. Depositors
account shall be established
only after Depositor has
received a copy of the agreement
and the required disclosure
statement.
Depositor acknowledges:
(1) That this agreement shall be
construed, administered and
enforced according to the laws
of Massachusetts.
(2) That he or she is of legal
age to establish this IRA
custodial account and a copy of
the appropriate Financial
Horizons Prospectus, Nationwide
Advisory Services, Inc.
Custodial Agreement and
Nationwide Advisory Services,
Inc. IRA Disclosure Statement
was received and read prior to
the execution of this
application, and that he or she
understands the Fund(s)
investment objectives and has
determined that the fund(s) are
a suitable investment(s) based
upon his or her investment needs
and financial situation, and her
or she certifies that the Social
Security Number(s) on this form
are true, correct, and
complete.
(3) That Nationwide Advisory
Services, Inc. Investment Trust
is appointed to act as agent for
Depositor in buying shares for
the Individual Retirement
Account, and Nationwide Advisory
Services, Inc. is authorized to
deduct all applicable fees from
the account hereby established.
DEPOSITOR CERTIFIES THAT
CONTRIBUTION IS FOR TAX YEAR
________.
X ________________________
SIGNATURE OF DEPOSITOR
<PAGE> 28
MOVE YOUR RETIREMENT MONEY
TO OUR IRA TODAY.
<TABLE>
<S> <C>
TRANSFER PREVIOUS YEARS' TRANSFER your previous years' IRA contributions to our Family of Mutual Funds for
CONTRIBUTIONS TO A FINANCIAL professional money management, diversification, and opportunities for greater
HORIZONS INVESTMENT TRUST (FHIT) IRA return. By completing the transfer form on the next page, Nationwide Advisory
Services will contact your existing custodian and arrange to transfer your
existing IRA, or IRAs, to one or more of our mutual funds. This will be done
without any tax penalty, subject to the rules and restrictions of your present
custodian.
If you have already received the proceeds of your existing IRA, you may rollover
those proceeds to a Financial Horizons Investment Trust (FHIT) IRA. This rollover
must be completed within 60 days of your receipt of these proceeds and may only be
done once every 12 months.
ROLLOVER PENSION PLAN Are you about to receive a lump sum distribution from a qualified retirement plan?
DISTRIBUTIONS TO A FINANCIAL You may be able to ROLLOVER all or part of these proceeds into a rollover IRA with
HORIZONS INVESTMENT TRUST (FHIT) IRA no tax penalty by completing the rollover section of the IRA application. These
distributions must be rolled over within 60 days of receipt and your are not
allowed to rollover any nondeductible employee contributions you may have made to
the plan.
DIRECT TRANSFER AVOIDS If you elect to have your distribution paid to you directly, your employer is
20% WITHHOLDING required to withhold 20% for Federal income taxes (CAUTION: In total, your taxes
REQUIREMENT and penalties could exceed 20%). You can avoid this withholding requirement and
postpone current taxes by requesting your employer to make a DIRECT TRANSFER of
the proceeds to an FHIT IRA rollover account. Just ask your employer to make the
check payable to Financial Horizons Investment Trust (FHIT). If necessary, the
form on the next page is provided for your convenience.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HORIZONS INVESTMENT TRUST (FHIT)
TRANSFER INSTRUCTIONS ROLLOVER INSTRUCTIONS
<S> <C> <C>
OUTSIDE IRA TO AN FHIT IRA... OUTSIDE IRA TO AN FHIT IRA... A CORPORATE RETIREMENT PLAN TO
AN FHIT IRA ROLLOVER ACCOUNT
1. Establish your FHIT IRA by 1. If you've received the proceeds 1. You can obtain the proceeds from
completing the application. from your existing plan, complete the corporation involved using
2. Complete and sign the Transfer the FHIT IRA application. their distribution forms (see
Authorization form. 2. On the FHIT IRA application note above regarding withholding
3. Send the Transfer Authorization complete Item #4 Rollover Account requirement), or use the form on
form, and the IRA application to Only by checking the block. the next page to request your
Nationwide Advisory Services. [X] IRA Plan employer to directly transfer the
4. We will send the Transfer 3. Attach a check made payable to proceeds to your FHIT IRA
Authorization form and a Letter FHIT along with an IRA rollover account.
of Acceptance to the current application and send both to 2. Rollover contributions may not
custodian/trustee of your present Nationwide Advisory Services. include nondeductible employee
IRA accepting the transfer to an 4. Additional contributions may be contributions. All earnings and
FHIT IRA. made to this type of account. contributions made by the
5. Additional contributions may be corporation may be rolled over.
made to this type of account. 3. Have the check made payable to
Financial Horizons Investment
Trust.
4. On the FHIT IRA application
complete Item #4 by checking the
block ROLLOVER ACCOUNT ONLY,
proceeds coming from a
[X] Qualified Corporate Plan.
5. In the event you took possession
of the proceeds, attach check to
the IRA application and send both
to Nationwide Advisory Services.
6. Additional contributions may be
made to this type of account,
however you should consult your
tax advisor before doing so.
</TABLE>
<PAGE> 29
1. Establish your new IRA with Nationwide Advisory Services by completing the
application.
2. Complete and sign the following Transfer Authorization.
TRANSFER/DIRECT ROLLOVER AUTHORIZATION
Date
Name of Plan Administrator/Trustee
Account No.
Address
Plan Administrator/Trustee:
I, ________________________________________, have established an IRA with
Nationwide Advisory Services, Inc. for investment in the ___________ Fund.
(name of the fund)
As Administrator/Trustee of the ________________________ , I instruct you to
(name of plan)
withdraw (liquidate) [ ] all or [ ] part ($______) of the assets from my
account in your custody and send a check, payable to Financial Horizons
Investment Trust, to:
NATIONWIDE
ADVISORY SERVICES, INC. Sincerely,
P.O. Box 1492 x __________________________
[LOGO] Columbus, Ohio 43216-1492 (plan participant)
3. Send this form together with your IRA application to: Financial Horizons
Investment Trust, P.O. Box 1492, Three Nationwide Plaza, Columbus, OH
43216-1492.
4. Financial Horizons will complete the following Letter of Acceptance and then
send this form to your current custodian/trustee.
LETTER OF ACCEPTANCE
Date
To the Plan Administrator/Trustee named above:
The Participant named on the above Transfer Authorization has established an IRA
under the FHIT prototype plan.
Nationwide Advisory Services, Inc, as Custodian for such Plan, agrees to accept
the direct transfer of the cash proceeds indicated above and to deposit same
under the rollover IRA. Please send a check payable to Financial Horizons
Investment Trust for ________________________________________'s IRA (Account
#____________), and mail such check to:
NATIONWIDE
ADVISORY SERVICES, INC.
P.O. Box 1492
Columbus, Ohio 43216-1492
[LOGO]
Date
By _____________________________
(Authorized Signature)
Please note that this direct rollover must be made in such a manner that the
participant will not be in actual or constructive receipt of any portion of the
plan assets, nor be subject to any adverse tax consequences.
<PAGE> 30
TRANSFER ON DEATH (TOD)
FOR INDIVIDUAL AND JOINT TENANCY ACCOUNTS ONLY
Shareholders in the Funds may choose to have their shares transferred upon death
directly to their designated beneficiaries. If you choose to name one or more
beneficiaries for the accounts(s) you are opening with this application, all
shares in the account, including those purchased in the future, will be
transferred directly to the designated beneficiaries upon your death. If you
designate one or more beneficiaries for your account(s), you have the right to
change or revoke the beneficiary designation at any time in the future. If you
elect to use this method of transferring the shares in your account upon your
death, please complete the section below. This form of transfer is available
only for individual and joint tenancy accounts.
I (We) request that any mutual fund account(s) that is opened with this
application be registered in beneficiary form under the Ohio Uniform Transfer On
Death Security Registration Act. I (We) assign ownership upon my (our) death to
the beneficiary(ies) named below and their lineal descendants, per stripes, in
the percentage shares indicated. I (We) direct the transfer agent to transfer
the shares in such account(s) and any unpaid dividends and capital gains
payments in accordance with this direction and the provisions of the Ohio
Uniform Transfer On Death Security Registration Act. If the account(s) created
with this application is/are established in joint tenancy, no transfer of
ownership of shares under this beneficiary designation will occur until the
death of all owners of the accounts(s). This beneficiary designation may be
modified or revoked for this account any time prior to the death of the last
surviving owner of the account, without the consent of the beneficiary(ies),
provided the modification or revocation is on the form provided by Nationwide
Advisory Services, Inc.,(NAS) and is received by NAS in Columbus, Ohio prior to
the death of the owner(s) of the account(s). NAS reserves the right to reject
any Transfer-On-Death forms which do not meet these and other terms and
conditions. NAS will only accept beneficiary designations in which shares are to
be divided among beneficiaries who survive shareholder(s).
NAME OF PRIMARY BENEFICIARY(IES):
(if he/she/they shall survive me (us)):
If naming a minor as beneficiary also list the legal guardian in whose name the
securities will be registered.
<TABLE>
<CAPTION>
DATE OF BIRTH
<S> <C> <C>
(1) % of shares
(2) % of shares
(3) % of shares
</TABLE>
Name of Guardian (if minor)
NAME OF CONTINGENT BENEFICIARY(IES):
(if primary beneficiary(ies) shall not survive me (us)):
If naming a minor as beneficiary also list the legal guardian in whose name the
securities will be registered.
<TABLE>
<CAPTION>
DATE OF BIRTH
<S> <C> <C> <C>
(1) % of shares
(2) % of shares
(3) % of shares
</TABLE>
Name of Guardian (if minor)
<TABLE>
<S> <C> <C> <C>
Date
Signature / /
Date
Signature / /
</TABLE>
<PAGE> 31
[THIS PAGE LEFT BLANK INTENTIONALLY]
<PAGE> 32
[THIS PAGE LEFT BLANK INTENTIONALLY]
<PAGE> 33
[THIS PAGE LEFT BLANK INTENTIONALLY]
<PAGE> 34
[FINANCIAL HORIZONS LOGO]
FINANCIAL HORIZONS
INVESTMENT TRUST
GROWTH FUND
MUNICIPAL BOND FUND
GOVERNMENT BOND FUND
CASH RESERVE FUND
PROSPECTUS
February 28, 1997
FINANCIAL HORIZONS INVESTMENT TRUST BULK RATE
P.O. BOX 1492 U.S. POSTAGE
THREE NATIONWIDE PLAZA PAID
COLUMBUS, OH 43216-1492 CLEVELAND, OHIO
PERMIT NO. 1702
FHT-1-H (3/97)
<PAGE> 35
PART B. STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 28, 1997
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
28, 1997. The Prospectus may be obtained from Nationwide Advisory Services,
Inc., P.O. Box 1492, Three Nationwide Plaza, Columbus, Ohio 43216, or by calling
1-800-848-0920.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL INFORMATION AND HISTORY 1
ADDITIONAL INFORMATION AS TO
INVESTMENT OBJECTIVES AND POLICIES 1
ADDITIONAL INFORMATION AS TO
INVESTMENT TECHNIQUES 2
INVESTMENT RESTRICTIONS 3
MAJOR SHAREHOLDERS 5
TRUSTEES AND OFFICERS OF THE TRUST 6
CALCULATING YIELD - CASH RESERVE FUND 7
CALCULATING YIELD AND TOTAL RETURN
- NON-CASH RESERVE FUNDS 7
INVESTMENT ADVISER AND OTHER SERVICES 8
DISTRIBUTION AGREEMENT 8
PURCHASES, REDEMPTIONS AND PRICING OF SHARES 9
SHAREHOLDERS' RIGHTS 11
CUSTODIAN 11
BROKERAGE ALLOCATION 11
FINANCIAL STATEMENTS 13-24
INDEPENDENT AUDITORS' REPORT 25
APPENDIX 26-29
</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> 36
- - 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.
2
<PAGE> 37
- - 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).
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.
3
<PAGE> 38
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.
(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
4
<PAGE> 39
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.
MAJOR SHAREHOLDERS
As of January 31, 1997, Nationwide Life Insurance Company of Columbus, Ohio, had
sole voting and investment power over 2,912,261 shares of the Cash Reserve Fund
(67.8%), 161,212 shares of the Municipal Bond Fund (8.9%), and 66,420 shares of
the Growth Fund (13.8%). The Trustees and Officers of the Trust owned less than
1% of the outstanding shares.
5
<PAGE> 40
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:
ROBERT M. DUNCAN, Trustee.
1397 Haddon Road,
Columbus, Ohio 43209.
Mr. Duncan is Vice President & Secretary Emeritus 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.
DIMON R. MCFERSON, Trustee*
One Nationwide Plaza,
Columbus, Ohio 43216.
Mr. McFerson is President and Chief Executive Officer of the Nationwide
Insurance Enterprise. He was formerly President and General Manager of the
Nationwide Insurance Enterprise. He is a Director of Nationwide Advisory
Services, Inc.
DR. JOHN C. BRYANT, Trustee.
44 Faculty Place,
Wilmington, Ohio 45177.
Dr. Bryant is Executive Director of the Cincinnati Youth Collaborative. He was
formerly Professor of Education, Wilmington College.
DR. THOMAS J. KERR, IV, Trustee.
4890 Smoketalk Lane,
Westerville, Ohio 43081.
Dr. Kerr is President Emeritus of Kendall College. He was formerly President of
Grant Hospital Development Foundation.
JAMES F. LAIRD, Jr., Treasurer
Three Nationwide Plaza,
Columbus, Ohio 43216.
Mr. Laird is Vice President-General Manager of Nationwide Advisory Services,
Inc., the Distributor and Investment Manager.
WILLIAM G. GOSLEE., Assistant Treasurer.
Three Nationwide Plaza,
Columbus, Ohio 43216.
Mr. Goslee is Treasurer of Nationwide Advisory Services, Inc., the Distributor
and Investment Manager.
RAE MERCER POLLINA, Secretary.
Three Nationwide Plaza,
Columbus, Ohio 43216.
Mrs. Pollina is Corporate Secretary of Nationwide Advisory 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
6
<PAGE> 41
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, 1996.
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR TOTAL
AGGREGATE RETIREMENT BENEFITS ESTIMATED 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>
John C. Bryant, Trustee $5,000 -0- -0- $15,500
Robert M. Duncan, Trustee $5,000 -0- -0- $15,500
Thomas J. Kerr, IV, Trustee $5,000 -0- -0- $15,500
Dimon R. McFerson, Trustee -0- -0- -0- -0-
</TABLE>
- ---------------
* The Fund Complex includes Trusts comprised of fifteen investment portfolios.
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, 1996,
the Fund's seven-day current yield was 4.78%.
The effective yield was 4.90%.
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
7
<PAGE> 42
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 (or Life) 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, 1996 were 6.44% and 4.49%, respectively.
The Government Bond, Municipal Bond and Growth Funds average annual total
returns reflecting maximum sales charges for the one year, five year and Life of
the funds ended October 31, 1996, are listed below:
<TABLE>
<CAPTION>
1 YEAR 5 YEAR LIFE*
------ ------ -----
<S> <C> <C> <C>
Government Bond .1% 7.2% 9.2%
Municipal Bond (.3) 5.8 7.0
Growth 14.4 13.2 12.1
</TABLE>
- --------------
* Period from 12/19/88 (commencement of operations) through 10/31/96.
INVESTMENT ADVISER AND OTHER SERVICES
INVESTMENT MANAGEMENT AGREEMENT
Under the terms of the Investment Management Agreement, Nationwide Advisory
Services, Inc. ("NAS") 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 NAS shall reimburse the Trust for the compensation of the Trustees who are
"interested persons" of NAS.
During the fiscal years ended October 31, 1996, 1995, and 1994, the Investment
Manager earned fees of $16,666, $16,571, and $15,926, respectively for the Cash
Reserve Fund; $414,415, $447,894, and $507,403, respectively for the Government
Bond Fund; $150,996, $171,005, and $182,759, respectively for the Municipal Bond
Fund; and $54,053, $46,886, and $38,858, respectively for the Growth Fund.
NAS is wholly owned by Nationwide Life Insurance Company, which is wholly owned
by Nationwide Financial Services, Inc., an insurance company holding company.
Nationwide Financial Services, Inc. is wholly-owned by Nationwide Corporation.
All of the common stock of Nationwide Corporation is held by Nationwide Mutual
Insurance Company (95.3%) and Nationwide Mutual Fire Insurance Company (4.7%).
DISTRIBUTION AGREEMENT
NAS 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
8
<PAGE> 43
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, 1996, 1995, and 1994, the Distributor
waived fees of $0, $0, and $7,279 for the Cash Reserve Fund; $476,865, $476,865,
and $236,601 for the Government Bond Fund; $58,074, $65,771, and $84,082 for the
Municipal Bond Fund; and $20,790, $18,033, and $17,616 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, 1996, 1995, and 1994, such
charges were $1,593, $10,596, and $6,697 for the Cash Reserve Fund; $36,566,
$75,240, and $271,592 for the Government Bond Fund; $118,289, $97,848, and
$79,727 for the Municipal Bond Fund; and $12,788, $28,961, and $12,759 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 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.
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
adjusted by applicable sales charges 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.
The net asset value per share of each Fund of the Trust is determined by NAS, 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,
9
<PAGE> 44
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.
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.
10
<PAGE> 45
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.
TRANSFER AGENT AND
DIVIDEND DISBURSEMENT
Nationwide Investors Services, Inc. (NIS) is the Transfer and Dividend
Disbursing Agent for the Funds. NIS, a wholly-owned subsidiary of NAS received
fees for transfer agent services during the year ended October 31, 1996 of
$11,898 from the Growth Fund, $14,136 from the Municipal Bond Fund, $57,100 from
the Government Bond Fund and $966 from the Cash Reserve Fund. Management
believes the charges for the services performed are comparable to fees charged
by other companies performing similar services.
BROKERAGE ALLOCATION
During the years ended October 31, 1996, 1995, and 1994, brokerage commissions
paid by the Growth Fund totaled $1,928, $5,943, and $2,757 respectively. During
the years ended October 31, 1996, 1995, and 1994, the Cash Reserve Fund,
Government Bond Fund, and Municipal Bond Fund paid no brokerage commissions.
There is no commitment to
11
<PAGE> 46
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, NAS regularly
evaluates all research service received and available to determine whether
services should be continued or eliminated. In the management of the Funds, NAS
does not intend to specifically search out or employ any new or additional
research services.
12
<PAGE> 47
Financial Horizons Investment Trust
Growth Fund
For the year ended October 31, 1996, the Financial Horizons Growth Fund had a
total return of 19.41%, compared with 24.10% for the S&P 500 over the same
period.
Performance during the first half of the Fund's fiscal year was favorably
influenced by substantial appreciation in many of its small-cap holdings.
Subsequently, the markets pulled back in June and July in response to earnings
reports coming in below expectations. Although it appeared that this could have
signaled the end of the bull market or a larger 10% pullback, stocks rebounded
as other companies reported continued earnings gains at or above expectations.
Technology stocks have recovered as we have seen more evidence that demand for
personal computers will continue to drive growth for semiconductor, software and
computer companies. Intel, the fund's largest holding, benefited from this
trend, and the stock has risen dramatically. A few other small-cap computer
software and equipment companies the fund has held also outperformed the market.
Conversely, Motorola, another large technology holding, has disappointed
investors as demand for cellular phones has decreased.
Financial stocks have, as in the past year, had strong gains, and benefited the
Fund's performance. We have added to holdings in this sector through two
credit-card companies: Capital One Financial and First USA. The Growth Fund has
also benefited from its holdings in the medical products and energy sectors.
Unfortunately, the Fund was underweighted in the energy sector during this
period of strong performance. Additions to this sector may occur in the future
since prospects for these companies remain favorable and valuations reasonable.
The Fund was also negatively impacted by its holdings in long distance
telecommunications stocks. AT&T and MCI Communications have been negatively
impacted by competitive pressures and their continued investments in new
technology and markets.
The Fund invests in companies with good growth prospects at reasonable
valuations. During this year it initiated holdings in Capital One Financial,
First USA, International Imaging Materials, Boston Scientific, Meridian
Diagnostics and FileNet when valuations were attractive. Conversely, positions
were liquidated in CFI Proservices and Medtronic when these companies appeared
overvalued. The emphasis in selecting securities continues to be potential
capital appreciation rather than dividend income. Therefore, the Fund usually
generates realized capital gains while net income is relatively low. Although
small-cap stocks are not a priority, the Fund will continue to take advantage of
the ability its size affords to hold these securities without sacrificing
liquidity.
Laura Klebe, MBA - Portfolio Manager
Fund Value $9,095,304
TOP FIVE EQUITY HOLDINGS
<TABLE>
<CAPTION>
Value %
- -----------------------------------------------------------
<S> <C> <C>
Intel Corp. $439,500 4.8%
Merrill Lynch & Co. 351,250 3.9%
SPSS, Inc. 311,250 3.4%
Archer Daniels Midland Co. 305,718 3.4%
Zebra Technologies Corp. 259,875 2.9%
</TABLE>
FUND PERFORMANCE
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth $24,594
S&P 500 $32,248
</TABLE>
Comparative performance of $10,000 invested in the Financial Horizons Investment
Trust Growth Fund since inception (12/19/88) and the S&P 500* over the period
since inception ended 10/31/96.
* The S&P 500 is a broad, unmanaged index of equity securities, and unlike the
Growth Fund returns, does not reflect any fees or expenses.
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
<TABLE>
<CAPTION>
1 Year 5 Year Life
<S> <C> <C> <C>
Without sales charge..........19.41%.....13.39%.....12.11%
With sales charge.............14.41%.....13.15%.....12.11%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes the applicable contingent deferred sales charge
(CDSC) was paid on withdrawals which has the most dramatic effect on the
one-year performance figures. The CDSC declines from 5% in the first year to 0%
after 6 years. These results include reinvestment of all dividends and capital
gains distributions. The life of the fund is 7.8 years.
Investment return and principal value will fluctuate, and when redeemed, shares
may be worth more or less than the original investment. Past performance is no
guarantee of future results.
3
<PAGE> 48
Financial Horizons Investment Trust - Statement of Investments October 31, 1996
Growth Fund
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (91.9%)
---------------------
Airlines (1.0%)
---------------
6,000 Skywest, Inc. $ 90,000
----------
Business Equipment & Services (5.3%)
------------------------------------
7,500 American Business Information* 144,375
3,000 Healthcare Services Group* 28,875
6,600 Olsten Corp. (The) 132,000
10,000 TRO Learning, Inc.* 177,500
----------
482,750
----------
Chemicals (1.9%)
----------------
2,000 Sigma-Aldrich Corp. 117,500
1,000 Loctite Corp. 58,625
----------
176,125
----------
Communication-Equip (2.0%)
--------------------------
3,000 HBO & Co. 180,375
----------
Computer Equipment (1.7%)
-------------------------
7,000 American Power Corp.* 149,625
----------
Computers-Services & Software (4.8%)
------------------------------------
4,500 Filenet Corp.* 127,687
10,000 SPSS, Inc.* 311,250
----------
438,937
----------
Consumer Products (3.3%)
------------------------
16,000 National Picture & Frame* 184,000
4,000 Newell Co. 113,500
----------
297,500
----------
Contract Manufacturing (1.3%)
-----------------------------
5,500 DII Group, Inc.* 121,000
----------
Dental (0.9%)
-------------
2,000 Dentsply International, Inc. 84,250
----------
Distribution (1.6%)
-------------------
4,725 Bergen Brunswig Corp., Class A 148,247
----------
Drugs (4.2%)
------------
4,000 Allergan, Inc. 122,000
4,000 Schering-Plough Corp. 256,000
----------
378,000
----------
Electronics (7.5%)
------------------
4,000 Intel Corp. 439,500
2,000 Motorola, Inc. 92,000
11,100 Woodhead Industries, Inc. 152,625
----------
684,125
----------
Engineering and Construction (1.4%)
-----------------------------------
2,000 Fluor Corp. 131,000
----------
Financial (13.8%)
-----------------
3,645 Bear Stearns Companies, Inc. 86,113
4,500 Capital One Financial 140,062
1,600 First USA, Inc. 92,000
18,231 Gainsco, Inc. 175,473
5,000 Merrill Lynch & Co., Inc. 351,250
2,000 Morgan Stanley Group, Inc. 100,500
8,400 Silicon Valley Bancshares* 219,450
5,000 Standard Financial 89,062
----------
1,253,910
----------
Food & Beverage (1.0%)
----------------------
1,500 Grand Metropolitan PLC ADR 45,938
5,800 Grand Metropolitan PLC 43,776
----------
89,714
----------
<FN>
- ----------
The abbreviations in the above statement stand for the following:
PLC Public Limited Company
ADR American Depository Receipt
* 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.
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Food-Grain & Agriculture (4.5%)
-------------------------------
14,056 Archer Daniels Midland Co. $ 305,718
5,500 Northland Cranberrys, Class A 105,875
----------
411,593
----------
Healthcare Services (3.6%)
--------------------------
3,200 Apria Healthcare Group* 61,200
6,000 Columbia/HCA Healthcare Corp. 214,500
7,500 United American HealthCare* 46,875
----------
322,575
----------
Machinery & Capital Goods (4.7%)
--------------------------------
3,000 Duriron, Inc. 80,250
1,000 Emerson Electric Co. 89,000
9,000 Zebra Technologies Corp.* 259,875
----------
429,125
----------
Medical Products (4.4%)
-----------------------
5,000 Biomet, Inc. 80,625
4,000 Boston Scientific* 217,500
10,000 Meridian Diagnostics 105,000
----------
403,125
----------
Oil & Gas (2.9%)
----------------
1,300 Amoco Corp. 98,475
500 Royal Dutch Petroleum Co. 82,688
800 Texaco, Inc. 81,300
----------
262,463
----------
Pollution Control (0.9%)
------------------------
2,500 WMX Technologies, Inc. 85,938
----------
Printing & Publishing (4.2%)
----------------------------
6,400 International Imaging Materials* 152,000
6,000 Merrill Corp. 133,500
2,800 Reader's Digest Assoc., Inc., Class B 96,950
----------
382,450
----------
Restaurants (2.7%)
------------------
5,000 Bob Evans Farms, Inc. 62,500
8,800 Wendy's International, Inc. 181,500
----------
244,000
----------
Retail (5.6%)
-------------
9,999 CUC International* 244,976
3,000 Franklin Quest Co.* 60,750
5,000 Smart & Final, Inc. 117,500
4,000 Tractor Supply Co.* 83,000
----------
506,226
----------
Telecommunications (6.0%)
-------------------------
1,333 360 Communications Co.* 30,159
2,200 AT & T Corp. 76,725
712 Lucent Technologies, Inc. 33,464
9,800 MCI Communications Corp. 246,225
4,000 Sprint Corp. 157,000
----------
543,573
----------
Tire & Rubber (0.7%)
--------------------
3,000 Cooper Tire & Rubber Co. 58,875
Total common stocks (cost $5,667,901) 8,355,501
----------
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (7.9%)
----------------------------------
U.S. Treasury Bills
-------------------
$740,000 5.06% through 5.36%, due 02/13/97 through
07/24/97 (cost $720,332) 720,926
----------
Total investments (cost $6,388,233) $9,076,427
==========
</TABLE>
4
<PAGE> 49
Financial Horizons Investment Trust
Municipal Bond Fund
The municipal market has produced modest returns over the past 12 months, but
the road along the way was anything but smooth. Over the year, the Bond Buyer 11
Index moved from a yield of 5.62% to 5.60%. After rallying to 5.23% by February,
the market retraced all of its gains back to a peak of 6.02% by mid-June.
Inflationary fears that were prevalent in the spring months never materialized
into the economic numbers that followed. The Federal Reserve was content to
leave rates alone, allowing municipals to rally back to the current readings.
For the fiscal year, the Lehman Municipal Bond Index returned 5.70%, while the
Fund gained 4.72%.
Over the past year, we have continued to emphasize high credit quality but
switched to lower average coupons and slightly shorter average maturities. As a
result, our credit quality was maintained above a "Aa," our average coupon
declined from 6.16% to 5.83%, and our position in discount bonds (those bonds
priced below $98 per $100 of par value) increased from approximately 20% to 40%
of the portfolio. Average par-weighted maturity was shortened from 19.6 years to
19.0 years. By lowering the average coupon and increasing our position in
discount bonds, we have shifted the Fund into a more aggressive,
performance-oriented position. If rates continue to fall, we should be in a good
position to continue to capitalize on this opportunity. The current year's sales
have generated net capital gains, however there is a loss carry-forward that
will offset these gains and nullify their effects for tax-reporting purposes.
A moderation in the growth of the economy, coupled with confidence that the
Federal Reserve has effectively tamed inflation and will not have to raise rates
in the near term, is the foundation for this market's summer rally. Election
anxieties perhaps tempered the rally somewhat. With the election now in the
rearview mirror, the market can again focus on the solid fundamentals of
moderate growth and low inflation.
We have a well-balanced portfolio that is positioned to benefit from an
extension in the current market rally. We are constantly searching for value
through a disciplined swap program. Overall, we continue to take a long-term
perspective and look for positive performance in the future.
J. Randall Baney, MBA - Portfolio Manager
Fund Value $20,499,850
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
Value %
- -------------------------------------------------------------------------------
<S> <C> <C>
New Jersey Turnpike $1,092,500 5.3%
Nashville and Davidson County, Tennessee 1,068,625 5.2%
New York Local Government Asst 1,067,500 5.2%
Harris County, Texas 1,047,500 5.1%
Birmingham, Alabama 1,043,750 5.1%
</TABLE>
<TABLE>
<CAPTION>
FUND PERFORMANCE
1989 1990 1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Muni Bond $17,078
Leh. Muni Bond $18,873
</TABLE>
Comparative performance of $10,000 invested in the Financial Horizons Investment
Trust Municipal Bond Fund since inception (12/19/88) and the Lehman Brothers
Municipal Bond Index* over the period since inception ended 10/31/96.
* The Lehman Brothers Municipal Bond Index represents an unmanaged group of
bonds that are not adjusted for expenses and includes bonds of lower quality
than those purchased by the Municipal Bond Fund. The investment return and
principal value will fluctuate. When redeemed, shares may be worth more or
less than the original investment.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
1 Year 5 Year Life
<S> <C> <C> <C>
Without sales charge...........4.72%......6.12%......7.04%
With sales charge ............-0.28%......5.80%......7.04%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes the applicable contingent deferred sales charge
(CDSC) was paid on withdrawals which has the most dramatic effect on the
one-year performance figures. The CDSC declines from 5% in the first year to 0%
after 6 years. These results include reinvestment of all dividends and capital
gains distributions. The life of the fund is 7.8 years.
Investment return and principal value will fluctuate, and when redeemed, shares
may be worth more or less than the original investment. Past performance is no
guarantee of future results.
5
<PAGE> 50
Financial Horizons Investment Trust - Statement of Investments October 31, 1996
Municipal Bond Fund
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (98.3%)
Alabama (5.1%)
--------------
$1,000,000 Birmingham, Alabama General Obligation
Refunding Bonds, Series 1992-B,
6.25%, 04/01/16 $ 1,043,750
------------
Florida (4.7%)
--------------
1,000,000 Orlando, Florida Utilities Commission
Water and Electric Subordinated
Revenue Refunding Bonds,
Series 1993-A, 5.25%, 10/01/14 957,500
------------
Illinois (9.7%)
---------------
1,000,000 Illinois Housing Development Authority
Homeowner Mortgage Revenue
Bonds, Series 1994-A-1, 6.45%, 08/01/17 1,027,500
1,000,000 Illinois Regional Transportation Authority,
General Obligation Refunding Bonds,
Series 1996, 5.40%, 06/01/15 961,250
------------
1,988,750
------------
Massachusetts (4.7%)
--------------------
1,000,000 Commonwealth of Massachusetts
General Obligation Refunding Bonds,
Series 1995-A, 5.00%, 07/01/10 957,500
------------
Nevada (4.8%)
-------------
1,000,000 Nevada State General Obligation, Nevada
Municipal Bond Bank Project,
Numbers 49 & 50, 5.50%, 11/01/16 980,000
------------
New Jersey (5.3%)
-----------------
1,000,000 New Jersey Turnpike Authority Turnpike
Revenue Bonds, Series 1991-C,
6.50%, 01/01/16 1,092,500
------------
New York (5.2%)
---------------
1,000,000 New York Local Government Assistance
Corporation, Series 1993-E, Refunding
Bonds, 6.00%, 04/01/14 1,067,500
------------
North Carolina (5.0%)
---------------------
1,000,000 Charlotte-Mecklenburg Hospital Authority,
North Carolina Health Care System
Revenue Bonds, Series 1992,
6.25%, 01/01/20 1,030,000
------------
South Carolina (5.0%)
---------------------
1,000,000 South Carolina State Housing Finance &
Development Authority Homeownership
Mortgage Purchase Bonds,
Series 1994-A, 6.375%, 07/01/16 1,015,000
------------
Tennessee (5.2%)
----------------
1,030,000 Nashville & Davidson County, Tennessee
General Obligation Multi-Purpose
Improvement Bonds, Series 1994,
6.125%, 05/15/14 1,068,625
------------
<FN>
- ----------
Cost also represents cost for Federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Texas (19.2%)
-------------
$1,000,000 Carrollton -- Farmers Branch
Independent School District, Texas
General Obligation School Building
Unlimited Tax Bonds, Series 1995,
5.00%, 02/15/16 $ 930,000
1,000,000 Grand Prairie Independent School
District, Texas General Obligation
Unlimited Tax School Building and
Refunding Bonds, Series 1996,
5.20%, 02/15/17 946,250
1,000,000 Harris County, Texas Tax and Revenue
Certificates of Obligation, Series 1994,
6.10%, 10/01/13 1,047,500
1,000,000 Texas State Public Finance Authority
Building Revenue Refunding,
Series 1992-B, 5.75%, 02/01/12 1,011,250
------------
3,935,000
------------
Utah (4.9%)
-----------
1,000,000 Utah Housing Finance Agency, Multi-
Family Housing Revenue Refunding
Bonds, (Cottonwood Apartments
Project), Issue 1995, 6.30%, 07/01/15 1,011,250
------------
Virginia (14.9%)
----------------
1,000,000 Chesapeake, Virginia General Obligation
Water & Sewer Bonds, Series 1995-A,
5.375%, 12/01/20 956,250
1,000,000 Richmond, Virginia General Obligation
Public Improvement Refunding Bonds,
Series 1991-B, 6.25%, 01/15/18 1,035,000
900,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds,
Series 1992-C, Subseries C-7,
6.30%, 01/01/15 915,750
140,000 Virginia Housing Development Authority
Multi-Family Housing Bonds,
Series 1991-F, 7.10%, 05/01/13 148,050
------------
3,055,050
------------
Washington (4.6%)
-----------------
1,000,000 Seattle, Washington Limited Tax, General
Obligation Bonds, Series 1995, 5.125%, 942,500
07/01/15 ------------
Total long-term municipal securities
(cost $19,986,232) $20,144,925
============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 51
Financial Horizons Investment Trust
Government Bond Fund
Total return for the Financial Horizons Government Bond Fund for the year ended
October 31, 1996, was 5.01% compared to a total return of 5.05% for its
benchmark index, the Merrill Lynch Government Master Index.
Early in the year, fears of higher inflation led to an increase in interest
rates. As favorable inflation results have been released over the past two
months, inflationary concerns have eased and rates have declined from their
highs at midyear. The net change in interest rates over the past 12 months was
an increase of approximately .30 percent in intermediate and long rates. The
current stable inflation environment is favorable for the bond market.
The Government Bond Fund continues to be invested in spread product including
sectors of the government agency and mortgage-backed markets perceived to be
undervalued. Approximately one-third of portfolio assets are invested in the
collateralized mortgage obligation (CMO) market. The yield on these
conservatively structured investments continues to make them attractive
portfolio holdings.
Wayne T. Frisbee, CFA - Portfolio Manager
Fund Value $58,736,729
<TABLE>
<CAPTION>
TOP FIVE BOND HOLDINGS
Value %
- -------------------------------------------------------------------------------
<S> <C> <C>
Resolution Funding $14,577,892 24.8%
FNMA REMICS 13,130,822 22.4%
Federal National Mortgage Association 9,270,147 15.8%
FHLMC REMICS 6,882,563 11.7%
Federal Home Loan Banks 4,012,716 6.8%
</TABLE>
<TABLE>
<CAPTION>
FUND PERFORMANCE
1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gov't Bond $19,926
M. Lynch $19,905
</TABLE>
Comparative performance of $10,000 invested in the Financial Horizons Investment
Trust Government Bond Fund since inception (12/19/88) and the Merrill Lynch
Government Master Index* over the period since inception ended 10/31/96.
* The Merrill Lynch Government Master Index is an index of unmanaged bonds
which unlike the Government Bond Fund returns, do not reflect any fees or
expenses. The investment return and principal value will fluctuate. When
redeemed, shares may be worth more or less than the original investment.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
1 Year 5 Year Life
<S> <C> <C> <C>
Without sales charge...........5.01%......7.47%......9.16%
With sales charge..............0.08%......7.17%......9.16%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes the applicable contingent deferred sales charge
(CDSC) was paid on withdrawals which has the most dramatic effect on the
one-year performance figures. The CDSC declines from 5% in the first year to 0%
after 6 years. These results include reinvestment of all dividends and capital
gains distributions. The life of the fund is 7.8 years.
Investment return and principal value will fluctuate, and when redeemed, shares
may be worth more or less than the original investment. Past performance is no
guarantee of future results.
7
<PAGE> 52
Financial Horizons Investment Trust - Statement of Investments October 31, 1996
Government Bond Fund
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
MORTGAGE BACKED SECURITIES (34.1%)
----------------------------------
$ 707,185 FHLMC (REMIC) Series 190-D,
9.20%, 10/15/21 $ 738,929
3,000,000 FHLMC (REMIC) Series 1344-D,
6.00%, 08/15/07 2,801,368
1,289,219 FHLMC (REMIC) Series 31-E,
7.55%, 05/15/20 1,306,068
2,000,000 FHLMC (REMIC) Series 1313-G,
7.25%, 06/15/07 2,036,198
1,000,000 FNMA (REMIC) Series 93-203 PJ,
6.50%, 10/25/23 981,009
422,198 FNMA (REMIC) Series 1989-86,
8.75%, 11/25/19 443,459
4,000,000 FNMA (REMIC) Series 1990-16D,
9.00%, 03/25/20 4,202,476
589,820 FNMA (REMIC) Series 1991-68E,
8.35%, 10/25/03 593,287
923,312 FNMA (REMIC) Series 1991-73A,
8.00%, 07/25/21 952,063
1,743,142 FNMA (REMIC) Series 90-7-B,
8.50%, 01/25/20 1,815,132
4,000,000 FNMA (REMIC) Series 92-126,
8.00%, 07/25/02 4,143,396
-----------
Total mortgage backed securities
(cost $19,643,084) 20,013,385
-----------
<FN>
- ----------
The abbreviations in the above statement stand for the following:
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
REMIC Real Estate Mortgage Investment Conduit
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.
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY LONG-TERM
OBLIGATIONS (52.6%)
------------------------------------
$ 4,000,000 Federal Home Loan Banks, 6.36%, 03/21/01 $ 4,012,716
3,000,000 Federal Home Loan Mortgage Corp.,
7.445%, 04/14/04 3,047,901
4,030,000 Federal National Mortgage Assoc.,
8.25%, 10/12/04 4,209,134
4,000,000 Federal National Mortgage Assoc.,
8.55%, 12/10/04 4,064,048
1,000,000 Federal National Mortgage Assoc.,
7.26%, 10/05/05 996,965
15,000,000 Resolution Funding STRIPS, 0.00%, 04/15/06 8,099,235
3,000,000 Resolution Funding STRIPS, 0.00%, 04/15/08 1,401,477
10,000,000 Resolution Funding STRIPS, 0.00%, 07/15/13 3,165,290
10,000,000 Resolution Funding STRIPS, 0.00%, 07/15/20 1,911,890
-----------
Total U.S. government and agency
long-term obligations
(cost $30,020,695) 30,908,656
-----------
REPURCHASE AGREEMENT (13.4%)
----------------------------
7,894,000 Prudential Securities, 5.55%, due 11/01/96,
Collateralized by $8,035,000, Sallie Mae
Floating Rate Note, due 04/10/97, market
value $8,055,088 (cost $7,894,000) 7,894,000
-----------
Total investments (cost $57,557,779) $58,816,041
===========
</TABLE>
8
<PAGE> 53
Financial Horizons Investment Trust
Cash Reserve Fund
The Financial Horizons Cash Reserve Fund had total assets of $4.2 million for
the year ended October 31, 1996. The average maturity totaled 37 days.
Commercial paper accounted for 89% of the Fund, followed by Canadian Government
obligations (7%) and U.S. Government & Agency securities (4%). Commercial paper
continues to have a yield advantage over other money market instruments.
Total return on the Cash Reserve Fund was 4.97% for the year ended October 31,
1996, compared to the Consumer Price Index total return of 2.99%. The 30-day
current yield in the same period was 4.77% with an effective yield of 4.88%.
The Federal Open Market Committee left interest rates unchanged for most of
1996. The last time they adjusted rates was in January 1996. At that time the
Federal Funds rate was lowered to 5.00% from 5.25%. Future rate changes will
depend on the Committee's perception on both economic growth and inflation.
The Financial Horizons Cash Reserve Fund continues to invest in only
high-quality, first-tier money market instruments. An internal credit review is
completed on all issuers prior to investment.
Karen G. Mader, MA - Portfolio Manager
Fund Value $4,242,751
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
Value %
- -------------------------------------------------------------------------------
<S> <C> <C>
Sonoco Products Co. $164,567 3.9%
Clorox Co. 161,544 3.8%
Merrill Lynch & Co. 159,903 3.8%
Caterpillar Financial Services 159,694 3.8%
Canadian Wheat Board 159,667 3.8%
</TABLE>
<TABLE>
<CAPTION>
FUND PERFORMANCE
1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Reserve $14,384
CPI $13,126
</TABLE>
Comparative performance of $10,000 invested in the Financial Horizons Investment
Trust Cash Reserve Fund since inception (12/19/88) and the Consumer Price Index*
over the period since inception ended 10/31/96.
* The Consumer Price Index is a broad index reflecting price changes in a
market basket of consumer goods and, unlike the Cash Reserve Fund, does not
reflect any fees or expenses.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
1 Year 5 Year Life
<S> <C> <C> <C>
Without sales charge...........4.97%......3.70%......4.73%
</TABLE>
These results include reinvestment of all dividends and capital gains
distributions. The life of the fund is 7.8 years.
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 a share. Past performance is no guarantee of
future results.
9
<PAGE> 54
Financial Horizons Investment Trust - Statement of Investments October 31, 1996
Cash Reserve Fund
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
CANADIAN GOVERNMENT OBLIGATIONS (7.3%)
---------------------------------------
$152,000 British Columbia Province, 5.28%,
due 02/03/97 $ 149,905
160,000 Canadian Wheat Board, 5.35%, due 11/15/96 159,667
----------
Total Canadian government obligations
(cost $309,572) 309,572
----------
COMMERCIAL PAPER (89.1%)
------------------------
Agriculture/Finance (3.8%)
--------------------------
160,000 Deere, John Capital, 5.24%, due 11/26/96 159,418
----------
Auto/Finance (3.8%)
-------------------
160,000 Ford Motor Credit, 5.26%, due 11/25/96 159,439
Banks (2.3%)
------------
100,000 National City Credit, 5.35%, due 11/15/96 99,792
----------
Broker/Dealers (14.5%)
----------------------
140,000 Dean Witter Discover, 5.25%, due 11/25/96 139,510
156,000 Goldman Sachs Group, 5.26%,
due 11/27/96 155,407
160,000 Merrill Lynch & Co. 5.44%, due 11/05/96 159,903
160,000 Smith Barney, Inc., 5.27%, due 12/05/96 159,204
----------
614,024
----------
Captive Borrow Conduit (3.2%)
-----------------------------
138,000 Prudential Funding, 5.23%, due 12/09/96 137,238
----------
Chemicals (6.1%)
----------------
116,000 Monsanto Co., 5.45%, due 11/19/96 115,684
145,000 PPG Industries, 5.24%, due 12/10/96 144,177
----------
259,861
----------
Consumer Products (3.8%)
------------------------
162,000 Clorox Co. 5.33%, due 11/20/96 161,544
----------
Consumer Sales Finance (12.5%)
------------------------------
105,000 Amer. Exp. Credit Corp., 5.29%, due 11/08/96 104,893
146,000 Avco Financial Serv., 5.26%, due 12/10/96 145,168
143,000 Beneficial Corp., 5.26%, due 11/13/96 142,749
140,000 Norwest Financial, 5.31%, due 01/27/97 138,203
----------
531,013
----------
<FN>
- ----------
Cost also represents cost for Federal income tax purposes.
Portfolio holding percentages represent value as a percentage of net assets.
See accompanying notes to financial statements.
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Diversified Finance (3.6%)
--------------------------
$154,000 GE Capital Corp., 5.29%, due 11/18/96 $ 153,615
----------
Entertainment (2.3%)
--------------------
100,000 Walt Disney Co., 5.42%,
due 11/20/96 99,714
----------
Heavy Equipment/Finance (3.8%)
------------------------------
160,000 Caterpillar Financial Ser., 5.25%,
due 11/13/96 159,694
----------
Insurance (9.4%)
----------------
130,000 AIG Funding, Inc., 5.24%, due 12/17/96 129,130
130,000 MetLife Funding Inc., 5.24%, due 12/16/96 129,148
140,000 Principal Mutual, 5.24%, due 11/13/96 139,755
----------
398,033
----------
Lease Financing (3.2%)
----------------------
137,000 PHH Corp., 5.23%, due 11/04/96 136,940
----------
Manufacturing/Diversified (3.3%)
--------------------------------
140,000 Raytheon Co., 5.23%, due 11/05/96 139,919
----------
Packaging/Containers (2.6%)
---------------------------
110,000 Bemis Co., Inc., 5.26%, due 12/03/96 109,486
----------
Paper and Forest Products (3.9%)
--------------------------------
165,000 Sonoco Products Co., 5.25%, due 11/19/96 164,567
----------
Pharmaceuticals/Health Care (7.0%)
----------------------------------
150,000 Abbott Laboratories, 5.25%, due 01/16/97 148,337
150,000 Schering Corp., 5.40%, due 02/18/97 147,548
----------
295,885
----------
Total commercial paper (cost $3,780,182) 3,780,182
----------
U.S. GOVERNMENT OBLIGATIONS (1.4%)
----------------------------------
60,000 U.S. Treasury Bills, 5.14%, due 06/26/97
(cost $57,970) 57,970
----------
U.S. AGENCY-FULL FAITH & CREDIT (2.3%)
--------------------------------------
100,000 Federal National Mortgage Association
5.47%, due 02/10/97 (cost $98,465) 98,465
----------
Total investments (cost $4,246,189) $4,246,189
===========
</TABLE>
10
<PAGE> 55
Financial Horizons Investment Trust October 31, 1996
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
MUNICIPAL GOVERNMENT CASH
GROWTH BOND BOND RESERVE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (cost $6,388,233,
$19,986,232, $49,663,779 and $4,246,189, respectively) $9,076,427 $20,144,925 $50,922,041 $4,246,189
Repurchase agreements (cost $7,894,000) -- -- 7,894,000 --
--------------------------------------------------------
Total investments 9,076,427 20,144,925 58,816,041 4,246,189
Cash 29,069 223,314 30,032 519
Receivable for Fund shares sold 127 -- -- --
Receivable for investment securities sold -- -- 13,209 --
Accrued interest and dividends receivable 5,924 333,877 322,626 --
--------------------------------------------------------
TOTAL ASSETS 9,111,547 20,702,116 59,181,908 4,246,708
LIABILITIES
Payable for Fund shares redeemed 3,953 134,945 229,214 267
Accrued management fees 4,998 11,366 32,203 1,427
Accrued transfer agent fees 1,000 1,168 3,956 77
Accrued distribution fees 3,846 8,743 -- --
Dividends payable -- 34,553 152,402 1,243
Other accrued expenses 2,446 11,491 27,404 943
--------------------------------------------------------
TOTAL LIABILITIES 16,243 202,266 445,179 3,957
--------------------------------------------------------
NET ASSETS $9,095,304 $20,499,850 $58,736,729 $4,242,751
========================================================
NET ASSETS REPRESENTED BY:
Capital Shares, $1 par value, outstanding $ 467,236 $1,903,494 $55,376,700 $4,242,870
Capital paid in excess of par value 5,486,141 19,388,899 53,402,393 (105)
Net unrealized appreciation 2,688,194 158,693 1,258,262 --
Accumulated undistributed net realized gain (loss) 458,096 (950,935) (1,301,670) (6)
Accumulated undistributed (distributions in excess of) net
investment income (4,363) (301) 1,044 (8)
--------------------------------------------------------
NET ASSETS $9,095,304 $20,499,850 $58,736,729 $4,242,751
========================================================
Shares outstanding (unlimited number of shares authorized) 467,236 1,903,494 5,376,700 4,242,870
========================================================
NET ASSET VALUE AND OFFERING PRICE PER SHARE* $ 19.47 $ 10.77 $ 10.92 $ 1.00
========================================================
<FN>
* For the Growth Fund, the Municipal Bond Fund, and the Government Bond Fund, the redemption price per share varies by the
length of time shares are held.
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 56
Financial Horizons Investment Trust For the year ended October 31, 1996
Statements of Operations
<TABLE>
<CAPTION>
MUNICIPAL GOVERNMENT CASH
GROWTH BOND BOND RESERVE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends $ 81,409 -- -- --
Interest 40,820 $1,366,936 $ 4,351,716 $229,490
Other -- -- 171,119 --
----------------------------------------------------
Total income 122,229 1,366,936 4,522,835 229,490
EXPENSES:
Distribution fees 62,370 174,226 476,865 --
Investment management fees 54,053 150,996 414,415 16,666
Transfer agent fees 11,898 14,136 57,100 966
Professional services 1,934 5,474 15,020 1,052
Registration fees 2,235 1,783 4,963 2,452
Shareholders' reports 3,500 4,490 11,200 275
Custodian fees 2,100 16,600 11,500 4,503
Trustee fees and expenses 1,136 3,555 9,655 625
Other 1,508 2,553 9,724 468
----------------------------------------------------
Total expenses before waived expenses 140,734 373,813 1,010,442 27,007
Total waived expenses 20,790 58,074 476,865 --
----------------------------------------------------
Net expenses 119,944 315,739 533,577 27,007
----------------------------------------------------
NET INVESTMENT INCOME $ 2,285 $1,051,197 $ 3,989,258 $202,483
====================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments $1,456,661 $ 249,540 $ 746,770 $ (3)
Net change in unrealized appreciation (depreciation) of investments 995,019 (275,812) (1,785,043) --
----------------------------------------------------
Net realized and unrealized gain (loss) on investments 1,451,680 (26,272) (1,038,273) (3)
----------------------------------------------------
NET INCREASE IN ASSETS RESULTING FROM OPERATIONS $1,453,965 $1,024,925 $ 2,950,985 $202,480
====================================================
</TABLE>
See accompanying notes to financial statements.
12
<PAGE> 57
Financial Horizons Investment Trust
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
GROWTH FUND MUNICIPAL BOND FUND
Year ended Year ended Year ended Year ended
October 31, October 31, October 31, October 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ 2,285 (3,646) $ 1,051,197 $ 1,267,905
Net realized gain (loss) on investments 456,661 821,167 249,540 (809,772)
Net change in unrealized appreciation (depreciation) of
investments 995,019 607,704 (275,812) 3,105,091
--------------------------------------------------------
Net increase in net assets resulting from operations 1,453,965 1,425,225 1,024,925 3,563,224
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- (1,051,197) (1,266,974)
In excess of net investment income -- (5,505) (301) --
Net realized gain from investment transactions (819,732) (65,310) -- --
--------------------------------------------------------
Decrease in net assets from distributions to shareholders (819,732) (70,815) (1,051,498) (1,266,974)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 896,371 520,132 83,672 437,772
Net asset value of shares issued to shareholders from reinvestment
of dividends 806,112 69,603 617,827 827,461
Cost of shares redeemed (835,073) (1,137,884) (5,980,992) (4,168,004)
--------------------------------------------------------
Increase (decrease) in net assets derived from capital share
transactions 867,410 (548,149) (5,279,493) (2,902,771)
--------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 1,501,643 806,261 (5,306,066) (606,521)
NET ASSETS-- BEGINNING OF PERIOD 7,593,661 6,787,400 25,805,916 26,412,437
--------------------------------------------------------
NET ASSETS-- END OF PERIOD $9,095,304 $ 7,593,661 $20,499,850 $25,805,916
========================================================
Undistributed net realized gain (loss) on investments included
in net assets at end of period $ 458,096 $ 821,167 $ (950,935) $(1,200,475)
========================================================
Undistributed (distributions in excess of) net investment income
included in net assets at end of period $ (4,363) $ (6,648) $ (301) $ (5,752)
========================================================
SHARE ACTIVITY:
Shares sold 48,331 32,495 7,850 42,427
Reinvestment of dividends 46,328 4,761 57,620 80,208
Shares redeemed (45,321) (68,472) (559,944) (403,632)
--------------------------------------------------------
Net increase (decrease) in number of shares 49,338 (31,216) (494,474) (280,997)
========================================================
See accompanying notes to financial statements.
13
</TABLE>
<PAGE> 58
Financial Horizons Investment Trust
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND CASH RESERVE FUND
Year ended Year ended Year ended Year ended
October 31, October 31, October 31, October 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 3,989,258 $ 4,424,602 $ 202,483 $ 218,960
Net realized gain (loss) on investments 746,770 500,983 (3) (3)
Net change in unrealized appreciation (depreciation) of investments (1,785,043) 5,712,175 -- --
-------------------------------------------------------
Net increase in net assets resulting from operations 2,950,985 10,637,760 202,480 218,957
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (3,988,214) (4,454,858) (202,483) (218,917)
In excess of net investment income -- -- (8) --
Net realized gain from investment transactions -- -- -- (35)
Paid in capital -- (14,227) (105) --
-------------------------------------------------------
Decrease in net assets from distributions to shareholders (3,988,214) (4,469,085) (202,596) (218,952)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 452,449 1,055,320 280,277 890,988
Net asset value of shares issued to shareholders from reinvestment
of dividends 2,053,433 2,526,566 186,091 213,199
Cost of shares redeemed (11,921,797) (10,778,823) (373,733) (903,863)
-------------------------------------------------------
Increase (decrease) in net assets derived from capital share transactions (9,415,915) (7,196,937) 92,635 200,324
-------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (10,453,144) (1,028,262) 92,519 200,329
NET ASSETS-- BEGINNING OF PERIOD 69,189,873 70,218,135 4,150,232 3,949,903
-------------------------------------------------------
NET ASSETS-- END OF PERIOD $ 58,736,729 $ 69,189,873 $ 4,242,751 $ 4,150,232
=======================================================
Undistributed net realized gain (loss) on investments included in net
assets at end of period $ (1,301,670) $ (2,048,440) $ (6) $ (3)
=======================================================
Undistributed (distributions in excess of) net investment income
included in net assets at end of period $ 1,044 $ -- $ (8) $ --
=======================================================
SHARE ACTIVITY:
Shares sold 40,874 100,153 280,277 890,988
Reinvestment of dividends 188,895 239,877 186,091 213,199
Shares redeemed (1,101,948) (1,029,256) (373,733) (903,863)
-------------------------------------------------------
Net increase (decrease) in number of shares (872,179) (689,226) 92,635 200,324
=======================================================
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 59
Financial Horizons Investment Trust Selected data for each share
of capital stock outstanding
Financial Highlights
<TABLE>
<CAPTION>
GROWTH FUND MUNICIPAL BOND FUND
YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31,
1996 1995 1994 1993 1992 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE --
BEGINNING OF PERIOD $18.17 $15.11 $14.17 $12.46 $11.99 $ 10.76 $ 9.86 $ 11.75 $ 10.64 $ 10.61
Net investment income (loss) .01 (0.01) 0.03 0.08 0.22 0.48 0.50 0.49 0.56 0.61
Net realized gain (loss) and
unrealized appreciation
(depreciation) 3.28 3.23 0.95 1.73 0.43 0.01 0.90 (1.62) 1.22 0.07
---------------------------------------------- -----------------------------------------------
Total from investment operations 3.29 3.22 0.98 1.81 0.65 0.49 1.40 (1.13) 1.78 0.68
Dividends from net investment
income -- -- (0.04) (0.10) (0.18) (0.48) (0.50) (0.49) (0.56) (0.61)
Distributions in excess of net
investment income -- (0.01) -- -- -- -- -- -- -- --
Distributions from net realized
gain from investment
transactions (1.99) (0.15) -- -- -- -- -- (0.27) (0.11) (0.04)
---------------------------------------------- -----------------------------------------------
Total distributions (1.99) (0.16) (0.04) (0.10) (0.18) (0.48) (0.50) (0.76) (0.67) (0.65)
---------------------------------------------- -----------------------------------------------
Net increase (decrease) in net
asset value 1.30 3.06 0.94 1.71 0.47 0.01 0.90 (1.89) 1.11 0.03
---------------------------------------------- -----------------------------------------------
NET ASSET VALUE --
END OF PERIOD $19.47 $18.17 $15.11 $14.17 $12.46 $ 10.77 $ 10.76 $ 9.86 $ 11.75 $ 10.64
============================================== ===============================================
Total Return 19.41% 21.57% 6.92% 14.59% 5.42% 4.72% 14.50% (10.11%) 17.18% 6.56%
Net Assets, End of Period (000) $9,095 $7,594 $6,787 $5,165 $3,095 $20,500 $25,806 $26,412 $25,828 $14,641
Ratio of expenses to average
net assets 1.44% 1.47% 1.59% 1.44% 1.27% 1.36% 1.35% 1.27% 1.01% 0.65%
Ratio of expenses to average
net assets* 1.69% 1.72% 1.90% 2.03% 2.02% 1.61% 1.60% 1.57% 1.61% 1.62%
Ratio of net investment income
(loss) to average net assets 0.03% (0.05%) 0.21% 0.63% 1.45% 4.53% 4.82% 4.58% 4.81% 5.65%
Ratio of net investment income
(loss) to average net assets* (0.22%) (0.30%) (0.82%) 0.05% 0.70% 4.28% 4.57% 4.28% 4.11% 4.68%
Portfolio turnover 17.19% 29.19% 14.14% 12.98% 12.14% 38.80% 60.79% 69.67% 46.95% 57.98%
Average commission rate paid** 5.9080(cent) -- -- -- -- -- -- -- -- --
<FN>
- ----------
*Ratios calculated as if no expenses were waived.
**Represents the total amount of commissions paid in portfolio equity
transactions divided by the total number of shares purchased and sold by the
Fund for which commissions were charged.
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 60
Financial Horizons Investment Trust Selected data for each share
of capital stock outstanding
Financial Highlights
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND CASH RESERVE FUND
YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31,
1996 1995 1994 1993 1992 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE --
BEGINNING OF PERIOD $ 11.07 $ 10.12 $ 11.31 $ 11.00 $ 10.81 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income 0.68 0.68 0.58 0.63 0.89 0.05 0.05 0.03 0.02 0.03
Net realized gain (loss) and
unrealized appreciation
(depreciation) (0.15) 0.95 (1.10) 0.50 0.25 -- -- -- -- --
----------------------------------------------- ------------------------------------------
Total from investment operations 0.53 1.63 (0.52) 1.13 1.14 0.05 0.05 0.03 0.02 0.03
Dividends from net investment
income (0.68) (0.68) (0.58) (0.66) (0.89) (0.05) (0.05) (0.03) (0.02) (0.03)
Distributions from net realized
gain from investment
transactions -- -- (0.09) (0.16) (0.06) -- -- -- -- --
----------------------------------------------- ------------------------------------------
Total distributions (0.68) (0.68) (0.67) (0.82) (0.95) (0.05) (0.05) (0.03) (0.02) (0.03)
----------------------------------------------- ------------------------------------------
Net increase (decrease) in net
asset value (0.15) 0.95 (1.19) 0.31 0.19 -- -- -- -- --
----------------------------------------------- ------------------------------------------
NET ASSET VALUE --
END OF PERIOD $ 10.92 $ 11.07 $ 10.12 $ 11.31 $ 11.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=============================================== ==========================================
Total Return 5.01% 16.68% (4.75%) 10.76% 10.93% 4.97% 5.41% 3.08% 2.05% 3.07%
Net Assets, End of Period (000) $58,737 $69,190 $70,218 $84,602 $64,249 $4,243 $4,150 $3,950 $2,788 $2,538
Ratio of expenses to average
net assets 0.84% 0.89% 1.28% 1.00% 0.65% 0.65% 0.65% 0.84% 1.17% 1.06%
Ratio of expenses to average
net assets* 1.59% 1.58% 1.58% 1.61% 1.66% 0.65% 0.65% 1.06% 2.20% 1.82%
Ratio of net investment income
to average net assets 6.26% 6.42% 5.42% 5.55% 8.18% 4.86% 5.29% 3.14% 2.04% 3.02%
Ratio of net investment income
to average net assets* 5.51% 5.73% 5.12% 4.93% 7.17% 4.86% 5.29% 2.92% 0.79% 2.28%
Portfolio turnover 21.04% 140.55% 174.40% 143.63% 87.67% -- -- -- -- --
<FN>
- ----------
* Ratios calculated as if no expenses were waived.
</TABLE>
See accompanying notes to financial statements.
16
<PAGE> 61
Financial Horizons Investment Trust October 31, 1996
Notes to Financial Statements
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.
(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.
(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 the pro rata
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, 1996, the Municipal and Government Bond Funds had net
capital loss carry forwards of $950,935, and $1,301,670, respectively,
available to offset future capital gains, which will expire in 6 to 7
years.
(d) Dividends to Shareholders
-------------------------------
(1) Growth Fund:
Dividends are paid semi-annually and 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, they are reported as distributions of paid-in-capital. These
reclassifications have no effect upon the net asset value of the
respective funds.
Accordingly, as of October 31, 1996, undistributed net investment income
and paid-in-capital have been adjusted by the following amount:
<TABLE>
<CAPTION>
UNDISTRIBUTED NET
INVESTMENT INCOME PAID-IN-CAPITAL
<S> <C> <C>
Municipal Bond Fund ($5,752) $5,752
</TABLE>
(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.
17
<PAGE> 62
Financial Horizons Investment Trust October 31, 1996
Notes to Financial Statements (continued)
(f) Use of Estimates
----------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
2. TRANSACTIONS WITH AFFILIATES
As investment manager for the funds, Nationwide Advisory Services, Inc. (NAS),
(formerly Nationwide Financial Services, Inc.), an affiliated company, earns an
annual fee of .65% based on the average daily net assets of the Growth Fund,
Municipal Bond Fund and Government Bond Fund and .40% of the average daily net
asset of the Cash Reserve Fund.
NAS 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 Growth Fund, the Municipal Bond Fund, and the Government Bond
Fund at an annual rate of .75%. During the year ended October 31, 1996, NAS
waived distribution fees for the Growth, Municipal Bond, and Government Bond
Funds totaling $20,790, $58,074, and $476,865, respectively, representing .25%,
.25%, and .75% or $.046, $.027, and $.081 per average share outstanding.
NAS also receives fees as principal underwriter from contingent deferred sales
charges (CDSC) ranging from 5% to 1%, 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, 1996, NAS received
fees of $12,788, $118,289, $36,566, and $1,593 on the Growth, Municipal Bond,
Government Bond, and Cash Reserve Funds, respectively. Additionally, the
Government Bond Fund retained fees (CDSC) of $171,119 pursuant to NASD
guidelines which limit sales charges payable to underwriters. These fees are
reported as "other income."
A subsidiary of NAS (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 $6,000,000. Borrowings under
this arrangement bear interest at the Federal Funds rate plus .50%. No
compensating balances are required, and there were no outstanding balances at
October 31, 1996.
4. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding U.S. Government and
short-term securities) and purchases and sales of U.S. Government Obligations
for the year ended October 31, 1996, are summarized as follows:
<TABLE>
<CAPTION>
SECURITIES U.S. GOVT. OBLIGATIONS
PURCHASES SALES PURCHASES SALES
<S> <C> <C> <C> <C>
Growth Fund $1,314,505 $ 1,398,557 $ 2,199,583 $ 2,067,484
Municipal Bond Fund 8,809,010 14,273,766 -- --
Government Bond Fund 204,679 4,044,039 12,570,795 24,928,887
Cash Reserve Fund -- -- 702,640 690,000
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis.
Included in net unrealized appreciation at October 31, 1996, are the following
components:
<TABLE>
<CAPTION>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
GAINS LOSSES APPRECIATION
<S> <C> <C> <C>
Growth Fund $2,861,926 $(173,732) $2,688,194
Municipal Bond Fund 354,539 (195,846) 158,693
Government Bond Fund 1,470,150 (211,888) 1,258,262
</TABLE>
5. FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For corporate shareholders, 42.9% of the income dividends and short-term capital
gain distributions paid by the Growth Fund in the fiscal year ended October 31,
1996 qualifies for the corporate dividend received deduction.
All of the distributions paid by the Municipal Bond Fund during the fiscal year
are exempt from federal income taxes.
18
<PAGE> 63
Financial Horizons Investment Trust
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, 1996, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the 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, 1996, 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, 1996, 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
December 13, 1996
Columbus, Ohio
19
<PAGE> 64
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 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
26
<PAGE> 65
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.
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.
27
<PAGE> 66
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: Moody's applies numerical modifiers 1,2, and 3 in each generic rating
classification from Aa to B. The modifier 1 indicates that the issue ranks in
the higher end of its generic rating catagory; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic catagory.
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.
28
<PAGE> 67
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.
29
<PAGE> 68
PART C. OTHER INFORMATION
FEBRUARY 28, 1997
FINANCIAL HORIZONS INVESTMENT TRUST
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements: Cash Reserve Fund
Government Bond Fund
Municipal Bond Fund
Growth Fund
(1) Financial statements and schedules included in Prospectus (Part A):
Financial Highlights for the years ended October 31, 1996, 1995, 1994,
1993, 1992, 1991, 1990 and the period December 19, 1988, commencement
of operations, through October 31, 1989
(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, 1996, 1995,
1994, 1993, 1992, 1991, 1990 and the period December 19, 1988,
commencement of operations, through October 31, 1989
Statements of Investments at October 31, 1996
Statements of Assets and Liabilities at October 31, 1996
Statements of operations for the year ended October 31, 1996
Statements of Changes in Net Assets for each of the years in the
two-year period ended October 31, 1996
Notes to Financial Statements
Independent Auditors' Report relating to the above financial
statements and the Financial Highlights
(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.
<PAGE> 69
(6) Underwriting Agreement previously filed with registration statement
and herein incorporated by reference.
(7) Not applicable.
(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 27, 1996, 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.
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, 1996
<S> <C>
Cash Reserve Fund 53
Government Bond Fund 2481
Municipal Bond Fund 669
Growth Fund 724
</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
<PAGE> 70
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.
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
<PAGE> 71
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 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.
<PAGE> 72
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Nationwide Advisory Services, Inc. (NAS), 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
Joseph J. Gasper
Director and President and Chief Operating Officer
--------------------------------------------------
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Nationwide Financial Services, Inc.
Director and Chairman of the Board
----------------------------------
Nationwide Investment Services Corporation
West Coast Life Insurance Company
Director and Vice Chairman
--------------------------
Nationwide Financial Institution Distributors Agency, Inc.
NEA Valuebuilder Investor Services, Inc.
Public Employees Benefit Services Corporation
Director and President
----------------------
Nationwide Advisory Services, Inc.
Nationwide Investors Services, Inc.
Director
--------
Affliate Agency, Inc.
Affliate 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
GatesMcdonald Health Plus, Inc.
Gates, McDonald & Company
Landmark Financial Services of New York, Inc.
Nationwide Indemnity Company
Trustee and President
---------------------
Nationwide Insurance GolfCharities, Inc.
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
Nationwide Financial Services, Inc.
Nationwide Properties, Ltd.
Nationwide Realty investors, Ltd.
NEA Valuebuilder Investor Services, Inc.
<PAGE> 73
NEA Valuebuilder Investor Services of Arizona, Inc.
Nationwide Financial Institution Distributors Agency, Inc.
Colonial County Mutual Insurance Company
Colonial Insurance Company of California
Farmland Mutual Insurance Company
Lone Star General Agency, Inc.
Nationwide Agribusiness Insurance Company
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
Nationwide Investment Services Corporation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines 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
---------------------------------------------------
American Marine Underwriters, Inc.
Employers Life Insurance Company of Wausau
Pension Associates of Wausau, Inc.
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
Wausau International Underwriters
Executive Vice President-Law and Corporate
------------------------------------------
Services and Director
---------------------
Nationwide Advisory 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 Holding Company
Neckura Insurance Company
Neckura Life Insurance Company
Secretary
---------
The Beak and Wire Corporation
Affiliate Agency, Inc.
<PAGE> 74
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, Inc.
Vice Chairman, Secretary and Director
-------------------------------------
Gates, McDonald & Company
GatesMcDonald Health Plus, Inc.
Chairman of the Board, Secretary and Director
---------------------------------------------
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York, Inc.
Secretary and Director
----------------------
Nationwide Agency, Inc.
Nationwide HMO, Inc.
Nationwide Management Systems, Inc.
Director
--------
Leben Direkt Insurance Company
MRM Investments, Inc.
NWE, Inc.
Clerk
-----
NEA Valuebuilder Services Insurance Agency, Inc.
Dimon R. McFerson
Chairman and Chief Executive Officer-Nationwide
------------------------------------------------
Insurance Enterprise and Director
---------------------------------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, 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
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
National Casualty Company
Nationwide Financial Services, Inc.
Nationwide Investment Services Corporation
California Cash Management Company
Nationwide Cash Management Company
Employers Insurance of Wausau A Mutual Company
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines Insurance Company
Wausau Service Corporation
Wausau General Insurance Company
Wausau Business Insurance Company
Wausau Underwriters Insurance Company
Chairman of the Board, Chairman and Chief Executive Officer-
------------------------------------------------------------
<PAGE> 75
Nationwide Insurance Enterprise and Director
--------------------------------------------
American Marine Underwriters, Inc.
Gates, McDonald & Company
GatesMcDonald Health Plus, Inc.
Nationwide Investor Services, Inc.
Public Employees Benefit Services Corporation
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 Advisory Services, Inc.
Nationwide Financial Institution Distributors Agency, Inc.
Wausau International Underwriters
Wausau Preferred Health Insurance Company
Chairman and Director
---------------------
NEA Investor Services of Arizona, Inc.
Chairman and Chief Executive Officer and Director
-------------------------------------------------
Nationwide Indemnity Company
Trustee, Chairman
-----------------
Financial Horizons Investment Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Separate Account Trust
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
NEA Valuebuilder Investor Services, Inc.
Colonial County Mutual Insurance Company
Director
--------
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York
Chairman of the Board, Chairman and Chief
-----------------------------------------
Executive Officer-Nationwide Insurance Enterprise
-------------------------------------------------
and Trustee
-----------
Nationwide Insurance Enterprise Foundation.
Member-Board of Managers, Chairman of the Board, Chairman
---------------------------------------------------------
and Chief Executive Officer-Nationwide Insurance Enterprise
-----------------------------------------------------------
Nationwide Properties, Ltd.
Nationwide Realty investors, Ltd.
Robert A. Oakley
Executive Vice President-Chief Financial Officer
------------------------------------------------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
<PAGE> 76
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.
Countrywide Services Corporation
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.
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Financial Services, Inc.
Nationwide Investment Services Corporation
Nationwide Investor Services, Inc.
Nationwide Insurance Enterprise Foundation
Nationwide Properties, Ltd.
Nationwide Realty Investors, Ltd.
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Arizona, Inc.
Colonial County Mutual Insurance Company
Pension Associates of Wausau, Inc.
Public Employees Benefit Services Corporation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines 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, Chairman of the Board
-------------------------------
Neckura Insurance Company
Neckura Life Insurance Company
Executive Vice President-Chief Financial Officer and
-----------------------------------------------------
Director
--------
California Cash Management Company
Nationwide Cash Management Company
Nationwide Community Urban Redevelopment Corporation
MRM Investments, Inc.
Nationwide Advisory Services, Inc.
Nationwide Indemnity Company
Executive Vice President
------------------------
Companies Agency Insurance Services of California
Wausau International Underwriters
<PAGE> 77
Director, Vice Chairman
-----------------------
Leben Direkt Insurance Company
Neckura General Insurance Company
Auto Direkt Insurance Company
Director
--------
NWE, Inc.
Wausau Insurance Company (U.K.) Limited
Neckura Holding Company
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
GatesMcDonald Health Plus, Inc.
Lone Star General Agency, Inc.
National Casualty Company
Nationwide Financial Services, Inc.
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Advisory Services, Inc.
Nationwide Insurance Enterprise Foundation
Nationwide Investment Services Corporation
Pension Associates of Wausau
Public Employees Benefit Services Corporation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines 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
Member-Board of Managers, Vice Chairman
---------------------------------------
Nationwide Properties, Ltd.
Nationwide Realty Investors, Ltd.
Director and President
----------------------
California Cash Management Company
MRM Investments, Inc.
Nationwide Cash Management Company.
Nationwide Community Urban Redevelopment Corporation
NWE, Inc.
Director, Executive Vice President - Chief Investment
----------------------------------------------------------
Officer
-------
Nationwide Indemnity Company
James F. Laird, Jr.
Vice President and General Manager
----------------------------------
<PAGE> 78
Nationwide Advisory 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
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 Advisory 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 Advisory Services, Inc.
Nationwide Ivestors 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
Nationwide Agribusiness Insurance Company
Nationwide Financial Services, Inc.
Nationwide Financial Institution Distributors Agency, Inc.
Financial Horizons Distributors Agency of Alabama, Inc.
<PAGE> 79
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
GatesMcDonald Health Plus, Inc.
Landmark Financial Services of New York, Inc.
National Casualty Company
Nationwide Cash Management Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Investment Services 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 Insurance Enterprise Foundation
Nationwide Indemnity Company
Nationwide Properties, Ltd.
Nationwide Realty Investors, Ltd.
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Alabama, Inc.
NEA Valuebulider Investor Services of Arizona, 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
NEA Valuebuilder Services Insurance Agency, Inc.
MRM Investments, Inc.
NWE, Inc.
PEBSCO of Massachusetts Insurance Agency, Inc.
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
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines Insurance Company
Wausau International Underwriters
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
---------
<PAGE> 80
Nationwide Advisory 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. Pollina Secretary
---------
Nationwide Advisory 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 Property and Casualty, Nationwide Life and
Nationwide Life and Annuity Insurance Companies
Nationwide Indemnity Company
Vice President
--------------
Nationwide Advisory Services, Inc.
Director
--------
Nationwide Investors Services, Inc.
Neckura Holding Company
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> 81
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 and Service, GMBH
Leben Direkt Insurance Company
Neckura General Insurance Company
Neckura Holding Company
Neckura Insurance Company
Neckura Life Insurance Company
John E. Fisher Str. 1
61440 Oberursel/Ts.
Germany
Public Employees Benefit Services Corporation
Two Nationwide Plaza
Columbus, Ohio 43215
Nationwide Advisory Services, Inc.
Nationwide Investors Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43216
ITEM 29. PRINCIPAL UNDERWRITERS
(a) See Item 28 above.
<PAGE> 82
(B) NATIONWIDE ADVISORY SERVICES, INC.
DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH
NAME BUSINESS ADDRESS TITLE REGISTRANT
<S> <C> <C> <C>
Joseph J. Gasper One Nationwide Plaza President N/A
Columbus, OH 43215
Gordon E. McCutchan One Nationwide Plaza Executive VP - N/A
Columbus, OH 43215 Law and Corporate
Services
Dimon R. McFerson One Nationwide Plaza Chairman and Chairman of the
Columbus, OH 43215 Chief Executive Board of Trustees
Officer-Nationwide
Insurance Enterprise
Robert A. Oakley One Nationwide Plaza Executive Vice Presi- N/A
Columbus, OH 43215 dent, Chief Financial
Officer
Robert J. Woodward, Jr. One Nationwide Plaza Executive Vice Presi- N/A
Columbus, OH 43215 dent-Chief Investment
Officer
</TABLE>
OFFICERS
<TABLE>
<CAPTION>
POSITION WITH
NAME BUSINESS ADDRESS TITLE REGISTRANT
<S> <C> <C> <C>
Joseph J. Gasper One Nationwide Plaza President N/A
Columbus, OH 43215
Dimon R. McFerson One Nationwide Plaza Chairman and Chief Chairman of the
Columbus, OH 43215 Executive Officer - Board of Trustees
Nationwide Insurance
Enterprise
Robert J. Woodward, Jr. One Nationwide Plaza Executive Vice Presi- N/A
Columbus, OH 43215 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 Treasurer
Columbus, OH 43215
Harry A. Schermer One Nationwide Plaza Vice President- Assistant Treasurer
Columbus, OH 43215 Investments
James F. Laird, Jr. One Nationwide Plaza Vice President and Assistant Treasurer
Columbus, OH 43215 General Manager
William G. Goslee One Nationwide Plaza Treasurer Assistant
Columbus, OH 43215 Treasurer
</TABLE>
<PAGE> 83
<TABLE>
<S> <C> <C> <C>
Rae I. Pollina One Nationwide Plaza Secretary Secretary
Columbus, OH 43215
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
William G. Goslee
Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, OH 43215
ITEM 31. MANAGEMENT SERVICES
Not applicable.
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 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 payment by the registrantof 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 bysuch
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 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 in writing, stating that they
wish to communicate with the other shareholders with a view to obtaing
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 thererafter 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> 84
INDEPENDENT AUDITORS' CONSENT
To the Trustees
Financial Horizons Investment Trust
We consent to the use of our report dated December 13, 1996 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 28, 1997
<PAGE> 85
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., 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
DIMON R. MCFERSON Trustee and Chairman
Dimon R. McFerson 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
THOMAS J. KERR, IV Trustee
Thomas J. Kerr, IV
James F. Laird,Jr.
Attorney-in-Fact
February 28, 1997
</TABLE>
<PAGE> 86
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
DIMON R. MCFERSON Trustee and Chairman
Dimon R. McFerson 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
THOMAS J. KERR, IV Trustee
Thomas J. Kerr, IV
JAMES F. LAIRD,JR.
James F. Laird,Jr.
Attorney-in-Fact
February 28, 1997
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