<PAGE> 1
CARDINAL BALANCED FUND
SUPPLEMENT DATED SEPTEMBER 15, 1995,
TO PROSPECTUS DATED FEBRUARY 1, 1995
Capitalized terms used in this Supplement have the meaning assigned to them
in the Prospectus.
The following paragraph is added to the cover page of the Prospectus:
THE SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY ANY BANK, NOR ARE SUCH SHARES FEDERALLY
INSURED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL
AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
The Annual Fund Operation Expenses and the Example in the Fee Table on page
5 of the Prospectus are deleted and are replaced with the following:
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management Fees .75%
12b-1 Fees After Fee Waiver(1) 0
Other Expenses 1.07
----
Total Fund Operating Expenses
After Fee Waiver 1.82%
====
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period: $ 63 $ 100 $ 139 $249
</TABLE>
---------------
(1) The Ohio Company, as the Fund's distributor, has agreed with the Group to
waive all of its Rule 12b-1 fees until March 31, 1996. Absent such waiver,
Rule 12b-1 Fees and Total Fund Operating Expenses would be 0.25% and 2.07%,
respectively.
The following sentences are added at the end of the first paragraph under
the heading "Distribution Plan" on page 23 of the Prospectus:
The Ohio Company may from time to time waive all or a portion of the
fees payable to it pursuant to the Plan. Any such waiver will cause
the total return and yield of the Fund to be higher than they would
otherwise be absent such a waiver.
This Prospectus Supplement supersedes in its entirety the Prospectus
Supplement dated February 22, 1995.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT WITH THE PROSPECTUS
FOR FUTURE REFERENCE
<PAGE> 2
PROSPECTUS----------------------------------------------------------------------
[LOGO]
CARDINAL BALANCED FUND
Cardinal Balanced Fund (the "Fund") is a diversified investment fund of The
Cardinal Group (the "Group"), an open-end, management investment company. The
Trustees of the Group have divided the Fund's beneficial ownership into an
unlimited number of transferable units called shares (the "Shares").
The Fund seeks as its investment objectives current income and long-term growth
of both capital and income. There can be no assurance that the Fund's objectives
will be achieved.
--------------------------------------------------------------------------------
For further information regarding the Fund or for assistance
in opening an account or redeeming shares, please call:
In Columbus 464-5511 (opening accounts and further information)
From other Ohio locations (800) 282-9446 toll free
From outside Ohio (800) 848-7734 toll free
Inquiries may also be made by mail addressed
to the Fund at its principal office:
155 East Broad Street
Columbus, Ohio 43215
--------------------------------------------------------------------------------
The Prospectus relates only to Cardinal Balanced Fund, currently one of two
funds of the Group and one of six funds of the Cardinal family of funds.
Interested persons who wish to obtain copies of the prospectus of Cardinal
Aggressive Growth Fund, the other fund of the Group, or of The Cardinal Fund
Inc., Cardinal Government Obligations Fund, Cardinal Government Securities Trust
or Cardinal Tax Exempt Money Trust, the other members of the Cardinal family of
funds (collectively, with the Fund, the "Cardinal Funds"), should contact The
Ohio Company at the number above. Additional information about the Fund,
contained in a Statement Of Additional Information dated February 1, 1995, has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. Such Statement is available upon request without charge
from the Fund at the above address or by calling one of the phone numbers
provided above.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing in the Fund. This Prospectus
should be retained for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[LOGO]
The date of this Prospectus is February 1, 1995
--------------------------------------------------------------------------------
<PAGE> 3
--------------------------------------------------------------------------------
KEY FEATURES
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
PROFESSIONAL MANAGERS.......... The Fund's portfolio is fully managed by professional
portfolio managers. (See pages 22 and 23.)
DIVERSIFICATION................ The Fund's portfolio of securities represents an interest
in many companies and industries and therefore provides a
diversification of risk.
REDUCED SALES CHARGE........... An investor will pay a reduced sales charge for large
investments. (See page 15.)
LOW INITIAL INVESTMENT......... An investor can acquire shares of a balanced portfolio
with a smaller investment than would be needed to
purchase a similar portfolio directly.
RETIREMENT PROGRAMS............ The Fund is a permissible investment for qualified
retirement plans.
DIVIDEND REINVESTMENT.......... You may reinvest dividends, capital gains or both in
additional shares of the Fund at no charge. (See pages 5
and 17.)
ACH PROCESSING................. Investors may use Automated Clearing House ("ACH")
processing for subsequent purchases of shares,
redemptions, and/or distributions paid. (See page 19.)
</TABLE>
2
<PAGE> 4
--------------------------------------------------------------------------------
PROSPECTUS HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHARES OFFERED................. Units of beneficial interest without par value ("Shares")
of Cardinal Balanced Fund, a separate investment
portfolio (the "Fund") of The Cardinal Group, an Ohio
business trust (the "Group"). (See page 7.)
OFFERING PRICE & SALES
CHARGE....................... The public offering price is equal to net asset value per
share plus a sales charge equal to 4.50% of the public
offering price (4.71% of net amount invested) reduced on
investments of $100,000 or more. (See page 15.)
MINIMUM PURCHASE............... $1,000 minimum initial investment and $50 minimum subse-
quent investments. (See page 15.)
TYPE OF COMPANY................ The Fund is a diversified series of an open-end,
management investment company, organized as an Ohio
business trust. (See page 7.)
INVESTMENT OBJECTIVES.......... Current income and long-term growth of both capital and
income. (See page 8.)
INVESTMENT POLICIES............ Under normal market conditions, the Fund will invest in
common stocks, preferred stocks, fixed income securities
and securities convertible into common stocks. At least
25% of the value of the Fund's assets will be invested in
fixed income senior securities. (See pages 8 through 10.)
RISK FACTORS AND SPECIAL
CONSIDERATIONS............... An investment in a mutual fund such as the Fund involves
a certain amount of risk and may not be suitable for all
investors. Some investment policies of the Fund may
entail certain risks. (See "WHAT ARE THE INVESTMENT
OBJECTIVES AND POLICIES OF THE FUND? -- Risk Factors and
Investment Techniques" on page 10.)
INVESTMENT ADVISER AND
MANAGER...................... The Fund has entered into an Investment Advisory and
Management Agreement with Cardinal Management Corp., a
wholly-owned subsidiary of The Ohio Company (the "Ad-
viser"). The Adviser also serves as investment adviser to
Cardinal Aggressive Growth Fund, another fund of the
Group. (See page 22.)
</TABLE>
3
<PAGE> 5
<TABLE>
<S> <C>
MANAGEMENT FEE................. The annual rate is .75% of the average daily net assets
of the Fund. (See pages 22 and 23.)
DISTRIBUTIONS.................. Dividends and distributions are made with such frequency
as the Fund shall determine. (See page 17.)
REDEMPTION..................... At net asset value per share without charge, except that
broker-dealers may charge a service fee for assisting in
a redemption. (See page 18.)
TRANSFER AGENT................. Cardinal Management Corp. (The "Transfer Agent"). (See
page 23.)
</TABLE>
4
<PAGE> 6
--------------------------------------------------------------------------------
FEE TABLE
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......................... 4.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price).......................... 0%
Deferred Sales Load
(as a percentage of original purchase price or redemption
proceeds, as applicable)...................................... 0%
Redemption Fees
(as a percentage of amount redeemed, if applicable).......... 0%
Exchange Fee................................................... $0
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees................................................ .75%
12b-1 Fees..................................................... .25
Other Expenses................................................. 1.07
--------
Total Fund Operating Expenses.................................. 2.07%
========
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period:................ $ 65 $107 $151 $274
</TABLE>
The purpose of the above table is to assist a potential purchaser of the Fund's
Shares in understanding the various costs and expenses that an investor in the
Fund will bear directly or indirectly. See "WHO MANAGES MY INVESTMENT IN THE
FUND?" for a more complete discussion of the shareholder transaction expenses
and annual operating expenses of the Fund. The example and expenses above
reflect current fees. THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.
5
<PAGE> 7
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The following Financial Highlights with respect to the fiscal year ended
September 30, 1994, and the period from June 24, 1993, through September 30,
1993, have been audited by KPMG Peat Marwick LLP, independent auditors, whose
report thereon, together with certain financial statements, are contained in the
Fund's Statement of Additional Information and which may be obtained by
shareholders and prospective investors.
FINANCIAL HIGHLIGHTS FOR EACH SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
PERIOD FROM
JUNE 24, 1993
(DATE OF
COMMENCEMENT OF
YEAR ENDED OPERATIONS) THROUGH
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993*
-------------------- --------------------
<S> <C> <C>
Net asset value, Beginning of period............... $ 10.13 $ 10.00
Income from investment operations:
Net investment income............................ 0.23 0.02
Net gains or losses on securities (both realized
and unrealized)............................... (0.20) 0.12
----------- -----------
Total from investment operations................. 0.03 0.14
----------- -----------
Less Distributions:
Dividends (from net investment income)........... (0.23) (0.01)
Distributions (from capital gains)............... (0.03) --
Returns of capital............................... -- --
----------- -----------
Total Distributions.............................. (0.26) (0.01)
----------- -----------
Net asset value, End of period..................... $ 9.90 $ 10.13
=========== ===========
Ratios/Supplemental Data:
Total Return....................................... 0.37% 1.40%**
Net assets, End of period (000) omitted.......... $ 13,973 $ 10,811
Ratio of expenses to average net assets.......... 2.07% 0.70%
Ratio of net investment income to average net
assets........................................ 2.44% 0.35%
Portfolio Turnover Rate.......................... 59.09% 60.67%
</TABLE>
---------------
* Commencement of operations.
** This total return figure reflects aggregate total return. Aggregate total
return is calculated similarly to average annual total return except that the
return figure is aggregated over the relevant period instead of annualized.
See notes to financial statements appearing in the Fund's Statement of
Additional Information.
Pursuant to a Revolving Credit Agreement between the Group, on behalf of the
Fund, and The Fifth Third Bank dated as of May 2, 1994 (the "Loan Agreement"),
the Fund may borrow money from The Fifth Third Bank in an amount not exceeding
the lesser of $2 million or 10% of the value of the Fund's total assets at the
time of borrowing. The table below sets forth certain information concerning the
Loan Agreement.
<TABLE>
<CAPTION>
AVERAGE NUMBER OF
AMOUNT OF DEBT AVERAGE AMOUNT OF FUND'S SHARES AVERAGE AMOUNT OF
YEAR ENDED OUTSTANDING AT END DEBT OUTSTANDING OUTSTANDING DURING DEBT PER SHARE
SEPTEMBER 30, OF PERIOD DURING THE PERIOD THE PERIOD DURING THE PERIOD
------------------ ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
1994 $0 $532 1,239,389 $0.0004292
</TABLE>
6
<PAGE> 8
--------------------------------------------------------------------------------
PERFORMANCE INFORMATION
--------------------------------------------------------------------------------
From time to time the Fund may advertise its average annual total return,
cumulative total return and/or yield. SUCH TOTAL RETURN FIGURES AND YIELD
FIGURES ARE BASED UPON HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE
FUTURE PERFORMANCE. The average annual total return advertised by the Fund
refers to the return generated by an investment in the Fund over certain
specified periods since the establishment of the Fund. The average annual total
return over a period equates the amount of an initial investment in the Fund to
the amount redeemable at the end of that period assuming that any dividends and
distributions earned by an investment in the Fund are immediately reinvested and
the maximum applicable sales charge (currently 4.5%) is deducted from the
initial investment at the time of investment. The cumulative return advertised
refers to the total return on a hypothetical investment over the relevant period
and equates the amount of an initial investment in the Fund to the amount
redeemable at the end of that period assuming that any dividends and
distributions are immediately reinvested and the maximum sales charge is
deducted from the initial investment. Yield will be computed by dividing the
Fund's net investment income per share earned during a recent one-month period
by the Fund's per share maximum offering price (reduced by any undeclared earned
income expected to be paid shortly as a dividend) on the last day of the period
and annualizing the result. If the sales charge were not deducted, the average
annual total return, cumulative total return and yield advertised would be
higher.
In addition, from time to time the Fund may include in its sales literature and
shareholder reports a quote of the current "distribution" rate for the Fund. A
distribution rate is simply a measure of the level of dividends distributed for
a specified period and is computed by dividing the total amount of dividends per
share paid by the Fund during the past 12 months by a current maximum offering
price. It differs from yield, which is a measure of the income actually earned
by the Fund's investments, and from total return, which is a measure of the
income actually earned by, plus the effect of any realized and unrealized
appreciation or depreciation of, such investments during a stated period. A
distribution rate is, therefore, not intended to be a complete measure of
performance. A distribution rate may sometimes be greater than yield since, for
instance, it may including short-term and possibly long-term gains (which may be
non-recurring), may not include the effect of amortization of bond premiums and
does not reflect unrealized gains or losses.
Investors may also judge the performance of the Fund by comparing or referencing
its performance to the performance of other mutual funds or mutual fund
portfolios with comparable investment objectives and policies through various
mutual fund or market indices such as those prepared by Dow Jones & Co., Inc.,
and Standard & Poor's Corporation, and to data prepared by Lipper Analytical
Services, Inc., Morningstar, Inc. and CDA Investment Technologies, Inc.
Comparisons may also be made to indices or data published in Money Magazine,
Forbes, Barron's, The Wall Street Journal, The New York Times, The Columbus
Dispatch, Business Week, U.S.A. Today and Consumer Reports. In addition to
performance information, general information about the Fund that appears in a
publication such as those mentioned above may be included in advertisements and
in reports to shareholders.
Further information about the performance of the Fund is contained in the Fund's
Annual Report to Shareholders which may be obtained without charge by contacting
the Fund at the telephone numbers set forth on the cover page of this
Prospectus.
--------------------------------------------------------------------------------
WHAT IS THE FUND?
--------------------------------------------------------------------------------
The Fund is one separate diversified investment fund of the Group, which was
organized on March 23, 1993, as an Ohio business trust. The Group is registered
and operates as an open-end management investment company as defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
7
<PAGE> 9
--------------------------------------------------------------------------------
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE FUND?
--------------------------------------------------------------------------------
IN GENERAL
The investment objectives of the Fund are to seek current income and long-term
growth of both capital and income. The Fund intends to invest based on combined
considerations of risk, income and capital enhancement. The investment
objectives of the Fund are fundamental policies and as such may not be changed
without a vote of the holders of a majority of the outstanding Shares of the
Fund (as defined below under "WHAT ARE MY RIGHTS AS A SHAREHOLDER?"). There can
be no assurance that the investment objectives of the Fund will be achieved.
Under normal market conditions the Fund will invest in common stocks, preferred
stocks, fixed income securities and securities convertible into common stocks
(i.e., warrants, rights, convertible preferred stock, fixed rate preferred stock
and convertible fixed-income securities). At least 25% of the value of the
Fund's assets will be invested in fixed income senior securities. For purposes
of compliance with such 25% limitation, only that portion of any convertible
senior security attributable to its fixed income characteristics will be used.
By investing primarily in common stocks the Fund will pursue its objectives of
long-term growth of both capital and income. However, the Fund, through its
fixed-income and convertible securities as well as the dividend attributes of
certain of its common and preferred stock holdings will place considerable
emphasis on generating current income.
The common and preferred stocks and securities convertible into common stocks
will be selected if the Adviser believes that such securities can contribute to
the Fund's objectives of providing current income and growth in income and/or
long-term growth of capital. The Fund will invest in the common and preferred
stocks and securities convertible into common stocks of domestic issuers and
foreign issuers (subject to the limitations described below), with market
capitalizations of not less than $25 million and which are traded either in
established over-the-counter markets or on national exchanges.
The Adviser will select convertible securities primarily upon its evaluation
that the underlying common stocks meet the criteria for selection of common
stocks as described above. The Fund may invest up to 10% of its net assets in
non-investment grade convertible debt securities rated no lower than B by an
appropriate nationally recognized statistical rating organization (an "NRSRO")
or in unrated securities which are deemed by the Adviser to be of comparable
quality. Non-investment grade securities are commonly referred to as high yield
or high risk securities. High yield, high risk securities are generally riskier
than higher quality securities and are subject to more credit risk, including
risk of default, and volatility than higher quality securities. In addition,
such securities have less liquidity and experience more price fluctuation than
higher quality securities.
Convertible debt securities which are rated B by Moody's Investor Services
("Moody's") generally lack characteristics of a desirable investment, since the
assurance of interest and principal payments or maintenance of other terms of
the contract over any long period of time may be small. Debt rated B by Standard
& Poor's Corporation ("S&P") is regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such debt will likely have
some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. In the event that a
convertible debt security's rating falls below a "B" by the appropriate NRSROs,
the Adviser will reevaluate the security in order to determine whether to sell
or convert, if possible, such security. In such an event, however, the Fund
would not be required to liquidate such security if it would suffer a loss on
the sale of such security.
The Fund's fixed income senior securities consist of bonds, debentures, notes,
zero-coupon securities, mortgage-related securities, obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities,
certificates of deposit, time deposits, high quality commercial paper and
bankers' acceptances. The Fund may also invest in repurchase agreements.
8
<PAGE> 10
The Fund expects to invest in a variety of bills, notes and bonds issued by the
U.S. Treasury, differing in their interest rates, maturities, and times of
issuance, as well as "stripped" U.S. Treasury obligations such as Treasury
Receipts issued by the U.S. Treasury representing either future interest or
principal payments, and other obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities. Stripped securities are issued
at a discount to their "face value" and may exhibit greater price volatility
than ordinary debt securities because of the manner in which their principal and
interest are returned to investors. Certain of such U.S. Government obligations
may have variable or floating rates of interest, whose value on the adjustment
of its interest rate can reasonably be expected to approximate its par value.
However, in the event the interest rate of such security is tied to an index or
interest rate that may from time to time lag behind other market interest rates,
there is the risk that such security's market value, upon adjustment of its
interest rate, will not approximate its par value. Obligations of certain
agencies and instrumentalities of the U.S. Government, such as the Government
National Mortgage Association and the Export-Import Bank of the United States,
are supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal National Mortgage Association, are supported by the right
of the issuer to borrow from the Treasury; others, such as those of the Student
Loan Marketing Association, are supported by the discretionary authority of the
U.S. Government to purchase the agency's obligations; still others, such as
those of the Federal Farm Credit Banks or the Federal Home Loan Mortgage
Corporation, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored agencies or instrumentalities if it is not
obligated to do so by law. The Fund will invest in the obligations of such
agencies or instrumentalities only when the Adviser believes that the credit
risk with respect thereto is minimal.
The Fund also expects to invest in bonds, notes and debentures of U.S. corporate
issuers. Such obligations, in the case of debentures, will represent unsecured
promises to pay, in the case of notes and bonds, may be secured by mortgages on
real property or security interests in personal property and will in most cases
differ in their interest rates, maturities and times of issuance.
The Fund will invest only in corporate fixed income senior and municipal
securities which are rated at the time of purchase within the four highest
rating groups assigned by an appropriate NRSRO (which are considered to be
investment grade) or, if unrated, which the Adviser deems present attractive
opportunities and are of comparable quality. The Fund will invest in municipal
securities only when, in the opinion of the Adviser, such securities' rate of
return is better than or equivalent to that of other taxable debt obligations.
For a description of the rating symbols of the NRSROs, see the Appendix to the
Statement of Additional Information. For a discussion of debt securities rated
within the fourth highest rating group assigned by an NRSRO, see "Risk Factors
and Investment Techniques -- General" below.
Under normal market conditions, the Fund may hold up to 10% of the value of its
total assets in short-term obligations (with maturities of 12 months or less)
consisting of domestic commercial paper, bankers' acceptances, certificates of
deposit and time deposits of U.S. banks and repurchase agreements. The Fund may
also invest in securities of other investment companies, as further described
below, and in income participation loans.
The Fund may invest in obligations of the Export-Import Bank of the United
States, in U.S. dollar denominated international securities for which the
primary trading market is in the United States ("Yankee Securities"), or for
which the primary trading market is abroad ("Eurodollar Securities"), and in
Canadian Bonds and bonds issued by institutions organized for a specific
purpose, such as the World Bank and the European Economic Community, by two or
more sovereign governments ("Supranational Agency Bonds").
The Fund may also invest in mortgage-related securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities or by nongovernmental
entities which are rated, at the time of purchase, within the four highest bond
rating categories assigned by an appropriate NRSRO, or, if unrated, which the
Adviser deems present attractive opportunities and are of comparable quality.
Under normal market conditions, the Fund's investment in mortgage-related
securities will not exceed 25% of the value of its
9
<PAGE> 11
total assets. Such mortgage-related securities have mortgage obligations backing
such securities, including among others, conventional thirty year fixed rate
mortgage obligations, graduated payment mortgage obligations, fifteen year
mortgage obligations and adjustable rate mortgage obligations. All of these
mortgage obligations can be used to create pass-through securities. A
pass-through security is created when mortgage obligations are pooled together
and undivided interests in the pool or pools are sold. The cash flow from the
mortgage obligations is passed through to the holders of the securities in the
form of periodic payments of interest, principal and prepayments (net of a
service fee). Prepayments occur when the holder of an individual mortgage
obligation prepays the remaining principal before the mortgage obligation's
scheduled maturity date. As a result of the pass-through of prepayments of
principal on the underlying securities, mortgage-backed securities are often
subject to more rapid prepayment of principal than their stated maturity would
indicate. Because the prepayment characteristics of the underlying mortgage
obligations vary, it is not possible to predict accurately the realized yield or
average life of a particular issue of pass-through certificates. Prepayment
rates are important because of their effect on the yield and price of the
securities. Accelerated prepayments have an adverse impact on yields for pass-
throughs purchased at a premium (i.e., a price in excess of principal amount)
and may involve additional risk of loss of principal because the premium may not
have been fully amortized at the time the obligations are repaid. The opposite
is true for pass-throughs purchased at a discount. The Fund may purchase
mortgage-related securities at a premium or a discount. Reinvestment of
principal payments may occur at higher or lower rates than the original yield on
such securities. Due to the prepayment feature and the need to reinvest payments
and prepayments of principal at current rates, mortgage-related securities can
be less effective than typical bonds of similar maturities at maintaining yields
during periods of declining interest rates.
Also included among the mortgage-related securities that the Fund may purchase
are collateralized mortgage obligations ("CMOS") and real estate mortgage
investment conduits ("REMICs"). CMOs may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by the Government National Mortgage
Association, the Federal Home Loan Mortgage Corporation or the Federal National
Mortgage Association, and their income streams. Certain CMOs and REMICs are
issued by private issuers. Such securities may be eligible for purchase by the
Fund if (1) the issuer has obtained an exemptive order from the Securities and
Exchange Commission regarding purchases by investment companies of equity
interests of other investment companies or (2) such purchase is within the
limitations imposed by Section 12 of the 1940 Act.
The Fund may also invest in asset-backed securities such as Certificates of
Automobile Receivables ("CARS") and Certificates of Amortized Revolving Debts
("CARDS"), each of which must be rated at the time of purchase within the four
highest rating groups assigned by Moody's or S&P. For a description of the
fourth highest rating group, see "Risk Factors and Investment Techniques" below.
The amount invested in stocks, bonds and short-term obligations may be varied
from time to time, depending upon the Adviser's assessment of business, economic
and market conditions, including any potential advantage of price shifts between
the stock market and the bond market. The Fund reserves the right to hold
short-term securities in whatever proportion deemed desirable for temporary
defensive periods during adverse market conditions as determined by the Adviser.
However, to the extent that the Fund is so invested, its investment objectives
may not be achieved during that time.
RISK FACTORS AND INVESTMENT TECHNIQUES
GENERAL. Like any investment program, an investment in the Fund entails certain
risks. As a fund investing primarily in common stocks, the Fund is subject to
stock market risk, i.e., the possibility that stock prices in general will
decline over short or even extended periods.
Since the Fund also invests in bonds, investors in the Fund are also exposed to
bond market risk, i.e., fluctuations in the market value of bonds. Bond prices
are influenced primarily by changes in the level of interest rates. When
interest rates rise, the prices of bonds generally fall; conversely, when
interest rates fall, bond prices generally rise. While bonds normally fluctuate
less in price than stock, there have been in the
10
<PAGE> 12
past extended periods of cyclical increases in interest rates that have caused
significant declines in bond prices.
Current income by its nature always contributes positively to total return.
Therefore, the current income expected to be generated from an investment in the
Fund will counterbalance to some degree the adverse price fluctuations of the
securities held by the Fund. The effective result should therefore be lower
total return volatility for the Fund than a fund which does not provide such
current income.
The Fund may invest in certain variable or floating rate government securities
and, as described below, in put and call options and futures. Such instruments
are considered to be derivatives. A derivative is generally defined as an
instrument whose value is based upon, or derived from, some underlying index,
reference rate (e.g., interest rates), security, commodity or other asset. The
Fund will not invest more than 10% of its total assets in such derivatives at
any one time.
REPURCHASE AGREEMENTS. Securities held by the Fund may be subject to repurchase
agreements. Under the terms of the repurchase agreement, the Fund would acquire
securities from a financial institution such as a well-established securities
dealer or a bank which is a member of the Federal Reserve System which the
Adviser deems creditworthy under guidelines approved by the Group's Board of
Trustees. At the time of purchase, the bank or securities dealer agrees to
repurchase the underlying securities from the Fund at a specified time and
price. The resale price reflects the purchase price plus an agreed upon market
rate of interest which is unrelated to the coupon rate or maturity of the
underlying security. Under the 1940 Act, repurchase agreements are considered to
be loans by the Fund. The Fund will only enter into a repurchase agreement where
(i) the underlying securities are of the type which the Fund's investment
policies would allow it to purchase directly, (ii) the market value of the
underlying security, including interest accrued, will at all times be equal to
or exceed the value of the repurchase agreement, and (iii) payment for the
underlying securities is made only upon physical delivery or evidence of
book-entry transfer to the account of the Fund's custodian or a bank acting as
agent. The Adviser will be responsible for continuously monitoring such
requirements. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying securities and losses, including: (a) possible decline in the value
of the underlying securities during the period while the Fund seeks to enforce
its rights thereto; (b) possible subnormal levels of income and lack of access
to income during this period; and (c) expenses of enforcing its rights.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS. The Fund may also purchase
securities on a when-issued or delayed-delivery basis. The Fund will engage in
when-issued and delayed-delivery transactions only for the purpose of acquiring
portfolio securities consistent with its investment objectives and policies, not
for investment leverage, although such transactions represent a form of
leveraging. When-issued securities are securities purchased for delivery beyond
the normal settlement date at a stated price and yield and thereby involve a
risk that the yield obtained in the transaction will be less than those
available in the market when delivery takes place. The Fund will not pay for
such securities or start earning interest on them until they are received. When
the Fund agrees to purchase such securities, its custodian will set aside cash
or liquid securities equal to the amount of the commitment in a separate
account. Securities purchased on a when-issued basis are recorded as an asset
and are subject to changes in the value based upon changes in the general level
of interest rates. In when-issued and delayed-delivery transactions, the Fund
relies on the seller to complete the transaction; the seller's failure to do so
may cause the Fund to miss a price or yield considered to be advantageous.
The Fund's commitments to purchase when-issued securities will not exceed 25% of
the value of its total assets absent unusual market conditions. In the event
that its commitments to purchase when-issued securities ever exceed 25% of the
value of its assets, the Fund's liquidity and the ability of the investment
adviser to manage it might be adversely affected.
MEDIUM-GRADE SECURITIES. As described above, the Fund may invest in debt
securities within the fourth highest rating group assigned by an NRSRO (e.g.,
BBB or Baa by S&P and Moody's, respectively) and comparable unrated securities.
These types of debt securities are considered by Moody's to have some
11
<PAGE> 13
speculative characteristics, and are more vulnerable to changes in economic
conditions, higher interest rates or adverse issuer-specific developments which
are more likely to lead to a weaker capacity to make principal and interest
payments than comparable higher rated debt securities.
Should subsequent events cause the rating of a debt security purchased by the
Fund to fall below BBB or Baa, as the case may be, the Adviser will consider
such an event in determining whether the Fund should continue to hold that
security. In no event, however, would the Fund be required to liquidate any such
portfolio security where the Fund would suffer a loss on the sale of such
security.
FOREIGN SECURITIES. The Fund may also invest up to 25% of its net assets in
foreign securities through the purchase of sponsored and unsponsored American
Depositary Receipts ("ADRs"). Unsponsored ADRs may be less liquid than sponsored
ADRs, and there may be less information available regarding the underlying
foreign issuer for unsponsored ADRs. Investment in foreign securities is subject
to special investment risks that differ in some respects from those related to
investments in securities of U.S. domestic issuers. Such risks include trade
balances and imbalances, and related economic policies, future adverse
political, economic and social developments, the possible imposition of
withholding taxes on interest income, possible seizure, nationalization, or
expropriation of foreign investments or deposits, less stringent disclosure
requirements, the possible establishment of exchange controls or taxation at the
source, or the adoption of other foreign governmental restrictions. In addition,
foreign issuers may be subject to different accounting, auditing, reporting, and
recordkeeping standards than those applicable to U.S. domestic issuers, and
securities markets in foreign countries may be structured differently from and
may not be as liquid as the U.S. markets. The Fund will acquire securities
issued by foreign issuers only when the Adviser believes that the risks
associated with such investments are minimal.
RESTRICTED SECURITIES. Securities in which the Fund may invest include
securities issued by corporations without registration under the Securities Act
of 1933, as amended (the "1933 Act"), in reliance on the exemption from such
registration afforded by Section 3(a)(3) thereof, and securities issued in
reliance on the so-called "private placement" exemption from registration which
is afforded by Section 4(2) of the 1933 Act ("Section 4(2) securities"). Section
4(2) securities are restricted as to disposition under the Federal securities
laws, and generally are sold to institutional investors such as the Fund who
agree that they are purchasing the securities for investment and not with a view
to public distribution. Any resale must also generally be made in an exempt
transaction. Section 4(2) securities are normally resold to other institutional
investors through or with the assistance of the issuer or investment dealers who
make a market in such Section 4(2) securities, thus providing some liquidity.
Pursuant to procedures adopted by the Board of Trustees of the Group, the
Adviser may determine Section 4(2) securities to be liquid if such securities
are eligible for resale under Rule 144A under the 1933 Act and are readily
saleable. Rule 144A permits the Fund to purchase securities which have been
privately placed and resell such securities to certain qualified institutional
buyers, such as the Fund, without restriction. For purposes of determining
whether a Rule 144A security is readily saleable, and therefore liquid, the
Adviser must consider, among other things, the frequency of trades and quotes
for the security, the number of dealers willing to purchase or sell the security
and the number of potential purchasers, dealer undertakings to make a market in
the security, and the nature of the security and marketplace trades of such
security. However, investing in Rule 144A securities, even if such securities
are initially determined to be liquid, could have the effect of increasing the
level of the Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities.
PUT AND CALL OPTIONS. Subject to its investment policies and for purposes of
hedging against market risks related to its portfolio securities, the Fund may
purchase put and call options on securities. Purchasing options is a specialized
investment technique that entails a substantial risk of a complete loss of the
amounts paid as premiums to writers of options. The Fund will purchase put
options only on securities in which the Fund may otherwise invest. The Fund may
also engage in writing call options from time to time as the Adviser deems
appropriate. The Fund will write only covered call options (options on
securities owned by the Fund). In order to close out a call option it has
written, the Fund will enter into a "closing
12
<PAGE> 14
purchase transaction" -- the purchase of a call option on the same security with
the same exercise price and expiration date as the call option which the Fund
previously has written. When a portfolio security subject to a call option is
sold, the Fund will effect a closing purchase transaction to close out any
existing call option on that security. If the Fund is unable to effect a closing
purchase transaction, it will not be able to sell the underlying security until
the option expires or the Fund delivers the underlying security upon exercise.
Under normal market conditions, it is not expected that the underlying value of
portfolio securities subject to such options would exceed 25% of the net assets
of the Fund.
The Fund, as part of its option transactions, also may purchase index put and
call options and write index options. As with options on individual securities,
the Fund will write only covered index call options. Through the writing or
purchase of index options the Fund can achieve many of the same objectives as
through the use of options on individual securities. Options on securities
indices are similar to options on a security except that, rather than the right
to take or make delivery of a security at a specified price, an option on a
securities index gives the holder the right to receive, upon exercise of the
option, an amount of cash if the closing level of the securities index upon
which the option is based is greater than, in the case of a call, or less than,
in the case of a put, the exercise price of the option.
Price movements in securities which the Fund owns or intends to purchase
probably will not correlate perfectly with movements in the level of an index
and, therefore, the Fund bears the risk of a loss on an index option that is not
completely offset by movements in the price of such securities. Because index
options are settled in cash, a call writer cannot determine the amount of its
settlement obligations in advance and, unlike call writing on specific
securities, cannot provide in advance for, or cover, its potential settlement
obligations by acquiring and holding the underlying securities. The Fund may be
required to segregate assets or provide an initial margin to cover index options
that would require it to pay cash upon exercise.
FUTURES CONTRACTS. The Fund may also enter into contracts for the future
delivery of securities and futures contracts based on a specific security, class
of securities or an index, purchase or sell options on any such futures
contracts and engage in related closing transactions. A futures contract on a
securities index is an agreement obligating either party to pay, and entitling
the other party to receive, while the contract is outstanding, cash payments
based on the level of a specified securities index.
The Fund may engage in such futures contracts in an effort to hedge against
market risks. For example, when interest rates are expected to rise or market
values of portfolio securities are expected to fall, the Fund can seek through
the sale of futures contracts to offset a decline in the value of its portfolio
securities. When interest rates are expected to fall or market values are
expected to rise, the Fund, through the purchase of such contracts, can attempt
to secure better rates or prices for the Fund than might later be available in
the market when it effects anticipated purchases.
The acquisition of put and call options on futures contracts will, respectively,
give the Fund the right (but not the obligation), for a specified price, to sell
or to purchase the underlying futures contract, upon exercise of the option, at
any time during the option period.
Aggregate initial margin deposits for futures contracts, and premiums paid for
related options, may not exceed five percent of the Fund's total assets, and the
value of securities that are the subject of such futures and options (both for
receipt and delivery) may not exceed one-third of the market value of the Fund's
total assets. Futures transactions will be limited to the extent necessary to
maintain the Fund's qualification as a regulated investment company.
Futures transactions involve brokerage costs and require the Fund to segregate
assets to cover contracts that would require it to purchase securities. The Fund
may lose the expected benefit of futures transactions if interest rates or
securities prices move in an unanticipated manner. Such unanticipated changes
may also result in poorer overall performance than if the Fund had not entered
into any futures transactions. In addition, the value of the Fund's futures
positions may not prove to be perfectly or even highly correlated with the value
of its portfolio securities, limiting the Fund's ability to hedge effectively
against interest rate
13
<PAGE> 15
and/or market risk and giving rise to additional risks. There is no assurance of
liquidity in the secondary market for purposes of closing out futures positions.
INVESTMENT COMPANY SECURITIES. The Fund may also invest up to 10% of the value
of its total assets in the securities of other investment companies subject to
the limitations set forth in the 1940 Act. The Fund intends to invest in the
securities of other investment companies which, in the opinion of the Adviser,
will assist the Fund in achieving its objectives and in money market mutual
funds for purposes of short-term cash management. The Fund's investment in such
other investment companies may result in the duplication of fees and expenses,
particularly investment advisory fees. For a further discussion of the
limitations on the Fund's investments in other investment companies, see
"INVESTMENT OBJECTIVES AND POLICIES -- Additional Information on Portfolio
Instruments -- Securities of Other Investment Companies" in the Group's
Statement of Additional Information.
INVESTMENT RESTRICTIONS
The Fund is subject to a number of investment restrictions that may be changed
only by a vote of a majority of the outstanding Shares of the Fund (as defined
below under "WHAT ARE MY RIGHTS AS A SHAREHOLDER?").
The Fund will not:
1. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities,
if, immediately after such purchase, more than 5% of the value of the
Fund's total assets would be invested in such issuer, or the Fund would
hold more than 10% of the outstanding voting securities of the issuer,
except that up to 25% of the value of the Fund's total assets may be
invested without regard to such limitations. There is no limit to the
percentage of assets that may be invested in U.S. Treasury bills, notes,
or other obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities.
2. Purchase any securities which would cause more than 25% of the value of
the Fund's total assets at the time of purchase to be invested in
securities of one or more issuers conducting their principal business
activities in the same industry, provided that: (a) there is no
limitation with respect to obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities and repurchase
agreements secured by obligations of the U.S. Government or its agencies
or instrumentalities; (b) wholly owned finance companies will be
considered to be in the industries of their parents if their activities
are primarily related to financing the activities of their parents; and
(c) utilities will be divided according to their services. For example,
gas, gas transmission, electric and gas, electric, and telephone will
each be considered a separate industry.
3. Borrow money or issue senior securities, except that the Fund may borrow
from banks or enter into reverse repurchase agreements or dollar roll
agreements for temporary purposes in amounts up to 10% of the value of
its total assets at the time of such borrowing and except as permitted
pursuant to an exemption from the 1940 Act. The Fund will not purchase
securities while its borrowings (including reverse repurchase agreements
and dollar roll agreements) exceed 5% of its total assets.
4. Make loans, except that the Fund may purchase or hold debt instruments
and lend portfolio securities in accordance with its investment
objectives and policies, make time deposits with financial institutions
and enter into repurchase agreements.
The following additional investment restriction may be changed without the vote
of a majority of the outstanding Shares of the Fund.
The Fund may not:
1. Purchase or otherwise acquire any securities, if as a result, more than
15% of the Fund's net assets would be invested in securities that are
illiquid.
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<PAGE> 16
The Group, however, has represented to the Wisconsin Securities Bureau, on
behalf of the Fund, that so long as the Shares of the Fund are registered for
sale in the State of Wisconsin, the Fund will limit its investment in certain
securities which may not be sold to the public without being registered under
the Securities Act of 1933, as amended, to not more than 5% of its total assets.
For more information regarding such representations, see "INVESTMENT OBJECTIVES
AND POLICIES -- Investment Restrictions" in the Statement of Additional
Information.
--------------------------------------------------------------------------------
HOW DO I PURCHASE SHARES OF THE FUND?
--------------------------------------------------------------------------------
GENERAL
The Fund's Shares may be purchased at the public offering price, as described
below under "Public Offering Price," through The Ohio Company, principal
underwriter of the Fund's Shares, at its address and telephone number set forth
on the cover page of this Prospectus, and through other broker-dealers who are
members of the National Association of Securities Dealers, Inc. and have sales
agreements with The Ohio Company.
Subsequent purchases of Shares of the Fund may be made by ACH processing as
described under "WHAT OTHER SHAREHOLDER PROGRAMS ARE PROVIDED? -- ACH
Processing" below. In addition, if an Account Information Form has previously
been received by The Ohio Company, Shares may also be purchased by wiring funds
to the Fund's custodian. Prior to wiring any such funds and in order to ensure
that wire orders are invested properly, you must call The Ohio Company to obtain
the necessary instructions and information.
The minimum initial investment for individuals is $1,000, except the initial
investment for an applicant investing by means of the Automatic Investment Plan,
as described below, must be at least $50. Subsequent investments must be in
amounts of at least $50.
The Group reserves the right to reject any order for the purchase of Shares in
whole or in part. You will receive a confirmation of each new transaction in
your account, which will also show the total number of Shares owned by you and
the number of Shares being held in safekeeping by the Transfer Agent for your
account. Certificates representing Shares will not be issued.
PUBLIC OFFERING PRICE
The public offering price of Shares of the Fund is the net asset value per share
(see "HOW IS NET ASSET VALUE CALCULATED?") next determined after receipt by The
Ohio Company, its agents or broker-dealers with whom it has an agreement, of an
order and payment, plus a sales charge as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE
AS A OF OFFERING PRICE
PERCENTAGE ------------------------
AMOUNT OF OF THE NET SALES DEALER'S
SINGLE TRANSACTION AMOUNT INVESTED CHARGE CONCESSION
--------------------------------------------------- --------------- ---------- ----------
<S> <C> <C> <C>
Less than $100,000................................. 4.71% 4.50% 4.00%
$100,000 but less than $250,000.................... 3.63 3.50 3.00
$250,000 but less than $500,000.................... 2.56 2.50 2.00
$500,000 but less than $1,000,000.................. 1.52 1.50 1.00
$1,000,000 or more................................. 0.50 0.50 0.40
</TABLE>
(See "HOW IS NET ASSET VALUE CALCULATED?" for a description of the computation
of net asset value per share.)
15
<PAGE> 17
The above charges on investments of $100,000 or more are applicable to purchases
made at one time by an individual, or an individual, his spouse and their
children not of legal age, or a trustee, guardian or other like fiduciary of
certain single trust estates or certain single fiduciary accounts.
No sales charge is imposed on purchases of Shares by officers, trustees, and
employees of the Group, or by full-time employees of The Ohio Company or the
Adviser, who have been such for at least 90 days or by qualified retirement
plans for such persons.
AUTOMATIC INVESTMENT PLAN
The Fund has made arrangements to enable you to make automatic monthly or
quarterly investments, in the minimum amount of $50 per transaction, from your
checking account. Assuming the cooperation of your financial institution, your
checking account therein will be debited to purchase Shares of the Fund on the
periodic basis you select. Confirmation of your purchase of Fund Shares will be
provided by the Transfer Agent. The debit of your checking account will be
reflected in the checking account statement you receive from your financial
institution. Please see the appropriate form in the back of this Prospectus.
--------------------------------------------------------------------------------
MAY MY TAX SHELTERED RETIREMENT PLAN INVEST IN THE FUND?
--------------------------------------------------------------------------------
Shares of the Fund qualify for purchase in connection with the following tax
sheltered retirement plans:
-- Individual retirement account ("IRAs") plans.
-- Simplified Employee Pension Plans.
-- 403(b)(7) Custodial Plans sponsored by certain tax-exempt
employers.
-- Pension, profit-sharing and 401(k) plans qualifying under Section
401(a) of the Internal Revenue Code.
The Ohio Company offers a wide range of services to assist employers in reducing
the cost and complexity of utilizing any of the above retirement programs. These
services include:
Consulting services
Prototype plan documents
Low-cost recordkeeping and IRS reporting
On-going employee educational programs
Investment consultation
Trust services
Please contact your local office of The Ohio Company or call 1-800-237-2169
(inside Ohio) or 1-800-237-2170 (outside Ohio) to obtain complete information
regarding The Ohio Company's retirement plan services.
--------------------------------------------------------------------------------
HOW MAY I QUALIFY FOR QUANTITY DISCOUNTS?
--------------------------------------------------------------------------------
LETTER OF INTENTION
If you (including your spouse and children not of legal age) intend to purchase
$100,000 or more of Shares of the Fund and of any other Cardinal Fund sold with
a sales charge (a "Cardinal Load Fund") during any 13-month period you may sign
a letter of intention to that effect obtained from The Ohio Company and pay the
reduced sales charge applicable to the total amount of shares to be so
purchased. The 13-month period during which the Letter of Intention is in effect
will begin on the date of the earliest purchase to be included. In addition,
trustees, guardians or other like fiduciaries of single trust estates or certain
single fiduciary accounts may take advantage of the quantity discounts pursuant
to a letter of intention.
16
<PAGE> 18
A letter of intention is not a binding obligation upon you to purchase the full
amount indicated. Shares purchased with the first 5% of such amount will be held
in escrow (while remaining registered in your name) to secure payment of the
higher sales charge applicable to the shares actually purchased. If the full
amount indicated is not purchased, such escrowed shares will be involuntarily
redeemed to pay the additional sales charge, if necessary. Dividends on escrowed
shares, whether paid in cash or reinvested in additional shares of the
applicable Cardinal Load Fund, are not subject to escrow. The escrowed shares
will not be available for disposal by you until all purchases pursuant to the
letter of intention have been made or the higher sales charge has been paid.
When the full amount indicated has been purchased, the escrow will be released.
To the extent that you purchase more than the dollar amount indicated on the
Letter of Intention and qualify for a further reduced sales charge, the sales
charge will be adjusted for the entire amount purchased at the end of the
13-month period. The difference in sales charge will be, as you instruct, either
delivered to you in cash or used to purchase additional shares of the Cardinal
Load Fund designated by you subject to the rate of sales charge applicable to
the actual amount of the aggregate purchases. This program, however, may be
modified or eliminated at any time or from time to time by the Group without
notice.
CONCURRENT PURCHASES
For purposes of qualifying for a lower sales charge, you have the privilege of
combining "concurrent purchases" of Shares of the Fund and of one or more of the
other Cardinal Load Funds. For example, if you concurrently purchase Shares of
the Fund at the total public offering price of $50,000 and shares of another
Cardinal Load Fund at the total public offering price of $50,000, the sales
charge would be that applicable to a $100,000 purchase as shown in the table
above. "Concurrent purchases," as described above, shall include the combined
purchases of you, your spouse and your children not of legal age. To receive the
applicable public offering price pursuant to this privilege, you must, at the
time of purchase, give The Ohio Company sufficient information to permit
confirmation of qualification. This privilege, however, may be modified or
eliminated at any time or from time to time by the Group without notice thereof.
RIGHTS OF ACCUMULATION
After your initial purchase of Shares you may also be eligible to pay a reduced
sales charge for your subsequent purchases of Shares where the total public
offering price of Shares then being purchased plus the then aggregate current
net asset value of Shares of the Fund and of shares of any Cardinal Load Fund
held in your account equals $100,000 or more. You would be able to purchase
Shares at the public offering price applicable to the total of (a) the total
public offering price of the Shares of the Fund then being purchased plus (b)
the then current net asset value of Shares of the Fund and of shares of any
other Cardinal Load Fund held in your account. For purposes of determining the
aggregate current net asset value of shares held in your account, you may
include shares then owned by your spouse and children not of legal age.
You may obtain additional information about the foregoing special purchase
method from The Ohio Company. You are responsible for notifying The Ohio Company
at the time of purchase when purchases may be accumulated to take advantage of
the reduced sales charge. This program, however, may be modified or eliminated
at any time or from time to time by the Group without notice thereof.
--------------------------------------------------------------------------------
WHAT DISTRIBUTIONS WILL I RECEIVE?
--------------------------------------------------------------------------------
Dividends and distributions shall generally be paid quarterly (long term capital
gains normally will be distributed only once annually) and in such amounts as
the Fund from time to time shall determine and from net income and net realized
capital gains of the Fund. It is the policy of the Fund to distribute, at least
annually, substantially all of its net investment income and to distribute
annually any net realized capital gains. Unless a shareholder specifically
requests otherwise in writing to the Transfer Agent, dividends and distributions
will be made only in additional full and fractional Shares of the Fund and not
in cash.
17
<PAGE> 19
Dividends are paid in cash not later than seven days after a shareholder's
complete redemption of his Shares in the Fund.
Shareholders may also elect to receive dividends and distributions in cash by
using ACH processing as described under "WHAT OTHER SHAREHOLDER PROGRAMS ARE
PROVIDED? -- ACH Processing" below.
--------------------------------------------------------------------------------
HOW MAY I REDEEM MY SHARES?
--------------------------------------------------------------------------------
Investors may redeem Shares of the Fund at the net asset value per share next
determined following the receipt by the Fund's transfer agent, Cardinal
Management Corp. (the "Transfer Agent"), 215 East Capital Street, Columbus, Ohio
43215, of written or telephonic notice to redeem, as described more fully below.
See "HOW IS NET ASSET VALUE CALCULATED?", below, for a description of when net
asset value is determined.
As requested, The Ohio Company, on behalf of a shareholder, will forward the
foregoing notice to redeem to the Transfer Agent without charge. Other
broker-dealers may assist a shareholder in redeeming his Shares and may charge a
fee for such services.
The Group will make payment for redeemed Shares as promptly as practicable but
in no event more than seven days after receipt by the Transfer Agent of the
foregoing notice. The Group reserves the right to delay payment for the
redemption of Shares where such Shares were purchased with other than
immediately available funds, but only until the purchase payment has cleared
(which may take fifteen or more days from the date the purchase payment is
received by the Fund). The purchase of Fund Shares by wire transfer of federal
funds would avoid any such delay.
The Group intends to pay cash for all Shares redeemed, but, under abnormal
conditions which make payment in cash unwise, the Group may make payment wholly
or partly in portfolio securities at their then market value equal to the
redemption price. In such cases, an investor may incur brokerage costs in
converting such securities to cash.
The Group may suspend the right of redemption or may delay payment during any
period the determination of net asset value is suspended. See "HOW IS NET ASSET
VALUE CALCULATED?".
Due to the high cost of maintaining accounts, the Group reserves the right to
redeem, at net asset value, involuntarily Shares in any account at the then
current net asset value if at any time redemptions (but not as a result of a
decrease in the market price of such Shares or the deduction of any sales
charge) have reduced a shareholder's total investment in the Fund to a net asset
value below $500. A shareholder will be notified in writing that the value of
Fund Shares in the account is less than $500 and allowed 30 days to increase his
investment in the Fund to $500 before the redemption is processed. Proceeds of
redemptions so processed, including dividends declared to the date of
redemption, will be promptly paid to the shareholder.
REDEMPTION BY MAIL
Shareholders may elect to redeem Shares of the Fund by submitting a written
request therefor to the Transfer Agent at 215 East Capital Street, Columbus,
Ohio 43215. The Transfer Agent will request a signature guarantee by an eligible
guarantor institution as described below. However, a signature guarantee will
not be required if (i) the redemption check is payable to the Shareholder(s) of
record, and (2) the redemption check is mailed to the Shareholder(s) at the
address of record, provided, however, that the address of record has not been
changed within the preceding 15 days. For purposes of this policy, an "eligible
guarantor institution" shall include banks, brokers, dealers, credit unions,
securities exchanges and associations, clearing agencies and savings
associations as those terms are defined in the Securities Exchange Act of 1934.
The Transfer Agent reserves the right to reject any signature guarantee if (1)
it has
18
<PAGE> 20
reason to believe that the signature is not genuine or (2) it has reason to
believe that the transaction would otherwise be improper.
REDEMPTION BY TELEPHONE
Shareholders may elect to redeem Shares of the Fund by calling the Group at the
telephone numbers set forth on the front of this Prospectus. The Shareholder may
direct that the redemption proceeds be mailed to the address of record.
Neither the Group, the Fund nor its service providers will be liable for any
loss, damages, expense or cost arising out of any telephone redemption effected
in accordance with the Group's telephone redemption procedures, acting upon
instructions reasonably believed to be genuine. The Group will employ procedures
designed to provide reasonable assurances that instructions by telephone are
genuine; if these procedures are not followed, the Group, the Fund or its
service providers may be liable for any losses due to unauthorized or fraudulent
instructions. These procedures may include recording all phone conversations,
sending confirmations to Shareholders within 72 hours of the telephone
transaction, and verification of account name and account number or tax
identification number. If, due to temporary adverse conditions, investors are
unable to effect telephone transactions, Shareholders may also redeem their
Shares by mail as described above.
AUTOMATIC WITHDRAWAL
Shareholders may elect to have the proceeds from redemptions of Shares
transmitted to an authorized bank account at a Federal Reserve member bank
through ACH processing as described under "WHAT OTHER SHAREHOLDER PROGRAMS ARE
PROVIDED? -- ACH Processing" below.
SYSTEMATIC WITHDRAWAL PLAN
If you are the owner of Shares of the Fund having a total value of $10,000 or
more at the current net asset value, you may elect to redeem your Shares monthly
or quarterly in amounts of $50 or more, pursuant to the Fund's Systematic
Withdrawal Plan. Please contact The Ohio Company for the appropriate form.
--------------------------------------------------------------------------------
WHAT OTHER SHAREHOLDER PROGRAMS ARE PROVIDED?
--------------------------------------------------------------------------------
ACH PROCESSING
The Fund offers ACH privileges. Investors may use ACH processing to make
subsequent purchases, redeem Shares and/or electronically transfer distributions
paid on Fund Shares, in addition to the other methods described in this
Prospectus. ACH provides a method by which funds may be automatically
transferred to or from an authorized bank account at a Federal Reserve member
bank that is an ACH member. Please contact your representative if you are
interested in ACH processing.
EXCHANGE PRIVILEGE
Shareholders of the Fund may, provided the amount to be exchanged meets the
applicable minimum investment requirements and the exchange is made in states
where it is legally authorized, exchange Shares of the Fund for shares of:
Cardinal Aggressive Growth Fund,
an equity fund seeking appreciation of capital
(upon the payment of the applicable sales charge);
The Cardinal Fund Inc.,
an equity fund seeking long-term growth
of capital and income (upon the payment of
19
<PAGE> 21
the applicable sales charge);
Cardinal Government Obligations Fund,
a fund investing in securities issued
or guaranteed by the U.S. Government
(upon the payment of the appropriate
sales charge);
Cardinal Government Securities Trust,
a U.S. Government securities money market fund
(without payment of any sales charge); or
Cardinal Tax Exempt Money Trust,
a tax-free money market fund
(without payment of any sales charge).
Notwithstanding the foregoing and subject to the limitations contained in the
following paragraph, (i) exchanges by holders of Fund Shares, for whom the sales
charge has been waived, for shares of a Cardinal Load Fund may be completed
without the payment of a sales charge, and (ii) exchanges of Fund Shares by all
other shareholders for shares of a Cardinal Load Fund may be completed upon the
payment of a sales charge equal to the difference, if any, between the sales
charge payable upon purchase of shares of such Cardinal Load Fund and the sales
charge previously paid on the Fund Shares to be exchanged.
The foregoing exchange privilege may be exercised only once in each calendar
quarter and must be made by written or telephonic authorization. A shareholder
should notify The Ohio Company of his desire to make an exchange, and The Ohio
Company will furnish, as necessary, a prospectus and an application form to open
the account. The Transfer Agent will require that any written authorization of
an exchange include a signature guarantee as described above under "HOW MAY I
REDEEM MY SHARES? -- Redemption by mail." However, a signature guarantee will
not be required if the exchange is requested to be made within the same account
or into an existing account of the shareholder held in the same name or names
and in the same capacity as the account from which the exchange is to be made.
Shareholders may also authorize an exchange of shares of the Fund by telephone.
Neither the Group, the Fund nor any of its service providers will be liable of
any loss, damages, expense or cost arising out of any telephone exchange
authorization to the extent and subject to the requirements set forth under "HOW
MAY I REDEEM BY SHARES? -- Redemption by telephone" above.
For tax purposes, an exchange is treated as a redemption and a new purchase.
However, a shareholder may not include any sales charge on Shares of the Fund
for purposes of calculating the gain or loss realized upon an exchange of those
Shares within 90 days of their purchase.
The Fund may, at any time, modify or terminate the foregoing exchange privilege.
The Fund, however, will give shareholders of the Fund 60 days' advance written
notice of any such modification or termination.
--------------------------------------------------------------------------------
HOW IS NET ASSET VALUE CALCULATED?
--------------------------------------------------------------------------------
The net asset value of the Fund is determined once daily as of 4:00 P.M.,
Columbus, Ohio time, on each Business Day. A "Business Day" is a day on which
the New York Stock Exchange is open for business and any other day (other than a
day on which no Shares of the Fund are tendered for redemption and no order to
purchase any Shares of the Fund is received) during which there is a sufficient
degree of trading in the Fund's portfolio securities that the net asset value
might be materially affected by changes in the value of the portfolio
securities. The net asset value per share of the Fund is computed by dividing
the sum of the value of the Fund's portfolio securities plus any cash and other
assets (including interest and dividends accrued but not received) minus all
liabilities (including estimated accrued expenses) by the total number of Shares
then outstanding.
The net asset value per share will fluctuate as the value of the investment
portfolio of the Fund changes.
20
<PAGE> 22
Portfolio securities which are traded on United States stock exchanges are
valued at the last sale price on such an exchange as of the time of valuation on
the day the securities are being valued. Securities traded in the
over-the-counter market are valued at either the mean between the bid and ask
prices or the last sale price as one or the other may be quoted by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") as of
the time of valuation on the day the securities are being valued. The Group uses
one or more pricing services to provide such market quotations. Securities and
other assets for which market quotations are not readily available are valued at
fair value as determined in good faith by or under the direction of the Board of
Trustees of the Group.
Determination of the net asset value may be suspended at times when (a) trading
on the New York Stock Exchange is restricted by applicable rules and regulations
of the Securities and Exchange Commission, (b) the New York Stock Exchange is
closed for other than customary weekend and holiday closings, (c) an emergency
exists as a result of which disposal by the Group of portfolio securities owned
by the Fund or valuation of net assets of the Fund is not reasonably
practicable, or (d) the Securities and Exchange Commission has by order
permitted such suspension.
--------------------------------------------------------------------------------
DOES THE FUND PAY FEDERAL INCOME TAX?
--------------------------------------------------------------------------------
Each of the funds of the Group, including the Fund, is treated as a separate
entity for federal income tax purposes and intends to qualify as a "regulated
investment company" under the Code for so long as such qualification is in the
best interest of that fund's shareholders. Qualification as a regulated
investment company under the Code requires, among other things, that the
regulated investment company distribute to its shareholders at least 90% of its
investment company taxable income. The Fund contemplates declaring as dividends
100% of the Fund's investment company taxable income (before deduction of
dividends paid).
A non-deductible 4% excise tax is imposed on regulated investment companies that
do not distribute in each calendar year (regardless of whether they otherwise
have a non-calendar taxable year) an amount equal to 98% of their ordinary
income for the calendar year plus 98% of their capital gain net income for the
one-year period ending on October 31 of such calendar year. The balance of such
income must be distributed during the next calendar year. If distributions
during a calendar year were less than the required amount, the Fund would be
subject to a nondeductible excise tax equal to 4% of the deficiency.
--------------------------------------------------------------------------------
WHAT ABOUT MY TAXES?
--------------------------------------------------------------------------------
It is expected that the Fund will distribute annually to shareholders all or
substantially all of the Fund's net ordinary income and net realized capital
gains and that such distributed net ordinary income and distributed net realized
capital gains will be taxable income to shareholders for federal income tax
purposes, even if paid in additional Shares of the Fund and not in cash. The
dividends-received deduction for corporations will apply to the aggregate of
such ordinary income distributions in the same proportion as the aggregate
dividends eligible for the dividends received deduction, if any, received by the
Fund bear to its gross income.
Distribution by the Fund of the excess of net long-term capital gain over net
short-term capital loss is taxable to shareholders as long-term capital gain in
the year in which it is received, regardless of how long the shareholder has
held the Shares. Such distributions are not eligible for the dividends-received
deduction.
If the net asset value of a Share is reduced below the shareholder's cost of
that Share by the distribution of income or gain realized on the sale of
securities, the distribution is a return of invested principal, although taxable
as described above.
Prior to purchasing Shares, the impact of dividends or capital gains
distributions which are expected to be declared or have been declared, but have
not been paid, should be carefully considered. Any such
21
<PAGE> 23
dividends or capital gains distributions paid shortly after a purchase of Shares
prior to the record date will have the effect of reducing the per share net
asset value of the Shares by the amount of the dividends or distributions. All
or a portion of such dividends or distributions, although in effect a return of
capital, is subject to tax.
Foreign taxes may be imposed on the Fund by foreign countries with respect to
its income from foreign securities. Since less than 50% in value of the Fund's
total assets at the end of its fiscal year are expected to be invested in stock
or securities of foreign corporations, the Fund will not be entitled under the
Code to pass through to its Shareholders their pro rata share of the foreign
taxes paid by the Fund. These taxes will be taken as a deduction by the Fund.
The foregoing is intended only as a brief summary of some of the important tax
considerations generally affecting the Fund and its shareholders. Potential
investors in the Fund are urged to consult their tax advisers concerning the
application of federal, state and local taxes as such laws and regulations
affect their own tax situation.
The Transfer Agent will inform shareholders at least annually of the amount and
nature of such income and capital gains.
--------------------------------------------------------------------------------
WHO MANAGES MY INVESTMENT IN THE FUND?
--------------------------------------------------------------------------------
Except where shareholder action is required by law, all of the authority of the
Group is exercised under the direction of the Group's Trustees, who are elected
by the shareholders of the Group's funds and who are empowered to elect officers
and contract with and provide for the compensation of agents, consultants and
other professionals to assist and advise in its day-to-day operations. The Group
will be managed in accordance with its Declaration of Trust and the laws of Ohio
governing business trusts.
The Trustees of the Group receive fees and are reimbursed for their expenses in
connection with each meeting of the Board of Trustees they attend. However, no
officer or employee of the Adviser or The Ohio Company receives any compensation
from the Group for acting as a Trustee of the Group. The officers of the Group
receive no compensation directly from the Group for performing the duties of
their offices. The Adviser receives fees from the Group for acting as investment
adviser and manager and as dividend and transfer agent. The Ohio Company
receives no fees under its Distribution Agreement with the Group but may retain
all or a portion of the sales charge and may receive fees under the Distribution
Plan discussed below.
INVESTMENT ADVISER
Cardinal Management Corp. (the "Adviser"), 155 East Broad Street, Columbus, Ohio
43215, a wholly owned subsidiary of The Ohio Company, is the investment adviser
and manager of the Fund. The Adviser is also the investment adviser and manager
of Cardinal Aggressive Growth Fund, another fund of the Group ("CAGF"), and of
Cardinal Government Securities Trust ("CGST"), Cardinal Tax Exempt Money Trust
("CTEMT") and Cardinal Government Obligations Fund ("CGOF"), each of which is a
separate diversified management investment company.
The Ohio Company, an investment banking firm organized in 1925, is a member of
the New York Stock Exchange, the Midwest Stock Exchange, other regional stock
exchanges and the National Association of Securities Dealers, Inc. Descendants
of H.P. and R.F. Wolfe, deceased, and members of their families, through their
possession of a majority of a voting stock, may be considered controlling
persons of The Ohio Company. In addition to acting as the principal underwriter
for the Fund, CAGF, CGST, CTEMT and CGOF, The Ohio Company also serves as
investment adviser and principal underwriter for The Cardinal Fund Inc.
In its capacity as investment adviser, and subject to the ultimate authority of
the Group's Board of Trustees, the Adviser, in accordance with its investment
objectives and policies manages the Fund, makes decisions with respect to and
places orders for all purchases and sales of its portfolio securities. Since the
Fund's
22
<PAGE> 24
inception, Barry G. McMahon has been primarily responsible for the day-to-day
management of the Fund's portfolio. Mr. McMahon has been a portfolio manager
with the Adviser since 1992. Prior thereto, Mr. McMahon was a portfolio manager
with Columbus Mutual Life Insurance Company. In addition, pursuant to the
Investment Advisory Agreement, the Adviser generally assists in all aspects of
the Fund's administration and operation.
For the services provided and expenses assumed pursuant to its investment
advisory agreement with the Group with respect to the Fund, the Adviser receives
a fee from the Fund, computed daily and paid monthly at the annual rate of .75%
of average net daily assets of the Fund. While in the opinion of the staff of
the Securities and Exchange Commission such fee is higher than the advisory fee
paid by most mutual funds, the Group's Board of Trustees believes them to be
comparable to advisory fees paid by many funds having similar objectives and
policies.
DIVIDEND AND TRANSFER AGENT AND FUND ACCOUNTANT
The Group has entered into a Transfer Agency and Fund Accounting Agreement with
Cardinal Management Corp. (the "Transfer Agent"), 215 East Capital Street,
Columbus, Ohio 43215, pursuant to which the Transfer Agent has agreed to act as
the Fund's transfer agent, dividend disbursing agent and administrator of plans
of the Fund. In consideration of such services, the Fund has agreed to pay the
Transfer Agent an annual fee, paid monthly, equal to $18 per shareholder account
plus out-of-pocket expenses. In addition, the Transfer Agent provides certain
fund accounting services for the Fund. The Transfer Agent receives a fee from
the Fund for such services equal to a fee computed daily and paid periodically
at an annual rate of .03% of the Fund's average daily net assets.
DISTRIBUTOR
The Group has entered into a Distributor's Contract with The Ohio Company, 155
East Broad Street, Columbus, Ohio 43215, pursuant to which Shares of the Fund
will be offered continuously on a best efforts basis by The Ohio Company and
dealers selected by The Ohio Company. Walter R. Chambers is an officer and
trustee of the Group and an officer and director of The Ohio Company. Frank W.
Siegel is an officer and trustee of the Group and an officer of The Ohio
Company. John L. Schlater is a trustee of the Group and an officer of The Ohio
Company. Barry C. McMahon, Timothy C. McCombs, David C. Will and James M.
Schrack II are officers of both the Group and The Ohio Company.
EXPENSES
The Adviser bears all expenses in connection with the performance of its
services as investment adviser, manager, transfer agent and fund accountant
other than the cost of securities (including brokerage commissions, if any)
purchased for the Fund.
DISTRIBUTION PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Group has adopted a Distribution
and Shareholder Service Plan (the "Plan"), under which the Fund is authorized to
pay or reimburse The Ohio Company, as the Fund's principal underwriter, a
periodic amount calculated at an annual rate not to exceed twenty-five
one-hundredths of one percent (.25%) of the average daily net asset value of the
Fund. Such amount may be used by The Ohio Company to pay broker-dealers
(including The Ohio Company), banks and other institutions (a "Participating
Organization") for distribution and/or shareholder service assistance pursuant
to an agreement between The Ohio Company and the Participating Organization or
for distribution assistance and/or shareholder service provided by The Ohio
Company pursuant to an agreement between The Ohio Company and the Group. Under
the Plan, a Participating Organization may include The Ohio Company, its
subsidiaries, and its affiliates.
23
<PAGE> 25
As authorized by the Plan, The Ohio Company has entered into a Rule 12b-1
Agreement with the Group pursuant to which The Ohio Company has agreed to
provide certain shareholder services in connection with Shares of the Fund
purchased and held by The Ohio Company for the accounts of its customers and
Shares of the Fund purchased and held by customers of The Ohio Company directly,
including, but not limited to, answering Shareholder questions concerning the
Fund, providing information to Shareholders on their investments in the Fund and
providing such personnel and communication equipment as is necessary and
appropriate to accomplish such matters. In consideration of such services the
Group has agreed to pay The Ohio Company a monthly fee, computed at the annual
rate of .25% of the average aggregate net asset value of Shares held during the
period in customer accounts for which The Ohio Company has provided services
under this Agreement. Such fees paid by the Group will be borne solely by the
Fund. Such fee may exceed the actual costs incurred by The Ohio Company in
providing such services.
In addition, The Ohio Company may enter into, from time to time, other Rule
12b-1 Agreements with selected dealers pursuant to which such dealers will
provide certain Shareholder services such as those described above.
CUSTODIAN
The Group has appointed The Fifth Third Bank ("Fifth Third") 38 Fountain Square
Plaza, Cincinnati, Ohio 45263, as the Fund's custodian. In such capacity, Fifth
Third will hold or arrange for the holding of all portfolio securities and other
assets acquired and owned by the Fund.
--------------------------------------------------------------------------------
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
--------------------------------------------------------------------------------
The Group was organized as an Ohio business trust on March 23, 1993. The Group
currently consists of two funds, each having its own class of shares. The other
fund of the Group is Cardinal Aggressive Growth Fund. Each share represents an
equal proportional interest in a fund with other shares of the same fund, and is
entitled to such dividends and distributions out of the income earned on the
assets belonging to that fund as are declared at the discretion of the Trustees.
Shareholders are entitled to one vote for each dollar of value invested and a
proportionate fractional vote for any fraction of a dollar invested, and will
vote in the aggregate and not by series except as otherwise expressly required
by law. For example, shareholders of the Fund will vote in the aggregate with
other shareholders of the Group with respect to the election of trustees and
ratification of the selection of independent accountants. However, shareholders
of the Fund will vote as a fund, and not in the aggregate with other
shareholders of the Group, for purposes of approval of amendments to the Fund's
investment advisory agreement, the Plan or any of the Fund's fundamental
policies.
Overall responsibility for the management of the Fund is vested in the Board of
Trustees of the Group. See "WHO MANAGES MY INVESTMENT OF THE FUND?" Individual
Trustees are elected by the shareholders of the Group and may be removed by the
Board of Trustees or shareholders in accordance with the provisions of the
Declaration of Trust and By-Laws of the Group and Ohio law. See "ADDITIONAL
INFORMATION -- Miscellaneous" in the Statement of Additional Information for
further information.
An annual or special meeting of shareholders to conduct necessary business is
not required by the Declaration of Trust, the 1940 Act or other authority
except, under certain circumstances, to elect Trustees, amend the Declaration of
Trust, approve the investment advisory agreement and to satisfy certain other
requirements. To the extent that such a meeting is not required, the Group may
elect not to have an annual or special meeting.
The Group has represented to the Securities and Exchange Commission that the
Trustees will call a special meeting of shareholders for purposes of considering
the removal of one or more Trustees upon written request thereof from
shareholders holding not less than 10% of the outstanding votes of the Group and
that the Group will assist in communications with other shareholders as required
by Section 16(c) of the 1940
24
<PAGE> 26
Act. At such meeting, a quorum of shareholders (constituting a majority of votes
attributable to all outstanding shares of the Group), by majority vote, has the
power to remove one or more Trustees.
As used in this Prospectus and in the Statement of Additional Information,
"assets belonging to a fund" means the consideration received by the fund upon
the issuance or sale of shares in that fund, together with all income, earnings,
profits, and proceeds derived from the investment thereof, including any
proceeds from the sale, exchange, or liquidation of such investments, and any
funds or amounts derived from any reinvestment of such proceeds, and any general
assets of the Group not readily identified as belonging to a particular fund
that are allocated to the fund by the Group's Board of Trustees. The Board of
Trustees may allocate such general assets in any manner it deems fair and
equitable. Determinations by the Board of Trustees of the Group as to the timing
of the allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to the Fund are conclusive.
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding shares" of the Fund means the affirmative
vote, at a meeting of Shareholders duly called, of the lesser of (a) 67% or more
of the votes of shareholders of the Fund present at a meeting at which the
holders of more than 50% of the votes attributable to shareholders of record of
the Fund are represented in person or by proxy, or (b) the holders of more than
50% of the outstanding votes of shareholders of the Fund.
Holders of Shares should direct all inquiries concerning such matters to the
Transfer Agent, 215 East Capital Street, Columbus, Ohio 43215.
Shareholders will receive unaudited semi-annual reports describing the
investment operations of the Fund and annual financial reports audited by
independent auditors.
25
<PAGE> 27
Investment Adviser and Manager
Cardinal Management Corp.
155 East Broad Street
Columbus, Ohio 43215
Distributor
The Ohio Company
155 East Broad Street
Columbus, Ohio 43215
Transfer Agent and Dividend Paying
Agent
Cardinal Management Corp.
215 East Capital Street
Columbus, Ohio 43215
Custodian
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Legal Counsel
Baker & Hostetler
65 East State Street
Columbus, Ohio 43215
Independent Auditors
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
<PAGE> 28
=========================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
KEY FEATURES................................ 2
PROSPECTUS HIGHLIGHTS....................... 3
FEE TABLE................................... 5
FINANCIAL HIGHLIGHTS........................ 6
PERFORMANCE INFORMATION..................... 7
WHAT IS THE FUND?........................... 7
WHAT ARE THE INVESTMENT OBJECTIVES
AND POLICIES OF THE FUND?................. 8
HOW DO I PURCHASE SHARES
OF THE FUND?.............................. 15
MAY MY TAX SHELTERED RETIREMENT PLAN INVEST
IN THE FUND?.............................. 16
HOW MAY I QUALIFY FOR QUANTITY DISCOUNTS?... 16
WHAT DISTRIBUTIONS WILL I RECEIVE?.......... 17
HOW MAY I REDEEM MY SHARES?................. 18
WHAT OTHER SHAREHOLDER PROGRAMS ARE
PROVIDED?................................. 19
HOW IS NET ASSET VALUE CALCULATED?.......... 20
DOES THE FUND PAY FEDERAL INCOME TAX?....... 21
WHAT ABOUT MY TAXES?........................ 21
WHO MANAGES MY INVESTMENT IN THE FUND?...... 22
WHAT ARE MY RIGHTS AS A
SHAREHOLDER?.............................. 24
</TABLE>
------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND, THE ADVISER, OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE FUND OR BY THE DISTRIBUTOR TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE FUND TO MAKE
SUCH AN OFFER IN SUCH JURISDICTION.
=========================================================
=========================================================
----------------------
PROSPECTUS
----------------------
February 1, 1995
[LOGO]
CARDINAL
BALANCED
FUND
[LOGO]
=========================================================
=========================================================
