<PAGE> 1
CARDINAL GOVERNMENT SECURITIES MONEY MARKET FUND
CARDINAL TAX EXEMPT MONEY MARKET FUND
THE CARDINAL FUND
CARDINAL AGGRESSIVE GROWTH FUND
CARDINAL BALANCED FUND
CARDINAL GOVERNMENT OBLIGATIONS FUND
(LOGO)
155 E. Broad St. Columbus, Ohio 43215
New Accounts and
General Information:
(614) 464-5511
(800) 282-9446
<PAGE> 2
THE CARDINAL GROUP
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TABLE OF CONTENTS
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Message from the Chairman and the President
Page 1
Portfolio Managers' Discussion of Fund Performance
Page 2
Statements of Assets and Liabilities
Page 8
Statements of Operations
Page 10
Statements of Changes in Net Assets
Page 12
Statements of Investments
Page 15
Notes to Financial Statements
Page 25
Financial Highlights
Page 34
<PAGE> 3
THE CARDINAL GROUP
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MESSAGE FROM THE CHAIRMAN AND THE PRESIDENT
- --------------------------------------------------------------------------------
DEAR SHAREHOLDERS:
We are pleased to report on the activities of The Cardinal Group (the "Group")
for the six month period ending March 31, 1997. This Semi-Annual Report provides
an overview of the financial markets, a review of each fund's activities plus
complete unaudited financial statements and schedules of investments.
Over the past six months, the financial markets have shown continued strength as
marked by higher equity prices, stable interest rates and moderate inflation.
Given this backdrop, we are pleased to report that total net assets of The
Cardinal Group rose by $72 million to $996 million. As economic conditions
change, we will remain focused on reaching the objectives set forth in each
fund's prospectus.
We are also proud to report that Lipper Analytical Services recently named
Cardinal Government Obligations Fund the country's NUMBER ONE performing Ginnie
Mae fund for the one-year period ending December 31, 1996. It is important to
note that the Fund has had excellent performance over the past three years as
well.
The Group's three equity funds reflected continued improvement in investment
performance over the past six months. We are particularly pleased with the
returns generated by The Cardinal Fund and are optimistic that all of our equity
funds are properly positioned to respond to the opportunities which lie ahead.
Since the Group's fiscal year-end, two significant enhancements have been made
to the Cardinal money market funds. First, shares of Cardinal Government
Securities and Cardinal Tax Exempt Money Market Funds can now be purchased and
sold on a same-day basis. This means buy or sell orders entered before 12:00
noon will settle that same day. Second, there is no check writing minimum and
now Cardinal money market checks can be written for any dollar amount. We trust
you will find these improvements have enhanced the attractiveness of the
Cardinal money market funds.
Thank you for investing in The Cardinal Group. Your trust and confidence in us
is greatly appreciated.
Sincerely,
<TABLE>
<S> <C>
H. Keith Allen Frank W. Siegel, CFA
Chairman President
</TABLE>
1
<PAGE> 4
THE CARDINAL GROUP
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CARDINAL GOVERNMENT SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------------------------
For the six months ended March 31, 1997, the Cardinal Government Securities
Money Market Fund produced an annualized total return of 4.51%. The seven day
yield as of that date was 4.87%. The fund, which invests in repurchase
agreements and short-term obligations of the U.S. Government and its agencies,
is designed to provide monthly income from a high quality and liquid investment
portfolio.
WHAT WAS THE MONEY MARKET ENVIRONMENT OVER THE PAST 6 MONTHS?
Money market rates traded in a narrow range for most of the past six months,
spending most of that period anticipating a move by the Federal Reserve to
tighten credit availability. That move finally came in late March when the
discount rate was raised by 25 basis points or 1/4 of 1%. The money markets
adjusted to that increase and has settled into the higher trading range.
WHAT IS THE OUTLOOK FOR THE COMING MONTHS?
Unless economic activity moderates in the next few months, the Federal Reserve
will probably move rates higher to prevent any overheating which could re-ignite
inflation fears in the economy.
As portfolio manager of Cardinal Government Securities Money Market Fund, John
R. Carle, CFA, is responsible for the day-to-day management of the fund's
portfolio. Mr. Carle has 29 years of investment experience and has been
portfolio manager for the fund since January 1, 1996.
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CARDINAL TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
For the six months ended March 31, 1997 your fund produced an annualized return
of 2.61%. The fund has an average maturity of 20 days. Many of the bonds in the
portfolio are credit enhanced, meaning they are insured or backed by a
irrevocable bank letter of credit.
During the past six months we have allowed the average maturity of the portfolio
to decline for two reasons.
1.) Short term rates have been moving up due to actions taken by the
Federal Reserve Board.
2.) Need for liquidity due to a need by individuals and corporations to
pay taxes.
The fund is managed by David C. Will who has 20 years investment management
experience.
2
<PAGE> 5
THE CARDINAL GROUP
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THE CARDINAL FUND
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Through the first six months ended March 31, 1997, the stock market continued to
exhibit the strength which has propelled most large capitalization indices to
all time record highs. The S&P 500 broke through the 800 barrier in mid
February, as the Dow Jones Average penetrated the magical 7000 mark during the
same month. Though the longer term trend for stocks has been upward, it has not
come without the usual volatility and minor pullbacks which often accompany
strong bull markets. For example, during the month of March, the markets
declined 7 - 10% from their previous month's highs, prior to resuming their
positive momentum. This action was similar to what was experienced last year
during the month of July.
ASSESSING PERFORMANCE...
We are pleased to report to our shareholders that The Cardinal Fund has
continued to perform quite well in this environment. The total return, without
sales load, for the fund during the first six months of our fiscal year has
resulted in a 10.6% return. This result compares very favorably to both that of
the S&P 500 and the Dow Jones Industrial Average. Our return, when benchmarked
against comparable funds in the Lipper Analytical Service, ranks the Cardinal
Fund in the UPPER ONE THIRD of growth and income funds. Our goal continues to be
consistently ranked above the majority of similar investments funds.
WHAT IS THE CURRENT STRATEGY FOR PORTFOLIO MANAGEMENT?
Our strategy continues to be one of consistency. We prefer to maintain a near
fully invested posture at most times, selecting issues primarily of larger
capitalization, which exhibit strong management capabilities, and long track
records of consistent earnings results. General Electric, Coca Cola, and Procter
& Gamble are examples of the types of issues we prefer to own and are consistent
with our investment philosophy and methodology.
WHAT AREAS OF THE FUND PERFORMED WELL, AND WHERE DO YOU SEE VALUE?
In viewing the fund, investors will note that we currently maintain slight
overweightings in the sectors of technology, healthcare, financial services and
energy. These four primary sectors represent, in our view, the best places to
weight a portfolio. Issues such as Microsoft, Intel, Merck, Johnson & Johnson,
Citicorp, and Royal Dutch Petroleum are representative examples of the positions
we have built in the portfolio over the past eighteen months.
WHAT IS YOUR OUTLOOK FOR THE MARKET AND THE CARDINAL FUND?
For the market, we expect a continuation of upward movement, in particular the
large capitalization issues of corporate America. As inflation is maintained in
check and interest rates moderate to or below their current levels, the
prospects for common stocks remain very favorable.
This is not to say, however, that the markets will run straight up as we
progress through the final six months of our fiscal year. We do expect the
volatility, similar to what we have experienced, to continue in a
3
<PAGE> 6
THE CARDINAL GROUP
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sporadic fashion. As such, we will maintain a fully diversified portfolio with
concentration in sectors we feel will outperform in our economic environment.
As of March 31, 1997, the fund's largest five holdings were General Electric
(3.75%), Royal Dutch Petroleum (3.51%), Mobil Oil (3.37%), Intel (2.79%), and
Phillip Morris (2.79%).
JOHN BEVILACQUA assumed the management of The Cardinal Fund on January 1, 1996.
He has in excess of 22 years of investment experience. He received his MBA from
Xavier University and Bachelors of Science from Franklin University.
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CARDINAL AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
For the six month period ended March 31, 1997, Cardinal Aggressive Growth Fund
produced a total return, exclusive of the sale charge, of -1.15%. As a basis of
comparison, the Russell 2000 index of smaller capitalization companies achieved
a total return of -0.31%.
The Cardinal Aggressive Growth Fund is managed by Harold C. Elliott. Mr.
Elliott, who took over the management of this fund in July of last year, holds
an MBA from Xavier University and a bachelor's degree in Finance and Marketing
from The University of Cincinnati; has more than 20 years of experience in the
investment management business and is currently the Chief Investment Officer of
The Ohio Company.
COMMENT ON THIS FUND'S SIX MONTH PERFORMANCE AND YOUR ASSESSMENT OF THAT
PERFORMANCE.
As described in the previous paragraph, the Fund underperformed the Russell 2000
index of smaller capitalization, growth stocks by approximately .8%. The
environment for smaller stocks in general, and for high technology stocks
specifically, which this Fund has a large commitment to, has been less positive
recently for two specific reasons. First, due to the desire for liquidity in
their investments, many investors have focused their attention, and the large
amounts of new investment dollars, into the larger capitalization, highly
visible and most liquid, S&P 500 stocks. Secondly, the recent action by The
Federal Reserve to increase short-term interest rates put a damper on all stocks
but particularly those with higher price/ earnings multiples because of the
negative effect that a slowing economy (the result of a Fed tightening) might
have on these faster growing companies. We do not believe that the Fed's actions
will be similar to those that it took in 1994 when rates were increased six
times. Instead, we believe that the environment for stocks i.e., moderate
economic growth, positive corporate profit growth and low inflation remain
intact and that positive returns will be achieved not just during 1997 but also
during the next several years.
Underperformance, either from an absolute or relative standpoint is unacceptable
because it does not achieve our shareholders' objectives of above average
performance. We continue to take actions that we believe will not only assure
the achievement of our goal of above average performance but also of less
quarter to quarter price volatility. Since taking over the Fund in mid-July, the
fundamentals of this portfolio have continued to be strengthened and the
portfolio itself further diversified.
4
<PAGE> 7
THE CARDINAL GROUP
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WERE THERE SECTORS OF THE PORTFOLIO THAT HELPED OR PARTICULARLY HINDERED
INVESTMENT PERFORMANCE?
Between September and the latter part of February the absolute and relative
performance of The Fund was quite good and in large part due to its
overweighting in technology. That overweighting became a two-edged sword though
in March when the Fed increased interest rates and "damaged" many of the higher
multiple stocks. While the Fund is significantly more diversified than it was
one year ago, we continue to believe that a meaningful overweighing in
technology is warranted in this type of aggressive growth fund.
WHAT IS THE PHILOSOPHY AND STRATEGY EMPLOYED IN MANAGING THE CARDINAL AGGRESSIVE
GROWTH FUND?
The objective of Cardinal Aggressive Growth Fund continues to be superior
investment results through investment in the stocks of small and midsize
companies. As most investors know, investment in smaller companies has
historically resulted in investment returns that have compounded at a rate
annually of 2% greater than that of the Standard & Poor's 500 stock index. While
the volatility of the returns from investment in this sector of the market is
somewhat higher, it results from the fact that many smaller companies can peruse
niche markets; are often the originators of new technologies or services; that
their management are very entrepreneurial and because they have a large
percentage of their own net-worth invested in their company (and thus a great
vested interest).
This focus on smaller and mid-size companies is further refined by a number of
fundamental and growth criteria that are used to identify and select companies
with higher degrees of quality and consistency. These criteria include an
analysis of revenue and earnings growth, return on equity, operating margins and
the prudent use of debt. Companies that achieve/exceed these hurdles are
included with the desire to build a reasonably diversified portfolio and yet one
which focuses on sectors such as technology, healthcare and consumer staples
that are generally associated with above average growth.
The largest equity positions at the end of March, 1997 were: Microsoft Corp.,
Intel Inc., Teva Pharmaceuticals, Tellabs, Inc., Compaq, Inc.
OUR MARKET AND ECONOMIC EXPECTATIONS FOR THE FORESEEABLE FUTURE.
We continue to believe that the overall economic and market environment for
financial assets and particularly equity investments remain quite positive. Our
expectations are based upon the assumption of continued, but subdued economic
growth, low inflation, modest yet still positive corporate profit growth and
lower interest rates between now and year-end. In addition to this positive
cyclical environment, we believe that the secular environment is very positive
as well. The positive secular case is based upon the competitiveness of U.S.
businesses in the world's competitive business environment, a decline in the
federal deficit, a stable and conciliatory political climate and as previously
mentioned, low inflation.
5
<PAGE> 8
THE CARDINAL GROUP
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CARDINAL BALANCED FUND
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For the six months ended March 31, 1997, Cardinal Balanced Fund achieved a total
return, exclusive of sales of change, of 4.7%.
Since October 1, 1996, the Cardinal Balanced Fund has been managed by David C.
Will and Joseph A. Miner, C.F.A. Mr. Will, who holds a bachelor's degree in
Finance from Franklin University, has 26 years of experience in portfolio
management. Mr. Miner holds a bachelors degree in Banking and Finance from
Wheeling Jesuit College and has 15 years experience in financial analysis and
portfolio management. Joe has also earned the Chartered Financial Analysts
designation.
HOW DID THE MIXTURE OF STOCK AND BOND CHANGE DURING THE PERIOD?
We continue to have a positive outlook for the financial markets. Consequently
we have increased our weightings in common stocks and/or securities convertible
into common stocks from 55% to 65%.
HOW WOULD YOU ASSESS THE PERFORMANCE OF THE BALANCED FUND?
We have seen steady improvement in the Fund versus a peer group of balanced
funds. The median return of balanced mutual funds for the six months ending
3/31/97 was 5.5% versus your fund's 4.7% return. Currently (as of 5/14/97) your
fund is now ahead of the median balanced fund on a year to date and fiscal year
basis. We are very pleased with the improved performance of your fund.
WHAT STOCKS HAVE BEEN THE STRONGEST?
In the capital goods sector, General Electric, Deere & Co. and Crane have been
strong performers. Service Corp. and New York Times in the consumer cyclical
area are adding value to our returns. Coca Cola, Pepsico, Disney and Colgate
Palmolive have done better than the broad market. An area that we have
emphasized has been the Financial Group. Travelers, American Express, Bank of
New York and Barnett Bank are strong. Technology is led by Intel, Lucent
Technologies and Applied Material. Strong performers in Health Care are Merck
and Johnson and Johnson.
WHAT IS OUR OUTLOOK FOR THE FUND?
In keeping with our positive outlook for the financial markets, your fund
continues to be fully invested. Our outlook is based on a moderately growing
economy, low inflation, declining interest rates and high levels of corporate
profitability.
6
<PAGE> 9
THE CARDINAL GROUP
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CARDINAL GOVERNMENT OBLIGATIONS FUND
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For the six months ended March 31, 1997, Cardinal Government Obligations Fund,
which invests in a portfolio of U.S. Government agency securities, earned a
total return of 3.10% (exclusive of sales charges). For the trailing 12 months
that return was 6.08%
The fund is managed by John R. Carle, CFA, who has 29 years of securities
investment experience and has managed the fund since its inception in February,
1986.
HOW WOULD YOU ASSESS THE FUND'S PERFORMANCE?
The fund's performance over the first six months of the current fiscal year has
continued to be excellent. For the trailing 12 months ending March 31, 1997, the
fund earned a total return (exclusive of sales charges) of 6.08% and ranked
second in the Lipper universe of 51 Ginnie Mae funds [mutual funds investing
primarily in securities issued by The Government National Mortgage Association
(GNMA)].
WHAT WAS YOUR STRATEGY DURING THE PAST SIX MONTHS?
Our strategy over the past six months has been to increase the fund's holdings
of GNMA project loans because of the nature of their call protection. This has
had the effect of increasing slightly the portfolio's duration (life), but has
also allowed us to secure mortgage pools with attractive interest rates. We feel
this will position the fund well in anticipation of likely U.S. economic
activity.
WHAT IS YOUR OUTLOOK FOR THE COMING YEAR?
With the recent action of the Federal Reserve Bank to raise short-term interest
rates, we are anticipating a few months of moderating economic growth. This
should help fixed-income prices and allow the markets in which your fund invests
to improve over the balance of our fiscal year.
7
<PAGE> 10
THE CARDINAL GROUP
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STATEMENTS OF ASSETS AND LIABILITIES (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE
DATA)
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
CARDINAL
GOVERNMENT CARDINAL
SECURITIES TAX EXEMPT
MONEY MARKET MONEY MARKET
FUND FUND
------------ ------------
<S> <C> <C>
ASSETS:
Investments in securities at amortized cost....................... $553,998 $ 69,544
Interest receivable............................................... 5,965 363
Receivable for Fund shares sold................................... 13,916 0
Other assets (note 5)............................................. 366 58
Deferred organizational cost...................................... 143 24
-------- --------
Total assets.......................................... 574,376 69,989
-------- --------
LIABILITIES:
Payable for investment securities purchased....................... 30,000 0
Payable for Fund shares redeemed.................................. 11,964 0
Payable for shareholder distributions............................. 1,892 126
Accrued investment management and transfer agent fees (note 4).... 285 58
Other accrued expenses............................................ 85 26
-------- --------
Total liabilities..................................... 44,226 210
-------- --------
Commitments and contingencies (note 5)
NET ASSETS:
Paid in capital................................................... 530,150 69,779
Accumulated net realized gain (loss) on investments............... (312) 0
Undistributed net investment income............................... 312 0
-------- --------
Total net assets...................................... $530,150 $ 69,779
======== ========
Outstanding shares of beneficial interest......................... 530,150 69,779
======== ========
NET ASSET VALUE PER SHARE......................................... $1.00 $1.00
======== ========
</TABLE>
See accompanying notes to financial statements.
8
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THE CARDINAL GROUP
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STATEMENTS OF ASSETS AND LIABILITIES (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE
DATA)
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
CARDINAL CARDINAL
AGGRESSIVE CARDINAL GOVERNMENT
THE CARDINAL GROWTH BALANCED OBLIGATIONS
FUND FUND FUND FUND
------------ ---------- -------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value (cost $166,822,
$8,513, $13,047, and $136,338)...................... $236,907 $9,878 $13,897 $136,777
Cash.................................................. 30 23 24 244
Dividends and interest receivable..................... 420 3 76 850
Receivable for investment securities sold............. 3,715 0 321 2,915
Receivable for Fund shares sold....................... 1,308 0 17 540
Other assets (note 5)................................. 153 13 7 32
Deferred organizational cost.......................... 55 14 15 34
-------- ------ ------- --------
Total assets................................. 242,588 9,931 14,357 141,392
-------- ------ ------- --------
LIABILITIES:
Payable for investment securities purchased........... 0 0 0 11,040
Payable for Fund shares redeemed...................... 1,439 2 17 182
Payable for shareholder distributions................. 0 0 0 758
Accrued investment management and transfer agent fees
(note 4)............................................ 130 10 11 76
Other accrued expenses................................ 449 35 53 90
-------- ------ ------- --------
Total liabilities............................ 2,018 47 81 12,146
-------- ------ ------- --------
Commitments and contingencies (note 5)
NET ASSETS:
Paid in capital....................................... 159,589 9,377 12,781 150,251
Accumulated net realized gain (loss) on investments... 10,795 (381) 734 (21,293)
Undistributed net investment income (loss)............ (79) (477) (89) (151)
Unrealized gain on investments........................ 70,085 1,365 850 439
-------- ------ ------- --------
Total net assets............................. $240,570 $9,864 $14,276 $129,246
======== ====== ======= ========
NET ASSETS:
Investor shares................................... $218,099 $7,256 $13,079 $123,508
Institutional shares.............................. 22,471 2,628 1,197 5,738
-------- ------ ------- --------
Total........................................ $240,570 $9,884 $14,276 $129,246
======== ====== ======= ========
OUTSTANDING SHARES OF BENEFICIAL INTEREST
Investor shares................................... 16,387 662 1,170 15,418
Institutional shares.............................. 1,692 240 107 719
-------- ------ ------- --------
Total........................................ 18,079 902 1,277 16,137
======== ====== ======= ========
NET ASSET VALUE
Investor shares................................... $ 13.28 $10.93 $ 11.18 $ 8.03
Institutional shares.............................. $ 13.28 $10.93 $ 11.18 $ 8.03
======== ====== ======= ========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 12
THE CARDINAL GROUP
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STATEMENTS OF OPERATIONS (AMOUNTS IN THOUSANDS)
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SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
CARDINAL
GOVERNMENT CARDINAL
SECURITIES TAX EXEMPT
MONEY MARKET MONEY MARKET
FUND FUND
--------------------- -----------------
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................ $13,251 $ 1,149
------- -------
EXPENSES:
Investment management fees (note 4)................. 1,260 164
Transfer agent fees and expenses (note 4)........... 499 36
Accounting fees (note 4)............................ 36 10
------- -------
Total affiliated expenses................. 1,795 210
------- -------
Custodian fees...................................... 20 5
Professional fees................................... 58 21
Reports to shareholders............................. 68 17
Trustees' fees...................................... 27 5
Registration fees................................... 57 14
Other expenses...................................... 41 10
Amortization of deferred organizational cost (note
2)................................................ 17 3
------- -------
Total non-affiliated expenses............. 288 75
------- -------
Total expenses............................ 2,083 285
------- -------
Net increase in net assets from
operations.............................. $11,168 $ 864
======= =======
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 13
THE CARDINAL GROUP
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STATEMENTS OF OPERATIONS (AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
CARDINAL CARDINAL
AGGRESSIVE CARDINAL GOVERNMENT
THE CARDINAL GROWTH BALANCED OBLIGATIONS
FUND FUND FUND FUND
------------ ---------- -------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................... $ 2,071 $ 11 $ 95 $ 0
Interest.................................... 360 5 203 5,390
-------- ------ ------ ------
Total income...................... 2,431 16 298 5,390
-------- ------ ------ ------
EXPENSES:
Investment management fees (note 4)......... 745 41 53 333
Shareholder service fees (note 4)........... 139 5 8 77
Transfer agent fees and expenses (note 4)... 118 10 12 74
Accounting fees (note 4).................... 11 1 3 20
-------- ------ ------ ------
Total affiliated expenses......... 1,013 57 76 504
-------- ------ ------ ------
Custodian fees.............................. 14 4 6 19
Professional fees........................... 38 6 8 22
Reports to shareholders..................... 29 13 9 13
Trustees' fees.............................. 12 3 2 6
Registration fees........................... 14 7 6 15
Other expenses.............................. 22 3 5 15
Amortization of deferred organizational cost
(note 2).................................. 7 5 5 4
-------- ------ ------ ------
Total non-affiliated expenses..... 136 41 41 94
-------- ------ ------ ------
Total expenses.................... 1,149 98 117 598
-------- ------ ------ ------
Net investment income (loss)...... 1,282 (82) 181 4,792
-------- ------ ------ ------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) from security
transactions.............................. 10,379 (515) 1,115 (255)
Increase (decrease) in unrealized gain on
investments............................... 12,280 416 (623) 141
-------- ------ ------ ------
Net realized gain (loss) and
increase in unrealized gain
(loss) on investments........... 22,659 (99) 492 (114)
-------- ------ ------ ------
Net increase (decrease) in net
assets from operations.......... $ 23,941 $ (181) $ 673 $4,678
======== ====== ====== ======
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 14
THE CARDINAL GROUP
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STATEMENTS OF CHANGES IN NET ASSETS (AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
CARDINAL CARDINAL
GOVERNMENT SECURITIES TAX EXEMPT
MONEY MARKET FUND MONEY MARKET FUND
--------------------------------------- ---------------------------------------
SIX MONTHS ENDED ONE YEAR ENDED SIX MONTHS ENDED ONE YEAR ENDED
MARCH 31, 1997 SEPTEMBER 30, 1996 MARCH 31, 1997 SEPTEMBER 30, 1996
---------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income........ $ 11,168 $ 22,576 $ 864 $ 1,801
--------- ----------- -------- ---------
FROM DISTRIBUTIONS TO
SHAREHOLDERS:
Total distributions to
shareholders............... (11,168) (22,576) (864) (1,801)
--------- ----------- -------- ---------
FROM CAPITAL SHARE
TRANSACTIONS (NOTE 7):
Proceeds from sale of fund
shares..................... 676,744 1,272,767 86,022 159,477
Reinvestment of distributions
to shareholders............ 10,833 22,143 547 1,700
Cost of fund shares
redeemed................... (635,302) (1,262,409) (76,705) (166,042)
--------- ----------- -------- ---------
Increase (decrease) in
net assets from
capital share
transactions.......... 52,275 32,501 9,864 (4,865)
--------- ----------- -------- ---------
Net increase (decrease)
in net assets......... 52,275 32,501 9,864 (4,865)
NET ASSETS -- beginning of
period..................... 477,875 445,374 59,915 64,780
--------- ----------- -------- ---------
NET ASSETS -- end of
period..................... $ 530,150 $ 477,875 $ 69,779 $ 59,915
========= =========== ======== =========
</TABLE>
See accompanying notes to financial statements.
12
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THE CARDINAL GROUP
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STATEMENTS OF CHANGES IN NET ASSETS (AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
CARDINAL AGGRESSIVE
THE CARDINAL FUND GROWTH FUND
-------------------------------------- --------------------------------------
SIX MONTHS ENDED ONE YEAR ENDED SIX MONTHS ENDED ONE YEAR ENDED
MARCH 31, 1997 SEPTEMBER 30, 1996 MARCH 31, 1997 SEPTEMBER 30, 1996
---------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss)........ $ 1,282 $ 4,370 $ (82) $ (152)
Net realized gain (loss) from
security transactions............. 10,379 35,032 (515) 77
Increase (decrease) in unrealized
gain on investments............... 12,280 (1,098) 416 (63)
-------- -------- ------- -------
Net increase (decrease) in net
assets from operations.......... 23,941 38,304 (181) (138)
-------- -------- ------- -------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Distributions of net investment
income -- Investor Shares......... (1,290) (4,551) 0 0
Distributions of net investment
income -- Institutional Shares.... (67) 0 0 0
Distribution of net realized gains
from security transactions........ (19,120) (34,597) (222) (766)
-------- -------- ------- -------
Total distributions to
shareholders.................... (20,477) (39,148) (222) (766)
-------- -------- ------- -------
FROM CAPITAL SHARE TRANSACTIONS
(NOTE 7):
Proceeds from sale of fund shares... 29,016 8,454 3,822 2,503
Reinvestment of distributions to
shareholders...................... 17,911 36,392 200 743
Cost of fund shares redeemed........ (38,863) (41,141) (3,404) (3,107)
-------- -------- ------- -------
Increase (decrease) in net assets
from capital share
transactions.................... 8,064 3,705 618 139
-------- -------- ------- -------
Net increase (decrease) in net
assets.......................... 11,528 2,861 215 (765)
NET ASSETS -- beginning of period... 229,042 226,181 9,669 10,434
-------- -------- ------- -------
NET ASSETS -- end of period......... $240,570 $229,042 $ 9,884 $ 9,669
======== ======== ======= =======
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 16
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
CARDINAL CARDINAL GOVERNMENT
BALANCED FUND OBLIGATIONS FUND
-------------------------------------- --------------------------------------
SIX MONTHS ENDED ONE YEAR ENDED SIX MONTHS ENDED ONE YEAR ENDED
MARCH 31, 1997 SEPTEMBER 30, 1996 MARCH 31, 1997 SEPTEMBER 30, 1996
---------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income............... $ 181 $ 515 $ 4,792 $ 10,596
Net realized gain (loss) from
security transactions............. 1,115 856 (255) (1,240)
Increase (decrease) in unrealized
gain on investments............... (623) 47 141 (826)
-------- -------- -------- --------
Net increase in net assets from
operations...................... 673 1,418 4,678 8,530
-------- -------- -------- --------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Distributions of net investment
income -- Investor Shares......... (220) (519) (4,634) (10,496)
Distribution of net investment
income -- Institutional Shares.... (50) 0 (95) 0
Tax return of capital
distribution...................... 0 0 0 (214)
Distribution of net realized gains
from security transactions........ (1,144) (483) 0 0
-------- -------- -------- --------
Total distributions to
shareholders.................... (1,414) (1,002) (4,729) (10,710)
-------- -------- -------- --------
FROM CAPITAL SHARE TRANSACTIONS
(NOTE 7):
Proceeds from sale of fund shares... 1,809 2,334 9,220 5,062
Reinvestment of distributions to
shareholders...................... 1,326 927 2,730 6,056
Cost of fund shares redeemed........ (2,463) (3,867) (15,951) (27,351)
-------- -------- -------- --------
Increase (decrease) in net assets
from capital share
transactions.................... 672 (606) (4,001) (16,233)
-------- -------- -------- --------
Net increase (decrease) in net
assets.......................... (69) (190) (4,052) (18,413)
NET ASSETS -- beginning of period... 14,345 14,535 133,298 151,711
-------- -------- -------- --------
NET ASSETS -- end of period......... $ 14,276 $ 14,345 $129,246 $133,298
======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 17
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (AMOUNTS IN THOUSANDS) --
CARDINAL GOVERNMENT SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
AMORTIZED
MATURITY FACE COST
DATE AMOUNT (NOTE 2)
--------- --------- ---------
<S> <C> <C> <C>
U.S. GOVERNMENT-SPONSORED
ENTERPRISES AND FEDERAL
AGENCY OBLIGATIONS 70.40%
Federal Farm Credit Bank
Note, 5.25%............... 01-04-09 $ 30,000 $ 30,000
Federal Farm Credit Bank
Note, 5.24%............... 05-01-97 25,000 25,000
Federal Farm Credit Bank
Note, 5.34%............... 05-01-97 15,000 15,000
Federal Farm Credit Bank
Note, 5.28%............... 06-02-97 25,000 25,000
Federal Farm Credit Bank
Note, 5.29%............... 06-02-97 20,000 20,000
Federal Farm Credit Bank
Note, 5.55%............... 07-01-97 30,000 30,000
Federal Home Loan Bank Float
Rate Note, 5.31%.......... 12-16-97 10,000 10,000
Federal Home Loan Bank Note,
5.71%..................... 01-28-98 10,000 10,000
Federal Home Loan Bank Note,
5.805%.................... 02-13-98 10,000 9,998
Federal Home Loan Bank Note,
5.70%..................... 03-04-98 10,000 10,000
Federal Home Loan Bank Note,
5.90%..................... 03-19-98 15,000 15,000
Student Loan Marketing
Association Note, 5.32%... 04-10-97 30,000 30,000
Student Loan Marketing
Association Note, 5.56%... 05-08-97 30,000 30,000
Student Loan Marketing
Association Note, 5.61%... 06-12-97 30,000 30,000
Student Loan Marketing
Association Note, 5.60%... 07-17-97 30,000 30,000
Student Loan Marketing
Association Note, 5.59%... 08-21-97 35,000 35,000
<CAPTION>
AMORTIZED
MATURITY FACE COST
DATE AMOUNT (NOTE 2)
--------- --------- ---------
<S> <C> <C> <C>
U.S. GOVERNMENT-SPONSORED ENTERPRISES
AND FEDERAL AGENCY OBLIGATIONS (CON-
TINUED)
Student Loan Marketing
Association Note, 5.54%... 09-18-97 $ 30,000 $ 30,000
Student Loan Marketing
Association Note, 5.63%... 12-12-97 5,000 5,000
--------
TOTAL U.S. GOVERNMENT-
SPONSORED ENTERPRISES AND
FEDERAL AGENCY OBLIGATIONS
(COST $389,997,696)....... 389,998
--------
REPURCHASE AGREEMENTS 29.6%
Daiwa Securities America
Inc. (collateralized by
$29,580,000 U.S. Treasury
Notes..................... 04-03-97 29,000 29,000
Merrill Lynch Government
Securities Inc.
(collateralized by
$39,780,000 Federal Agency
Obligations Notes)........ 04-07-97 39,000 39,000
The Nikko Securities Co.
(collateralized by
$30,600,000 Federal Agency
Obligations Notes)........ 04-03-97 30,000 30,000
Paine Webber Inc.
(collateralized by
$26,520,000 Federal Agency
Obligations Notes)........ 04-01-97 26,000 26,000
Smith Barney Shearson
(collateralized by
$40,800,000 Federal Agency
Obligations Notes)........ 04-02-97 40,000 40,000
--------
TOTAL REPURCHASE
AGREEMENTS................ 164,000
--------
TOTAL INVESTMENTS AT
AMORTIZED COST 100.00%.... $553,998
========
</TABLE>
Cost also represents cost for Federal income tax purposes.
See accompanying notes to financial statements.
15
<PAGE> 18
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (AMOUNTS IN THOUSANDS) --
CARDINAL TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
FINAL AMORTIZED
2A-7* MATURITY FACE COST
MATURITY DATE AMOUNT (NOTE 2)
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
VARIABLE RATE DEMAND MUNICIPAL SECURITIES 93.0%
Alaska IDR Auth. Providence Medical, currently 3.50%, LOC by Krediet Bank.......... 04-07-97 06-01-10 $ 2,130 $ 2,130
Albuquerque, New Mexico Hospital Revenue, currently 3.45%.......................... 04-07-97 05-15-22 2,500 2,500
Ashtabula County, Ohio, Brighton Manor Project, currently 3.65%, LOC by Bank One
Columbus......................................................................... 04-07-97 12-01-16 2,400 2,400
Buffalo County, Nebraska Hospital Authority, currently 3.35%....................... 04-07-97 05-01-18 2,000 2,000
Clackamas County, Oregon, Hospital Facilities, currently 3.01%..................... 06-01-97 04-01-14 2,875 2,875
Columbus, Ohio Ser. 1, Purchase Agreement Westdeutsche Landesbank, currently
3.30%............................................................................ 04-07-97 12-01-17 3,000 3,000
Connecticut Development, Light & Power Co., currently 4.10%, LOC by 3.50%.......... 04-07-97 09-01-28 3,400 3,400
Cornell Township, Michigan, Economic Development, IRB, currently 3.40%............. 06-05-97 03-01-15 3,100 3,100
Dublin, Ohio City Schools District Notes, currently 4.00%.......................... 06-12-97 06-10-97 1,500 1,502
Grand Prairie, Texas Housing Finance Authority, currently 3.45%, Guaranteed by
General Electric Capital Corp.................................................... 04-07-97 06-01-10 1,800 1,800
Greater East Texas Higher Education, currently 4.05%, LOC by SLMA.................. 09-01-97 09-01-02 2,300 2,300
Hockley County, Texas, Indl. Development Corp., PCRB, currently 3.75%.............. 09-01-97 03-01-14 1,750 1,751
Howard County, Maryland, Multifamily Revenue Housing, currently 3.35% LOC FNMA..... 04-07-97 07-01-24 1,000 1,000
Indiana Secondary Education Loans Purchase Agreement, currently 3.50%.............. 04-07-97 12-01-14 1,000 1,000
Jackson County, Mississippi, Water Systems, currently 3.70%........................ 06-01-97 11-01-24 1,000 1,000
Kansas City, Missouri, Indl. Development Hospital Revenue, currently 3.85%......... 04-01-97 04-15-15 1,500 1,500
Kentucky Development Financial Authority, currently 3.45%.......................... 04-07-97 12-01-15 900 900
Livermore, California, Multifamily Revenue, currently 3.20%........................ 04-07-97 08-01-18 1,000 1,000
Louisiana Public Facility Authority, currently 3.40%, Guaranteed by General
Electric Capital Corp............................................................ 04-07-97 10-01-22 2,000 2,000
Marion County, West Virginia Waste Disposal, RB, currently 3.55%, LOC by National
Westminster...................................................................... 04-07-97 10-01-17 1,000 1,000
Muldrow Oklahoma, Public Works Authority, IRB, currently 3.40%, LOC by Rabobank
Nederland........................................................................ 04-07-97 02-01-15 3,000 3,000
New York City Municipal Water Financial Authority, currently 3.85% FGIC
Securities....................................................................... 04-01-97 06-15-24 1,500 1,500
North Carolina Medical Care Community Hospital Revenue, currently 3.45% LOC by
Wachovia Bank.................................................................... 04-07-97 09-01-02 2,000 2,000
Ohio State Higher Education, RB, currently 3.45%, LOC by Bank One Columbus......... 04-07-97 12-01-06 1,115 1,115
Pennsylvania St. Higher Education, RB, currently 3.45%, LOC by SLMA................ 04-07-97 07-01-18 1,500 1,500
Platte County, Wyoming PCRB, currently 4.00% LOC by Chase Manhattan Bank........... 04-01-97 07-01-14 1,000 1,000
Port Anacortes, Washington, Indl. Development Corp., Texas Project, currently
3.35%............................................................................ 06-01-97 06-15-19 3,000 3,000
Texas State Tax and Revenue, currently 4.75%....................................... 04-07-97 08-29-97 1,000 1,005
Texas State Veterans Housing Assistance, currently 3.35%........................... 08-29-97 12-01-16 2,900 2,900
Utah County, Utah Environmental Improvement, USX Corp. Project, IDR, currently
3.10%............................................................................ 06-01-97 11-01-27 1,000 1,000
Utah State Board of Regents Student Loans, currently 3.50%, LOC by Barclay's
Bank............................................................................. 04-07-97 11-01-31 1,500 1,500
Washington Housing Financial Commission, VRN, currently 3.45%, LOC by Harris Trust
& Savings Bank................................................................... 04-07-97 01-01-10 4,000 4,000
York County, South Carolina, PCRB, currently 3.65%................................. 06-01-97 08-15-14 1,000 1,000
York County, South Carolina, PCRB, currently 3.65%................................. 06-01-97 08-15-14 2,000 2,000
--------- ---------
TOTAL VARIABLE RATE DEMAND MUNICIPAL SECURITIES.................................... 64,678
---------
REGULATED INVESTMENT COMPANIES 7.0%
Federated Tax-Free Trust, currently 2.79%.......................................... 1,514 1,514
S.E.I. Institutional Tax-Free Fund, currently 3.09%................................ 3,352 3,352
--------- ---------
TOTAL REGULATED INVESTMENT COMPANIES............................................... 4,866
---------
TOTAL INVESTMENTS AT AMORTIZED COST 100.00%........................................ $69,544
==========
</TABLE>
IDR -- Industrial Development Revenue Bonds
IRB -- Industrial Revenue Bonds
PCRB -- Pollution Control Revenue Bonds
RB -- Revenue Bonds
LOC -- Irrevocable Letter of Credit
* Rule 2a-7, of the Investment Company Act of 1940, defines maturity as the
longer of the period remaining until the next readjustment of the interest
rate or the period remaining until the principal amount can be recovered
through demand.
Cost also represents cost for Federal income tax purposes.
See accompanying notes to financial statements.
16
<PAGE> 19
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (MARKET VALUE IN THOUSANDS) --
THE CARDINAL FUND
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
FACE/ MARKET
SHARES VALUE
---------- --------
<S> <C> <C>
COMMON STOCK 93.8%
AGRICULTURE SERVICES .80%........ 25,000 $ 1,900
OIL AND GAS EXTRACTION .90%
Schlumberger Limited........... 20,000 2,145
--------
FOOD & KINDRED PRODUCTS 3.90%
Anheuser Busch Co.............. 50,000 2,106
Coca-Cola Co................... 100,000 5,588
Pepsico Inc.................... 50,000 1,631
--------
9,325
--------
TOBACCO PRODUCTS 2.7%
Philip Morris Cos, Inc......... 55,000 6,277
--------
FURNITURE & FIXTURES .90%
Johnson Controls Inc........... 25,000 2,013
--------
PAPER & ALLIED PRODUCTS 2.80%
Boise Cascade Corp............. 30,000 915
International Paper............ 40,000 1,555
Kimberly-Clark Co.............. 15,000 1,491
Playtex Inc.................... 50,000 544
Tenneco, Inc................... 25,000 975
Willamete Industries........... 20,000 1,250
--------
6,730
--------
PRINTING & PUBLISHING 2.50%
Gannett Co..................... 30,000 2,576
New York Times Co.............. 40,000 1,765
Tribune Co..................... 40,000 1,620
--------
5,961
--------
CHEMICALS & ALLIED PRODUCTS 11.00%
Arco Chemical Co............... 19,900 866
American Home Products......... 80,000 4,800
Amgen, Inc..................... 15,000 838
Dow Chemical Co................ 35,000 2,800
Dupont De Nemours & Co......... 25,700 2,724
Gillette Co.................... 25,000 1,816
Merck & Co..................... 50,000 4,213
Monsanto Co.................... 25,000 956
Pfizer Inc..................... 35,000 2,944
Procter & Gamble Co............ 35,000 4,025
--------
25,982
--------
<CAPTION>
FACE/ MARKET
SHARES VALUE
---------- --------
<S> <C> <C>
COMMON STOCK (CONTINUED)
PETROLEUM & COAL PRODUCTS 9.70%
Exxon Corp..................... 20,000 $ 2,155
Mobil Corp..................... 58,000 7,576
Royal Dutch Petroleum Co....... 45,000 7,875
Texaco, Inc.................... 50,000 5,475
--------
23,081
--------
RUBBER & MISCELLANEOUS PLASTIC PRODUCTS 9.70%
Nike Inc....................... 15,000 930
--------
PRIMARY METAL INDUSTRIES 1.00%
Alcoa.......................... 25,000 1,700
Worthington Industries......... 30,000 574
--------
2,275
--------
INDUSTRIAL MACHINERY & EQUIPMENT 8.80%
Applied Materials.............. 40,000 1,855
Caterpillar, Inc............... 15,000 1,204
Cisco Systems.................. 25,000 1,203
Compaq Computer Corp........... 40,000 3,065
Deere & Co..................... 25,000 1,087
Gateway 2000................... 30,000 1,537
Hewlett Packard................ 40,000 2,130
International Business
Machines..................... 15,000 2,061
Minnesota Mining &
Manufacturing................ 70,000 5,915
U.S. Robotics Corp............. 15,000 831
--------
20,888
--------
ELECTRONIC & OTHER ELECTRIC EQUIPMENT 9.50%
Atmel Corp..................... 65,000 1,556
General Electric Co............ 85,000 8,436
Intel Corp..................... 45,000 6,261
Lucent Technologies............ 50,000 2,637
Tellabs, Inc................... 30,000 1,084
Texas Instruments.............. 35,000 2,621
--------
22,595
--------
TRANSPORTATION EQUIPMENT .40%
Boeing Co...................... 10,000 986
--------
</TABLE>
(continued)
17
<PAGE> 20
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
THE CARDINAL FUND
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
FACE/ MARKET
SHARES VALUE
---------- --------
<S> <C> <C>
COMMON STOCK (CONTINUED)
INSTRUMENTS & RELATED PRODUCTS 2.50%
Biomet Co...................... 60,000 $ 1,012
Boston Scientific.............. 20,000 1,235
Medtronic, Inc................. 35,000 2,179
Tektronix, Inc................. 30,000 1,515
--------
5,941
--------
COMMUNICATIONS 3.90%
GTE Corp....................... 100,000 4,662
LCI International, Inc......... 50,000 838
Pacific Gateway Exchange....... 15,000 375
Sprint Corp.................... 40,000 1,820
Worldcom, Inc.................. 70,000 1,540
--------
9,235
--------
ELECTRIC, GAS & SANITARY SERVICES 2.30%
U.S. Filter Corp............... 35,000 1,081
Western Resources.............. 60,000 1,800
Williams Cos., Inc............. 60,000 2,670
--------
5,551
--------
WHOLESALE TRADE -- DURABLE GOODS 3.30%
Johnson & Johnson Inc.......... 80,000 4,230
Kent Electronics............... 25,000 575
Motorola Inc................... 50,000 3,018
--------
7,823
--------
BUILDING MATERIALS & GARDEN SUPPLIES .60%
Lowe's Companies............... 35,000 1,308
--------
APPAREL & ACCESSORY STORES 1.10%
Kohls.......................... 20,000 847
Limited Inc.................... 50,000 919
Saks Holdings, Inc............. 25,000 719
--------
2,485
--------
EATING & DRINKING PLACES .60%
McDonalds Corp................. 30,000 1,417
--------
<CAPTION>
FACE/ MARKET
SHARES VALUE
---------- --------
<S> <C> <C>
COMMON STOCK (CONTINUED)
DEPOSITORY INSTITUTIONS 8.40%
Banc One Corp.................. 100,000 $ 3,975
Bankers Trust N.Y.............. 15,000 1,230
Barnett Banks Inc.............. 25,000 1,162
Charter One Financial Inc...... 105,000 4,607
Citicorp....................... 12,000 1,299
Huntington Bancshares Inc...... 100,000 2,625
Key Corp....................... 100,000 4,875
--------
19,773
--------
NONDEPOSITORY INSTITUTIONS 5.00%
Beneficial Corp................ 50,000 3,231
Federal National Mortgage...... 20,000 723
Textron, Inc................... 75,000 7,875
--------
11,829
--------
INSURANCE CARRIERS 3.70%
American International Group... 30,000 3,521
Cincinnati Financial Corp...... 75,000 5,269
--------
8,790
--------
INSURANCE AGENTS, BROKERS & SERVICE 2.20%
Marsh & McLennan............... 45,000 5,096
--------
PERSONAL SERVICES .40%
Service Corp................... 30,000 892
--------
BUSINESS SERVICES 2.20%
Cellular Technical............. 25,000 227
Microsoft Corp................. 55,000 5,043
--------
5,270
--------
MOTION PICTURES .80%
The Walt Disney Co............. 25,000 1,825
--------
HEALTH SERVICES .80%
Healthsouth Corp............... 50,000 956
Tenet Healthcare Corp.......... 40,000 985
--------
1,941
--------
ENGINEERING & MANAGEMENT SERVICES .80%
ABB AB......................... 10,000 1,083
Dun & Bradstreet............... 30,000 761
--------
1,844
--------
TOTAL COMMON STOCK
(COST $152,021,696).......... 222,107
--------
</TABLE>
(continued)
18
<PAGE> 21
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
THE CARDINAL FUND
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
FACE/ MARKET
SHARES VALUE
---------- --------
<S> <C> <C>
REPURCHASE AGREEMENTS 6.30%
Paine Webber Repo 04-01-97
(collateralized by U.S.
Government Securities)....... 14,800,000 $ 14,800
--------
TOTAL REPURCHASE AGREEMENTS
(COST $14,800,000)......... 14,800
--------
TOTAL INVESTMENTS
(COST $166,821,696)
100.00%.................... $236,907
========
</TABLE>
+ Security is segregated as collateral for call options written.
(a) Represents cost for Federal income tax purposes. Cost differs from market
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................................................ $73,172
Unrealized depreciation................................................ (3,087)
-------
Net unrealized appreciation............................................ $70,085
=======
</TABLE>
See accompanying notes to financial statements.
19
<PAGE> 22
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (MARKET VALUE IN THOUSANDS) --
CARDINAL AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
FACE/ MARKET
SHARES VALUE
------- ------
<S> <C> <C>
COMMON STOCK 95.7%
METAL MINING .40%
Specialty Metals................... 2,500 $ 44
PRINTING & PUBLISHING 1.30%
New York Times Co. Class A......... 3,000 132
------
CHEMICALS & ALLIED PRODUCTS 9.30%
Biochemical Pharmaceutical Inc..... 1,500 65
Centecor Inc....................... 2,000 61
Genzyme............................ 3,000 68
Interneuron Pharmaceuticals Inc.... 2,000 35
Meridian Diagnostics............... 8,000 88
Mylan Laboratories................. 10,000 146
Teva Pharmaceutical Industries..... 4,500 250
Vertex Pharmaceuticals, Inc........ 5,000 201
------
914
------
STONE, CLAY & GLASS PRODUCTS .80%
Dupont Photo Masks Inc............. 2,000 76
------
INDUSTRIAL MACHINERY & EQUIPMENT 16.50%
Applied Materials.................. 4,000 186
Compaq Computer Corp............... 4,000 306
EMC Corp........................... 8,000 284
Gateway 2000....................... 5,000 256
Hewlett-Packard.................... 3,000 160
Lancer............................. 5,000 98
Pall Corp.......................... 4,000 93
Silicon Graphics................... 7,000 137
U.S. Robotics...................... 2,000 111
------
1,629
------
ELECTRONIC & OTHER ELECTRIC EQUIPMENT 20.00%
Analog Devices, Inc................ 10,667 240
Ascend Communications, Inc......... 1,500 61
Atmel Corp......................... 7,000 168
Broadband Technologies............. 10,000 91
Intel Corp......................... 3,500 487
Lattice Semiconductor.............. 3,000 137
Little Fuse........................ 2,500 116
National Semiconductors............ 4,000 110
Omnipoint Corp..................... 2,000 20
Tellabs Inc........................ 9,000 325
Texas Instruments, Inc............. 3,000 225
------
1,979
------
<CAPTION>
FACE/ MARKET
SHARES VALUE
------- ------
<S> <C> <C>
COMMON STOCK (CONTINUED)
INSTRUMENTS & RELATED PRODUCTS 11.40%
Biomet............................. 10,000 $ 169
Dentsply International, Inc........ 2,000 100
Genrad Inc......................... 15,000 233
KLA Instruments Corporation........ 3,000 110
Lecroy Corp........................ 5,000 130
Photon Dynamics, Inc............... 9,000 54
Respireonics, Inc.................. 4,000 85
Vivid Technologies................. 3,000 48
Vivus Pharmaceuticals, Inc......... 3,000 120
X-Rite, Inc........................ 5,000 75
------
1,123
------
COMMUNICATIONS 6.50%
Airtouch Communications, Inc....... 7,000 161
Emmis Broadcasting................. 2,000 77
Evergreen Media.................... 3,000 88
Pacific Gateway Exchange........... 4,000 100
Worlcom Inc........................ 10,000 220
------
646
------
ELECTRIC, GAS & SANITARY SERVICES .70%
Commodore Applied Technologies..... 10,000 71
------
WHOLESALE TRADE -- DURABLE GOODS 3.10%
Motorola Inc....................... 4,000 242
Pioneer Standard Electronics....... 5,000 64
------
305
------
WHOLESALE TRADE -- NONDURABLE GOODS 1.10%
Men's Warehouse.................... 4,000 110
------
APPAREL & ACCESSORY STORES 2.20%
Kohls.............................. 3,000 127
Saks Holding, Inc.................. 3,000 86
------
213
------
EATING & DRINKING PLACES .90%
Lone Star Steakhouse/Saloon........ 4,000 92
------
DEPOSITORY INSTITUTIONS 1.40%
Eclipse Surgical Technologies...... 2,500 15
Geoworks........................... 4,000 27
Integrated Device Technologies..... 10,000 100
------
142
------
</TABLE>
(continued)
20
<PAGE> 23
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
CARDINAL AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
FACE/ MARKET
SHARES VALUE
------- ------
<S> <C> <C>
COMMON STOCK (CONTINUED)
SECURITY & COMMODITY BROKERS 2.30%
Alex. Brown, Inc................... 750 $ 32
Bear Stearns....................... 1,050 28
A.G. Edwards, Inc.................. 1,000 31
Hambrecht & Quist Group Inc........ 1,000 17
Legg Mason......................... 1,000 42
McDonald & Co. Investments......... 1,000 36
Paine Webber....................... 1,500 42
------
228
------
INSURANCE CARRIERS 1.00%
C.M.A.C. Investment Corp........... 3,000 100
------
PERSONAL SERVICES 1.00%
Loewen Group....................... 3,000 96
------
BUSINESS SERVICES 11.40%
Advent Software, Inc............... 3,000 66
Computer Sciences Corp............. 4,500 278
Cort Business Services Corp........ 5,000 114
Fore Systems, Inc.................. 2,000 30
Microsoft Corp..................... 4,000 367
PRI Automation..................... 2,500 119
Personal Group of America, Inc..... 4,000 78
Pixar Inc.......................... 4,000 72
------
1,124
------
<CAPTION>
FACE/ MARKET
SHARES VALUE
------- ------
<S> <C> <C>
COMMON STOCK (CONTINUED)
MOTION PICTURES .70%
Imaxf Inc.......................... 2,000 $ 68
------
HEALTH SERVICES 3.00%
IDEXX Laboratories, Inc............ 3,000 42
Maxicare Healthplans Inc........... 10,000 251
------
ENGINEERING & MANAGEMENT SERVICES .70%
Myriad Genetics.................... 2,000 69
------
TOTAL COMMON STOCK
(COST $8,087,621).............. 9,453
------
REPURCHASE AGREEMENTS 4.30%
Fifth Third Bank 04-01-97
(collateralized by U.S. Government
Securities)........................ 425,000 425
------
TOTAL INVESTMENTS
(COST $8,512,621) 100.00%...... $9,878
======
</TABLE>
(a) Represents cost for Federal income tax purposes. Cost differs from market
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................................................... $ 2,305
Unrealized depreciation......................................................................... (940)
-------
Net unrealized appreciation..................................................................... $ 1,365
=======
</TABLE>
* Non-income producing
See accompanying notes to financial statements.
21
<PAGE> 24
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (MARKET VALUE IN THOUSANDS) --
CARDINAL BALANCED FUND
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
FACE/ MARKET
SHARES VALUE
--------- -------
<S> <C> <C>
COMMON STOCK 61.8%
Ahmanson H F..................... 5,000 $ 183
Alliance Capital Mgmnt........... 6,000 148
American Express Co.............. 3,000 180
American General Hosp............ 4,000 109
Amgen............................ 1,500 84
Amoco Corp....................... 2,000 173
Applied Materials................ 3,000 139
Avalon Properties, Inc........... 3,000 82
Avery Dennison Corp.............. 4,500 173
Bank of New York................. 4,500 165
Barnett Banks Inc................ 4,000 186
Bay Apartments Communities....... 2,500 89
British Petroleum Co............. 700 96
Burlington North/Santa Fee....... 2,000 148
CWM Mortgage Holding............. 7,000 136
Coca-Cola Co..................... 3,000 167
Colgate.......................... 2,000 199
Commerce Bancshares, Inc......... 3,500 160
Crane Co......................... 4,500 141
Deere & Co....................... 4,000 174
The Walt Disney Co............... 1,900 139
Exxon Corp....................... 2,000 215
Federal Express.................. 2,500 130
Fisher Scientific Intl........... 3,500 154
Gateway 2000..................... 3,000 154
General Electric Co.............. 1,000 99
General Motors, Class H.......... 3,000 163
Gillette Company................. 2,500 181
Healthsouth Corp................. 9,000 172
Hewlett Packard.................. 2,000 106
IBM.............................. 1,000 137
Intel Corp....................... 1,300 181
Johnson & Johnson................ 3,000 159
Kimberly-Clark Corp.............. 1,000 99
Lowe's Companies................. 4,000 150
Lucent Technology................ 3,500 185
McDonalds Corp................... 3,000 142
Medtronic Inc.................... 2,500 156
Mellon Bank Corp................. 2,000 146
Merck & Co....................... 2,000 169
Monsanto Co...................... 4,500 172
Neogen Corp...................... 10,000 75
New York Times Co. Cl A.......... 4,500 199
Nike Inc......................... 2,000 124
Pepsico Inc...................... 5,000 163
<CAPTION>
FACE/ MARKET
SHARES VALUE
--------- -------
<S> <C> <C>
Philip Morris Cos., Inc.......... 1,000 $ 114
Potash........................... 1,700 129
Robert Mondavi, Cl A............. 3,000 109
Rowe T. Price Assoc. Inc......... 4,000 149
Saks Holding, Inc................ 3,500 101
Service Corp. International...... 3,000 89
Tenet Healthcare Corp............ 3,000 74
Textron Inc...................... 1,600 168
Transocean Offshore, Inc......... 3,000 168
Travelers Group, Inc............. 2,667 128
Tribune Co....................... 4,000 162
Tyco International............... 3,000 165
U.S. Robotics Corp............... 1,500 83
William Cos., Inc................ 2,000 89
Worldcom Inc..................... 7,000 154
-------
TOTAL COMMON STOCK
(COST $7,726,102)............ 8,584
-------
CONVERTIBLE PREFERRED STOCK 3.5%
Airtouch Comm. 4.25%............. 3,000 $ 131
Glendale Federal 8.75%, (Series
E)............................. 4,000 235
U.S. Surgical Corp., (Series
A)............................. 7,500 115
-------
TOTAL CONVERTIBLE PREFERRED
STOCK (COST $415,910)........ 481
-------
CORPORATE BONDS 15.3%
Amer Air, 10.18%, 01-02-13....... 250,000 286
CSX Trans, 6.72%, 06-01-97....... 250,000 238
Consumer Pwr, 7.50%, 06-01-02.... 300,000 301
Dole Foods, 7.00%, 05-15-03...... 200,000 196
GMAC, 7.00%, 09-15-02............ 200,000 198
Kemper Cor., 6.875%, 09-15-03.... 250,000 244
Limited Inc., 7.50%, 03-15-23.... 250,000 214
Nordstrom, 6.70%, 07-01-05....... 250,000 238
-------
TOTAL CORPORATE BONDS
(COST $2,078,439)............ 1,915
-------
CONVERTIBLE CORPORATE BONDS 2.2%
Magna Intl., 5.05%, 10-15-02..... 200,000 214
Repap Enterprises, Inc., 8.50%,
08-01-97....................... 150,000 149
U.S. Filter, 4.50%, 07-01-05..... 150,000 150
-------
TOTAL CONVERTIBLE CORPORATE
BONDS (COST $307,125)........ 513
-------
</TABLE>
(continued)
22
<PAGE> 25
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
CARDINAL BALANCED FUND
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
FACE/ MARKET
SHARES VALUE
--------- -------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS 15.1%
U.S. Strip, 11.250%, 02-15-15.... 1,000,000 $ 430
T-Note, 5.875%, 02-15-04......... 500,000 473
FNMA, 6.94%, 03-14-11............ 500,000 466
FNMA, 7.00%, 09-03-03............ 250,000 245
FNMA, 7.03%, 10-25-06............ 250,000 242
FNMA, 7.50%, 11-15-06............ 250,000 245
-------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST
$2,206,356).................. 2,101
-------
<CAPTION>
FACE/ MARKET
SHARES VALUE
--------- -------
<S> <C> <C>
REPURCHASE AGREEMENTS 2.2%
Fifth Third Bank, 04-01-97,
(collateralized by U.S. Govern-
ment Securities)............... 300,000 $ 300
-------
TOTAL REPURCHASE AGREEMENTS
(COST $300,000).............. 300
-------
TOTAL INVESTMENTS 100.00%
(COST $13,046,933)........... $13,897
=======
</TABLE>
GNMA -- Government National Mortgage Association
MIP -- Monthly Income Payment
(a) Represents cost for Federal income tax purposes. Cost differs from market
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................................................... $ 1,204
Unrealized depreciation......................................................................... (354)
-------
Net unrealized appreciation..................................................................... $ 850
=======
</TABLE>
See accompanying notes to financial statements.
23
<PAGE> 26
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (PRINCIPAL AMOUNTS AND MARKET VALUE IN THOUSANDS) --
CARDINAL GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2)
-------- --------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS 98.2%
GNMA CLC Notes, 7.350% maturing
01-15-97 through 01-15-98................. $ 2,613 $ 2,604
GNMA CLC Notes, 7.750% maturing
02-15-98 through 12-15-98................. 2,151 2,108
GNMA CLC Notes, 8.000% maturing
11-15-97 through 10-15-98................. 6,264 6,377
GNMA CLC Notes, 8.125% maturing
05-15-99.................................. 3,800 3,893
GNMA CLC Notes, 8.250% maturing
09-15-97.................................. 2,350 2,370
GNMA PL Notes, 8.000% maturing
06-15-19 through 08-15-35................. 14,574 14,732
GNMA PL Notes, 8.120% maturing
06-15-29.................................. 492 497
GNMA PL Notes, 8.250% maturing
03-15-22 through 11-15-34................. 5,691 5,787
GNMA PL Notes, 8.500% maturing
06-15-22 through 03-15-30................. 8,178 8,388
GNMA PL Notes, 8.875% maturing
05-15-35.................................. 1,260 1,324
GNMA PL Notes, 9.000% maturing
10-15-21 through 12-15-34................. 7,321 7,625
GNMA PL Notes, 9.250% maturing
03-15-30 through 05-15-33................. 1,649 1,737
GNMA PL Notes, 9.500% maturing
01-15-19 through 02-15-23................. 804 856
GNMA PL Notes, 10.200% maturing
12-15-22.................................. 1,627 1,691
GNMA PL Notes, 10.500% maturing
07-15-14.................................. 1,010 1,053
<CAPTION>
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2)
-------- --------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS
(CONTINUED)
GNMA I Notes, 7.500% maturing
10-15-25 through 03-15-27................. $ 14,863 $ 14,570
GNMA I Notes, 8.000% maturing
05-15-22 through 06-15-26................. 14,492 14,614
GNMA I Notes, 8.500% maturing
05-15-96 through 08-15-17................. 8,851 9,206
GNMA I Notes, 9.000% maturing
05-15-16 through 07-15-18................. 16,470 17,483
GNMA I Notes, 11.000% maturing
01-15-10 through 06-15-20................. 6,927 4,716
GNMA II Notes, 8.000% maturing
05-20-26 through 12-26-26................. 3,685 3,690
GNMA II Notes, 10.000% maturing
01-20-14 through 12-20-21................. 8,204 8,981
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGA-
TIONS (COST $133,862,679)............. 134,302
--------
REPURCHASE AGREEMENTS, FULLY COLLATERALIZED BY
U.S. GOVERNMENT OBLIGATIONS 1.8%
Fifth Third Bank, 6.450%, due 04-01-
97 (collateralized by $2,524,500
Federal Home Loan Mortgage Corp............. 2,475 2,475
--------
TOTAL REPURCHASE AGREEMENTS
(COST $2,475,000)..................... 2,475
--------
TOTAL INVESTMENTS
(COST $136,337,679)................... $136,777
========
</TABLE>
CLC -- Construction Loan Contract
GNMA -- Government National Mortgage Association
PL -- Project Loan
(a) Represents cost for Federal income tax purposes. Cost differs from market
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................................................ $ 1,632
Unrealized depreciation........................................................................ (1,193)
--------
Net unrealized appreciation.................................................................... $ 439
========
</TABLE>
See accompanying notes to financial statements.
24
<PAGE> 27
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
1. ORGANIZATION
The Cardinal Group (the "Group") is an open-end management investment company,
sponsored by The Ohio Company ("TOC"), established as an Ohio Business Trust on
March 23, 1993. The Group is authorized to issue an unlimited number of shares
which are units of beneficial interest without par value. Before June 24, 1993
the Group had no operations other than those relating to organizational matters,
including the issuance of 5,000 shares of beneficial interest in each of
Cardinal Balanced Fund and Cardinal Aggressive Growth Fund (the "Original
Portfolios") for cash at $10.00 per share on June 4, 1993 to Cardinal Management
Corp. ("CMC"), the Group's Investment Adviser and a wholly owned subsidiary of
TOC.
Effective May 1, 1996 the Group acquired the assets and assumed the liabilities
of four open-end management investment companies also sponsored by TOC in
exchange for shares of corresponding portfolios of the Group. Cardinal
Government Securities Trust, Cardinal Tax Exempt Money Trust, The Cardinal Fund
Inc., and Cardinal Government Obligations Fund (collectively the "Acquired
Funds") were acquired by portfolios of the Group as follows:
Cardinal Government Securities Trust was acquired by Cardinal Government
Securities Money Market Fund
Cardinal Tax Exempt Money Trust was acquired by Cardinal Tax Exempt Money
Market Fund
The Cardinal Fund Inc. was acquired by The Cardinal Fund
Cardinal Government Obligations Fund was acquired by Cardinal Government
Obligations Fund
The new portfolios retained the basic investment objectives and assumed the
historical performance of the Acquired Funds.
Effective January 1, 1997, as authorized by the Board of Trustees, the Group
began to issue shares of two classes, Investor and Institutional, of units of
beneficial interest of The Cardinal Fund, Cardinal Government Obligations Fund,
Cardinal Balanced Fund and Cardinal Aggressive Growth Fund portfolios.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies that the Group
follows in the preparation of its financial statements and the calculation of
daily net asset values. The policies are in conformity with generally accepted
accounting principles and the Investment Company Act of 1940 (the "Act"), as
amended. The preparation of these financial statements requires the management
of the Group to make estimates and assumptions which affect the reported amounts
of assets and liabilities as of March 31, 1997 and the income and expenses
reported for the period. Actual results could differ significantly from those
estimates.
(continued)
25
<PAGE> 28
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
SECURITIES VALUATION Investments in Cardinal Government Securities Money Market
Fund and Cardinal Tax Exempt Money Market Fund (the "money market funds") are
valued at amortized cost, which approximates the market value. Any premiums and
discounts are amortized on a straight-line method to the maturity of the
particular security. The use of the amortized cost method requires that the
money market funds purchase only securities with a remaining maturity of 397
calendar days or less (longer if certain maturity shortening provisions in Rule
2a-7, of the Act, apply) and maintain a dollar weighted portfolio maturity of 90
days or less.
Investments in The Cardinal Fund, Cardinal Aggressive Growth Fund, Cardinal
Balanced Fund and Cardinal Government Obligations Fund (collectively the
"non-money market funds") listed or traded on a national securities exchange are
valued at the last sale price. Investments traded in the over-the-counter market
are valued at either the mean between the bid and ask prices or the last sale
price as may be quoted by the National Association of Securities Dealers
Automated Quotation System. If no quotations are available the portfolio
securities are valued in good faith by the Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME Security transactions are recorded
on the trade date, which is the date they are purchased or sold. Interest income
is recognized on the accrual basis. Dividend income, if any, is recognized on
the ex-dividend date. Realized gains or losses are calculated using the
First-In/First-Out (FIFO) basis.
REPURCHASE AGREEMENTS It is the policy of the Group for its Custodian, Fifth
Third Bank of Cincinnati, or a third-party bank reporting to the Custodian, to
take possession of all securities pledged to the Group as collateral for the
funds loaned in repurchase agreements. Repurchase agreements entered into by the
Group must mature in seven days or less and be fully collateralized by
securities eligible for purchase by the participating portfolio. The Group may
only participate in repurchase transactions with those banks and securities
broker/dealers that meet the credit criteria established by the Board of
Trustees and monitored by CMC.
DEFERRED ORGANIZATIONAL COST Costs incurred with the initial organization of
the Group have been deferred and are being amortized on a straight-line basis
over the 60 month period from the commencement of operations on June 24, 1993.
In the event that any of the initial shares of the Original Portfolios are
redeemed by CMC or any subsequent holders thereof during the 60 month
amortization period, the Group will reduce the redemption proceeds otherwise
payable by any unamortized initial organizational costs in the same proportion
as the number of initial shares of the Original Portfolios being redeemed bears
to the number of initial shares of the Original Portfolios outstanding at the
time of redemption.
The costs incurred with the acquisitions of the Acquired Funds have been
deferred and are being amortized over the 60 month period beginning May 1, 1996,
the effective date of the acquisitions.
(continued)
26
<PAGE> 29
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
FEDERAL INCOME TAXES The Group has made no provision for Federal income taxes.
It is the intention of the management of the Group to comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies and to
make sufficient distributions of taxable income and gains within the required
time, to relieve it from all, or substantially all, Federal income taxes.
DISTRIBUTIONS TO SHAREHOLDERS The money market funds and Cardinal Government
Obligations Fund declare dividends from net investment income daily and pay them
to shareholders monthly. The Cardinal Fund, Cardinal Aggressive Growth Fund and
Cardinal Balanced Fund declare and pay dividends from net investment income, if
any, quarterly. Realized capital gains, if any, are declared and paid annually
for the Group. Distributions of net investment income and realized capital gains
are determined in accordance with the Internal Revenue Code and may differ from
those calculated in accordance with generally accepted accounting principles.
For the period ended September 30, 1996, approximately $77,000 in net investment
losses for the Cardinal Aggressive Growth Fund were used to offset short-term
capital gains for Federal income tax purposes. In addition, approximately
$132,000, representing a portion of the Cardinal Aggressive Growth Fund's
redemptions during the period ended September 30, 1995 were classified as
capital gain distributions under income equalization rates allowed for Federal
income tax purposes.
OPTION WRITING When a portfolio of the Group writes an option, an amount equal
to the premium received is recorded as a liability and is subsequently adjusted
to the current market value of the option written. Premiums received from
options written that expire unexercised are recognized as realized gains by the
portfolio on the expiration date. The difference, if any, between the premium
received and the amount paid in a closing transaction is also treated as a
realized gain or loss. If a written option is exercised, the premium received is
added to proceeds from sales of the underlying securities for call options
written or deducted from the cost basis of securities purchased for put options
written. The portfolios making use of option writing bear the market risk of an
unfavorable change in the price of any security/index underlying the written
option.
EXPENSE ALLOCATION Expenses directly related to one of the Group's portfolios
or classes are charged to that portfolio or class. Other operating expenses are
allocated to the portfolios of the Group based on their relative net assets.
(continued)
27
<PAGE> 30
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
3. PURCHASES AND SALES OF SECURITIES
The purchases and sales of investment securities (excluding short-term
securities) for the six months ended March 31, 1997 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -------
<S> <C> <C>
The Cardinal Fund.......................................... $ 13,456 $11,049
Cardinal Aggressive Growth Fund............................ 1,294 905
Cardinal Balanced Fund..................................... 2,100 1,705
Cardinal Government Obligations Fund....................... 18,574 24,460
</TABLE>
4. TRANSACTIONS WITH AFFILIATES
CMC, an affiliated company, acts as the Investment Adviser and Transfer Agent
for the Group under contracts monitored and annually approved by the Board of
Trustees. CMC receives a fee based on the average net assets of each portfolio,
plus reimbursement of out-of-pocket costs, for these services as outlined below
as of March 31, 1997:
<TABLE>
<CAPTION>
INVESTMENT ADVISER TRANSFER AGENT
FEE AS A PERCENT OF FEE -- ANNUAL
AVERAGE NET ASSETS PER ACCOUNT CHARGE
-------------------- ------------------
<S> <C> <C>
Money market funds......................... 0.50% $21.00
The Cardinal Fund*......................... 0.60% 18.00
Cardinal Aggressive Growth Fund............ 0.75% 18.00
Cardinal Balanced Fund..................... 0.75% 18.00
Cardinal Government Obligations Fund....... 0.50% 21.00
</TABLE>
- ---------------
* Prior to May 1, 1996, TOC served as Investment Adviser to The Cardinal Fund's
predecessor, The Cardinal Fund, Inc., and was paid an investment adviser fee
of 0.50% of average net assets.
TOC serves as the Group's distributor. TOC receives fees from the Fund for
providing services under the Distribution and Shareholder Service Plan, pursuant
to Rule 12b-1 of the Investment Company Act of 1940, and the Administrative
Service Plan. Under the Plan, the non-money market funds pay TOC an annual fee
not to exceed .25% of the average net assets of the Investor shares of those
funds for providing distribution and shareholder services. Under the
Administrative Services Plan, TOC receives .15% of the average net assets of the
Institutional shares of those funds for providing shareholder services.
CMC also acted as the Fund Accountant for the Group until January 20, 1997 when
Fifth Third Bank, the Custodian for the Group, assumed that function.
(continued)
28
<PAGE> 31
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
TOC reported to the Group that it received the following commissions (loads),
after discounts to dealers, from the sale of shares of the portfolios of the
Group for the six months ended March 31, 1997:
<TABLE>
<S> <C>
The Cardinal Fund --Investor Shares.................................. $ 76,549
Cardinal Aggressive Growth Fund --Investor Shares.................... 62,247
Cardinal Balanced Fund --Investor Shares............................. 20,235
Cardinal Government Obligations Fund --Investor Shares............... 11,052
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
The portfolios of the Group have available lines of credit with Fifth Third Bank
of Cincinnati, the Custodian, which were unused at March 31, 1997. When used,
borrowings under this arrangement are secured by investment securities and can
be used only for short-term needs of the borrowing portfolio. Compensating
balances are not required and the interest is calculated at 106% of the
Custodian's prime lending rate. The amounts available under this arrangement are
as follows:
<TABLE>
<S> <C>
Cardinal Government Securities Money Market Fund................. $ 25,000,000
Cardinal Tax Exempt Money Market Fund............................ 10,000,000
The Cardinal Fund................................................ 25,000,000
Cardinal Aggressive Growth Fund.................................. 2,000,000
Cardinal Balanced Fund........................................... 2,000,000
Cardinal Government Obligations Fund............................. 25,000,000
</TABLE>
The aggregate limit on borrowing for the Group under this arrangement is
$25,000,000.
(continued)
29
<PAGE> 32
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
Fidelity Bond and Errors/Omissions insurance coverage for the Group and its
officers and Trustees has been obtained through ICI Mutual Insurance Company
(ICI Mutual), an industry-sponsored mutual insurance company. Certain portfolios
include in other assets deposits made for the initial capital and certificates
of deposits that collateralize standby letters of credit supporting potential
capital needs of ICI Mutual. In addition, these portfolios are also committed to
provide additional capital should ICI Mutual experience unusual losses arising
from its insurance underwriting. The following table details the deposits,
certificates of deposit and additional capital commitments of the Group:
<TABLE>
<CAPTION>
CERTIFICATES
OF ADDITIONAL
DEPOSITS DEPOSIT COMMITMENTS
-------- --------- ---------
<S> <C> <C> <C>
Cardinal Government Securities Money Market Fund....... $ 87,459 $ 175,000 $ 262,377
Cardinal Tax Exempt Money Market Fund.................. 13,291 27,000 39,873
The Cardinal Fund...................................... 28,588 56,600 85,764
Cardinal Government Obligations Fund................... 30,644 61,000 91,932
</TABLE>
6. FEDERAL INCOME TAXES
For Federal income tax purposes, at March 31, 1997 Cardinal Government
Obligations Fund had a capital loss carryforward available to offset future
capital gains, if any, that will expire over the next eight years. Approximately
$2,600,000 of the capital loss carryforward expired during the year ended
September 30, 1996. Cardinal Government Obligations Fund will not declare any
capital gain distributions until the carryforward amount has been offset or
expired. The amount of the capital loss carryforward and the years they expire
are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
-------------------------------------------- ------------
<S> <C>
1997........................................ $ 1,943,362
1998........................................ 1,867,822
1999........................................ 194,311
2001........................................ 1,489,408
Thereafter.................................. 14,206,099
-----------
$ 19,701,002
============
</TABLE>
Additionally, at March 31, 1997 Cardinal Government Securities Money Market Fund
had a capital loss carryforward of approximately $312,000 available to offset
future capital gains, if any. This capital loss carryforward will expire in
2002.
(continued)
30
<PAGE> 33
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
7. CAPITAL SHARES TRANSACTIONS
Transactions in capital shares for the Group for the six months ended March 31,
1997 and the year ended September 30, 1996 were as follows:
<TABLE>
<CAPTION>
CARDINAL GOVERNMENT CARDINAL TAX EXEMPT
SECURITIES MONEY MARKET FUND MONEY MARKET FUND
---------------------------------- ----------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1997 SEPT. 30, 1996 MARCH 31, 1997 SEPT. 30, 1996
---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
Shares outstanding:
Beginning of period............. 477,875,384 445,373,567 59,914,915 64,779,828
------------- ------------- -------------
Share Transactions:
Issued.......................... 676,744,012 1,272,767,547 86,022,113 159,476,954
Reinvested...................... 10,832,892 22,142,798 543,256 1,700,566
Redeemed........................ (635,301,862) (1,262,408,528) (76,701,171) (166,042,433)
------------- ------------- -------------
Net change in shares............ 52,275,042 32,501,817 9,864,198 (4,864,913)
------------- ------------- -------------
End of period................... 530,150,426 477,875,384 69,779,113 59,914,915
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
THE CARDINAL FUND CARDINAL AGGRESSIVE GROWTH FUND
INVESTOR SHARES INVESTOR SHARES
---------------------------------- ----------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1997 SEPT. 30, 1996 MARCH 31, 1997 SEPT. 30, 1996
---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
Shares outstanding:
Beginning of period............. 17,438,077 17,099,016 854,859 843,808
------------- ------------- ------------- -------------
Share Transactions:
Issued.......................... 436,112 650,183 80,092 218,186
Reinvested...................... 1,389,060 2,834,816 17,226 66,252
Redeemed........................ (2,876,746) (3,145,938) (289,902) (273,387)
------------- ------------- ------------- -------------
Net change in shares............ (1,051,574) 339,061 (192,584) 11,051
------------- ------------- ------------- -------------
End of period................... 16,386,503 17,438,077 662,275 854,859
============= ============= ============= =============
</TABLE>
(continued)
31
<PAGE> 34
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
CARDINAL GOVERNMENT
CARDINAL BALANCED FUND OBLIGATIONS FUND
INVESTOR SHARES INVESTOR SHARES
---------------------------------- ----------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1997 SEPT. 30, 1996 MARCH 31, 1997 SEPT. 30, 1996
---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
Shares outstanding:
Beginning of period............. 1,209,997 1,261,727 16,557,234 18,543,620
---------------- -------------- ---------------- --------------
Share Transactions:
Issued.......................... 104,691 201,799 431,177 622,614
Reinvested...................... 113,772 81,266 335,404 745,343
Redeemed........................ (258,307) (334,795) (1,905,425) (3,354,343)
---------------- -------------- ---------------- --------------
Net change in shares............ (39,844) (51,730) (1,138,844) (1,986,386)
---------------- -------------- ---------------- --------------
End of period................... 1,170,153 1,209,997 15,418,390 16,557,234
============= ============= ============= =============
</TABLE>
32
<PAGE> 35
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
CARDINAL AGGRESSIVE
THE CARDINAL FUND GROWTH FUND
INSTITUTIONAL SHARES INSTITUTIONAL SHARES
----------------------- -----------------------
FOR THE PERIOD FROM FOR THE PERIOD FROM
JANUARY 2, 1997 THROUGH JANUARY 2, 1997 THROUGH
MARCH 31, 1997 MARCH 31, 1997
----------------------- -----------------------
<S> <C> <C>
Shares outstanding:
Beginning of period..................................... 0 0
--------- ---------
Share Transactions:
Issued.................................................. 1,741,685 242,861
Reinvested.............................................. 4,887 0
Redeemed................................................ (54,603) (2,494)
--------- ---------
Net change in shares.................................... 1,691,969 240,367
--------- ---------
End of period........................................... 1,691,969 240,367
========= =========
</TABLE>
<TABLE>
<CAPTION>
CARDINAL CARDINAL GOVERNMENT
BALANCED FUND OBLIGATIONS FUND
INSTITUTIONAL SHARES INSTITUTIONAL SHARES
----------------------- -----------------------
FOR THE PERIOD FROM FOR THE PERIOD FROM
JANUARY 2, 1997 THROUGH JANUARY 2, 1997 THROUGH
MARCH 31, 1997 MARCH 31, 1997
----------------------- -----------------------
<S> <C> <C>
Shares outstanding:
Beginning of period..................................... 0 0
------- -------
Share Transactions:
Issued.................................................. 120,219 746,535
Reinvested.............................................. 4,312 11,831
Redeemed................................................ (17,442) (39,365)
------- -------
Net change in shares.................................... 107,089 719,001
------- -------
End of period........................................... 107,089 719,001
======= =======
</TABLE>
33
<PAGE> 36
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS --
CARDINAL GOVERNMENT SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
SIX MONTHS ENDED ----------------------------------------------
MARCH 31, 1997 1996 1995 1994 1993
---------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INVESTMENT ACTIVITIES:
Net investment income.................... 0.02 0.05 0.05 0.03 0.02
-------- ------- ------- ------- -------
Total from Investment Activities..... 0.02 0.05 0.05 0.03 0.02
-------- ------- ------- ------- -------
DISTRIBUTIONS:
From net investment income............... (0.02) (0.05) (0.05) (0.03) (0.02)
-------- ------- ------- ------- -------
Total Distributions.................. (0.02) (0.05) (0.05) (0.03) (0.02)
-------- ------- ------- ------- -------
NET ASSET VALUE, ENDING.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Total return............................. 2.24% 4.70% 4.98% 2.84%* 2.41%
Net Assets at end of period (000)........ 530,150 477,875 445,374 367,516 402,758
Ratio of expenses to average net
assets................................. 0.81% 0.81% 0.81% 0.85% 0.79%
Ratio of net investment income to average
net assets............................. 4.44% 4.74% 4.92% 2.94% 2.38%
</TABLE>
- ---------------
* During the year ended September 30, 1994, CMC contributed $1,151,186 to
Cardinal Government Securities Trust, the fund's predecessor, to offset losses
incurred by the predecessor. Without the capital contribution, the 1994 total
return would have been 2.55%.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CARDINAL TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
SIX MONTHS ENDED ----------------------------------------------
MARCH 31, 1997 1996 1995 1994 1993
---------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INVESTMENT ACTIVITIES:
Net investment income.................... 0.01 0.03 0.03 0.02 0.02
-------- ------- ------- ------- -------
Total from Investment Activities..... 0.01 0.03 0.03 0.02 0.02
-------- ------- ------- ------- -------
DISTRIBUTIONS:
From net investment income............... (0.01) (0.03) (0.03) (0.02) (0.02)
-------- ------- ------- ------- -------
Total Distributions.................. (0.01) (0.03) (0.03) (0.02) (0.02)
-------- ------- ------- ------- -------
NET ASSET VALUE, ENDING.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Total Return............................. 1.34% 2.67% 3.02% 1.78% 1.81%
Net Assets at end of period (000)........ 69,779 59,915 64,780 80,531 91,159
Ratio of expenses to average net
assets................................. 0.88% 0.89% 0.81% 0.76% 0.77%
Ratio of net investment income to average
net assets............................. 2.66% 2.66% 2.99% 1.78% 1.80%
</TABLE>
See notes to financial statements.
34
<PAGE> 37
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- THE CARDINAL FUND INVESTOR SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
SIX MONTHS ENDED --------------------------------------------------
MARCH 31, 1997 1996 1995 1994 1993
---------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING............... $ 13.13 $ 13.23 $ 12.73 $ 12.91 $ 12.95
INVESTMENT ACTIVITIES:
Net investment income.................. 0.08 0.25 0.36 0.31 0.32
Net realized and unrealized gain on
investments.......................... 1.27 1.95 1.32 0.12 0.55
-------- -------- -------- -------- --------
Total from Investment Activities..... 1.35 2.20 1.68 0.43 0.87
-------- -------- -------- -------- --------
DISTRIBUTIONS:
From net investment income............. (0.08) (0.26) (0.35) (0.33) (0.29)
From net realized gains................ (1.12) (2.04) (0.83) (0.28) (0.62)
-------- -------- -------- -------- --------
Total Distributions.................. (1.20) (2.30) (1.18) (0.61) (0.91)
-------- -------- -------- -------- --------
NET ASSET VALUE, ENDING.................. $ 13.28 $ 13.13 $ 13.23 $ 12.73 $ 12.91
======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Total Return (without sales load)...... 10.62% 17.96% 14.84% 3.38% 6.98%
Net Assets at end of period (000)...... $218,099 $229,042 $226,181 $246,581 $282,125
Ratio of expenses to average net
assets............................... 0.98% 0.75% 0.70% 0.72% 0.68%
Ratio of net investment income after
expenses to average net assets....... 1.10% 1.90% 2.89% 2.40% 2.46%
Ratio of incurred expenses to average
net assets (a)....................... 0.98% 0.85% 0.70% 0.72% 0.68%
Ratio of net investment income after
incurred expenses to average net
assets (a)........................... 1.10% 1.80% 2.89% 2.40% 2.46%
Portfolio turnover rate................ 11.46% 57.93% 19.78% 23.20% 11.11%
Average commission rate paid (b)....... $ 0.08 $ 0.08 $ 0.08 $ 0.08 $ 0.08
</TABLE>
- ---------------
(a) During the period certain fees were voluntarily waived. Had the fees been
charged, the effective ratio would reflect the incurred expenses as
indicated above.
(b) Represents the total amount of commissions paid in portfolio equity
transactions divided by the total number of shares purchased and sold
by the fund for which commissions were charged.
See notes to financial statements.
35
<PAGE> 38
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- THE CARDINAL FUND INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JANUARY 2, 1997*
THROUGH
MARCH 31, 1997
-----------------------
<S> <C>
NET ASSET VALUE, BEGINNING.............................................................. $ 12.99
INVESTMENT ACTIVITIES:
Net investment income................................................................. 0.04
Net realized and unrealized gain on investments....................................... 0.29
-------
Total from Investment Activities.................................................... 0.33
-------
DISTRIBUTIONS:
From net investment income............................................................ (0.04)
From net realized gains............................................................... 0.00
-------
Total Distributions................................................................. (0.04)
-------
NET ASSET VALUE, ENDING................................................................. $ 13.28
=======
RATIOS/SUPPLEMENTAL DATA:
Total Return (without sales load)..................................................... 2.54%
Net Assets at end of period (000)..................................................... $22,471
Ratio of expenses to average net assets............................................... 0.88%
Ratio of net investment income after expenses to average net assets................... 1.20%
Portfolio turnover rate............................................................... 11.46%
Average commission rate paid (a)...................................................... $ 0.08
</TABLE>
- ---------------
(a) Represents the total amount of commissions paid in portfolio equity
transactions divided by the total number of shares purchased and sold
by the fund for which commissions were charged.
* Commencement of operations.
See notes to financial statements.
36
<PAGE> 39
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS --
CARDINAL AGGRESSIVE GROWTH FUND INVESTOR SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, JUNE 24, 1993*
SIX MONTHS ENDED --------------------------------- THROUGH
MARCH 31, 1997 1996 1995 1994 SEPTEMBER 30, 1993
---------------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING........ $ 11.31 $ 12.37 $ 9.94 $ 10.47 $ 10.00
INVESTMENT ACTIVITIES:
Net investment loss............. (0.10) (0.17) (0.10) (0.13) (0.03)
Net realized and unrealized gain
(loss)
on investments................ (0.01) 0.01 2.53 (0.36) 0.50
-------- ------- ------- ------- --------
Total from Investment
Activities............... (0.11) (0.16) 2.43 (0.49) 0.47
-------- ------- ------- ------- --------
DISTRIBUTIONS:
From net realized gains......... (0.27) (0.90) 0.00 (0.04) 0.00
-------- ------- ------- ------- --------
Total Distributions......... (0.27) (0.90) 0.00 (0.04) 0.00
-------- ------- ------- ------- --------
NET ASSET VALUE, ENDING........... $ 10.93 $ 11.31 $ 12.37 $ 9.94 $ 10.47
======== ======= ======= ======= ========
RATIOS/SUPPLEMENTAL DATA:
Total Return (without sales
load)......................... (1.15)% (1.13)% 24.35% (4.74)% 4.70%
Net Assets at end of period
(000)......................... $ 7,256 $ 9,669 $10,434 $ 9,460 $ 6,320
Ratio of expenses to average net
assets........................ 2.00% 1.95% 2.24% 2.51% 0.91%
Ratio of net investment loss
after
expenses to average net
assets........................ (1.65)% (1.52)% (0.92)% (1.50)% (0.53)%
Ratio of incurred expenses to
average net assets (a)........ 2.00% 2.17% 2.25% 2.51% 0.91%
Ratio of net investment loss
after incurred expenses to
average net assets (a)........ 1.68% (1.75)% (0.93)% (1.50)% (0.53)%
Portfolio turnover rate......... 26.48% 48.60% 80.35% 95.70% 31.15%
Average commission rate paid
(b)........................... $ 0.08 $ 0.07 $ 0.07 $ 0.09 $ 0.08
</TABLE>
- ---------------
* Commencement of operations.
(a) During the period certain fees were voluntarily waived. Had the fees been
charged, the effective ratio would reflect the incurred expenses as
indicated above.
(b) Represents the total amount of commissions paid in portfolio equity
transactions divided by the total number of shares purchased and sold by the
fund for which commissions were charged.
See notes to financial statements.
37
<PAGE> 40
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS --
CARDINAL AGGRESSIVE GROWTH FUND INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JANUARY 2, 1997*
THROUGH
MARCH 31, 1997
----------------------
<S> <C>
NET ASSET VALUE, BEGINNING............................................................ $ 11.80
INVESTMENT ACTIVITIES:
Net investment loss................................................................. (0.05)
Net realized and unrealized gain (loss)
on investments.................................................................... (0.82)
--------
Total from Investment Activities................................................ (0.87)
--------
DISTRIBUTIONS:
From net realized gains............................................................. 0.00
--------
Total Distributions............................................................. 0.00
--------
NET ASSET VALUE, ENDING............................................................... $ 10.93
========
RATIOS/SUPPLEMENTAL DATA:
Total Return (without sales load)................................................... (7.37)%
Net Assets at end of period (000)................................................... $ 2,628
Ratio of expenses to average net assets............................................. 1.90%
Ratio of net investment loss after
expenses to average net assets.................................................... (1.58)%
Portfolio turnover rate............................................................. 26.48%
Average commission rate paid (a).................................................... 0.28%
</TABLE>
- ---------------
* Commencement of operations.
(a) Represents the total amount of commissions paid in portfolio equity
transactions divided by the total number of shares purchased and sold by the
fund for which commissions were charged.
See notes to financial statements.
38
<PAGE> 41
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS --
CARDINAL AGGRESSIVE GROWTH FUND INVESTOR SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, JUNE 24, 1993*
SIX MONTHS ENDED --------------------------------- THROUGH
MARCH 31, 1997 1996 1995 1994 SEPTEMBER 30, 1993
---------------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING........ $ 11.86 $ 11.52 $ 9.90 $ 10.13 $ 10.00
INVESTMENT ACTIVITIES:
Net investment income........... 0.15 0.41 0.34 0.23 0.02
Net realized and unrealized gain
(loss) on investments......... 0.38 0.73 1.67 (0.20) 0.12
-------- ------- ------- ------- --------
Total from Investment
Activities............... 0.53 1.14 2.01 0.03 0.14
-------- ------- ------- ------- --------
DISTRIBUTIONS:
From net investment income...... (0.15) (0.41) (0.35) (0.23) (0.01)
From net realized gains......... (1.06) (0.39) (0.04) (0.03) 0.00
-------- ------- ------- ------- --------
Total Distributions......... (1.21) (0.80) (0.39) (0.26) (0.01)
-------- ------- ------- ------- --------
NET ASSET VALUE, ENDING........... $ 11.18 $ 11.86 $ 11.52 $ 9.90 $ 10.13
======== ======= ======= ======= ========
RATIOS/SUPPLEMENTAL DATA:
Total Return (without sales
load)......................... 4.66% 10.26% 20.76% 0.37% 1.40%
Net Assets at end of period
(000)......................... $ 13,079 $14,345 $14,535 $13,973 $ 10,811
Ratio of expenses to average net
assets........................ 1.64% 1.64% 1.94% 2.07% 0.70%
Ratio of net investment income
after expenses to average net
assets........................ 2.56% 3.54% 3.24% 2.44% 0.35%
Ratio of incurred expenses to
average net assets (a)........ 1.64% 1.86% 1.95% 2.07% 0.70%
Ratio of net investment income
after incurred expenses to
average net assets (a)........ 2.56% 3.32% 3.23% 2.44% 0.35%
Portfolio turnover rate......... 24.34% 18.34% 37.62% 59.09% 60.67%
Average commission rate paid
(b)........................... $ 0.09 $ 0.09 $ 0.09 $ 0.10 $ 0.10
</TABLE>
- ---------------
* Commencement of operations.
(a) During the period certain fees were voluntarily waived. Had the fees been
charged, the effective ratio would reflect the incurred expenses as
indicated above.
(b) Represents the total amount of commissions paid in portfolio equity
transactions divided by the total number of shares purchased and sold by the
Fund for which commissions were charged.
See notes to financial statements.
39
<PAGE> 42
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CARDINAL BALANCED FUND INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JANUARY 2, 1997*
THROUGH
MARCH 31, 1997
----------------------
<S> <C>
NET ASSET VALUE, BEGINNING............................................................ $ 11.26
INVESTMENT ACTIVITIES:
Net investment income............................................................... 0.07
Net realized and unrealized gain (loss) on investments.............................. (0.08)
--------
Total from Investment Activities................................................ (0.01)
--------
DISTRIBUTIONS:
From net investment income.......................................................... (0.07)
--------
Total Distributions............................................................. (0.07)
--------
NET ASSET VALUE, ENDING............................................................... $ 11.18
========
RATIOS/SUPPLEMENTAL DATA:
Total Return (without sales load)................................................... (0.12)%
Net Assets at end of period (000)................................................... $ 1,197
Ratio of expenses to average net assets............................................. 1.54%
Ratio of net investment income after expenses to average net assets................. 2.66%
Portfolio turnover rate............................................................. 29.34%
Average commission rate paid (a).................................................... $ 0.09
</TABLE>
- ---------------
* Commencement of operations.
(a) Represents the total amount of commissions paid in portfolio equity
transactions divided by the total number of shares purchased and sold by the
Fund for which commissions were charged.
See notes to financial statements.
40
<PAGE> 43
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS --
CARDINAL GOVERNMENT OBLIGATIONS FUND INVESTOR SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
SIX MONTHS ENDED --------------------------------------------------
MARCH 31, 1997 1996 1995 1994 1993
---------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING............. $ 8.05 $ 8.18 $ 7.96 $ 8.63 $ 8.95
INVESTMENT ACTIVITIES:
Net investment income................ 0.30 0.60 0.64 0.66 0.74
Net realized and unrealized gain
(loss) on investments.............. (0.02) (0.12) 0.22 (0.68) (0.32)
-------- -------- -------- -------- --------
Total from Investment Activities... 0.28 0.48 0.86 (0.02) 0.42
-------- -------- -------- -------- --------
DISTRIBUTIONS:
From net investment income........... (0.30) (0.60) (0.64) (0.65) (0.74)
Tax return of capital................ 0.00 (0.01) 0.00 0.00 0.00
-------- -------- -------- -------- --------
Total Distributions................ (0.30) (0.61) (0.64) (0.65) (0.74)
-------- -------- -------- -------- --------
NET ASSET VALUE, ENDING................ $ 8.03 $ 8.05 $ 8.18 $ 7.96 $ 8.63
======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Total Return (without sales load).... 3.37% 6.04% 11.27% (0.27)% 4.83%
Net Assets at end of period (000).... $123,508 $133,298 $151,711 $169,529 $208,883
Ratio of expenses to average net
assets............................. 0.92% 0.78% 0.76% 0.75% 0.73%
Ratio of net investment income after
charged expenses to average net
assets............................. 7.30% 7.39% 7.93% 7.88% 8.32%
Ratio of incurred expenses to average
net assets (a)..................... 0.92% 0.88% 0.76% 0.75% 0.73%
Ratio of net investment income after
incurred expenses to average net
assets (a)......................... 7.30% 7.29% 7.93% 7.88% 8.32%
Portfolio turnover rate.............. 37.26% 33.58% 36.71% 21.95% 24.94%
</TABLE>
- ---------------
(a) During the period certain fees were voluntarily waived. Had the fees been
charged, the effective ratio would reflect the incurred expenses as
indicated above.
See notes to financial statements.
41
<PAGE> 44
THE CARDINAL GROUP
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS --
CARDINAL GOVERNMENT OBLIGATIONS FUND INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JANUARY 2, 1997*
THROUGH
MARCH 31, 1997
----------------------
<S> <C>
NET ASSET VALUE, BEGINNING........................................................... $ 8.11
INVESTMENT ACTIVITIES:
Net investment income.............................................................. 0.15
Net realized and unrealized gain (loss) on investments............................. (0.08)
-------
Total from Investment Activities................................................. 0.07
-------
DISTRIBUTIONS:
From net investment income......................................................... (0.15)
-------
Total Distributions.............................................................. (0.15)
-------
NET ASSET VALUE, ENDING.............................................................. $ 8.03
=======
RATIOS/SUPPLEMENTAL DATA:
Total Return (without sales load).................................................. 0.78%
Net Assets at end of period (000).................................................. $ 5,738
Ratio of expenses to average net assets............................................ 0.82%
Ratio of net investment income after charged expenses to average net assets........ 7.40%
Portfolio turnover rate............................................................ 37.26%
</TABLE>
- ---------------
* Commencement of operations.
See notes to financial statements.
42
<PAGE> 45
================================================================================
INVESTMENT ADVISER
Cardinal Management Corp.
215 East Capital Street
Columbus, Ohio 43215
TRANSFER AGENT AND DIVIDEND PAYING AGENT
Cardinal Management Corp.
215 East Capital Street
Columbus, Ohio 43215
DISTRIBUTOR
The Ohio Company
155 East Broad Street
Columbus, Ohio 43215
CUSTODIAN
Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
LEGAL COUNSEL
Baker & Hostetler
65 East State Street
Columbus, Ohio 43215
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
------------------------
This report has been prepared for the information of shareholders of The
Cardinal Group and is not authorized for distribution to prospective investors
unless preceded or accompanied by an effective Prospectus.
================================================================================
----------------------------------
SEMI-ANNUAL REPORT
----------------------------------
MARCH 31, 1997
CARDINAL GOVERNMENT SECURITIES MONEY MARKET FUND
CARDINAL TAX EXEMPT
MONEY MARKET FUND
THE CARDINAL FUND
CARDINAL AGGRESSIVE GROWTH FUND
CARDINAL BALANCED FUND
CARDINAL GOVERNMENT
OBLIGATIONS FUND
(LOGO)
================================================================================
