<PAGE> 1
The One Group(R)
Tax-Free Bond Fund
Supplement dated February 7, 1996 to
Prospectus dated November 1, 1995
The name of The One Group(R) Tax-Free Bond Fund has been changed to The
One Group(R) Municipal Income Fund. All references in the prospectus to The One
Group(R) Tax-Free Bond Fund should be changed accordingly.
On the Summary page under the heading "What are the Permitted
Investments?" the clause at the end of the first sentence -- "and not treated as
a preference item for purposes of the Federal alternative minimum tax" is
deleted.
At the end of the first paragraph under "Investment Policies --
Permissible Investments" on page 7, the following language is added:
The Fund maintains the ability under normal conditions to invest as
much as 100% of its assets in Municipal Securities issued to finance private
activities whose interest is a tax preference item for purposes of the Federal
alternative minimum tax for individuals. Thus, if you are subject to the Federal
alternative minimum tax, a portion of your income from the Fund may not be
exempt from Federal income taxes. See "Tax Status of Distributions."
The paragraph under the heading "Miscellaneous" on page 25 is deleted
and is replaced in its entirety by the following paragraph:
The Trust believes that as of November 6, 1995, BANC ONE CORPORATION
(100 East Broad Street, Columbus, OH 43271), through its affiliates, owned of
record substantially all the Fiduciary Class shares of the Fund. The Trust
believes that as of the same date, BANC ONE CORPORATION, through its affiliates,
possessed on behalf of its underlying accounts, voting or investment power with
respect to 96.92% of the Fiduciary Class shares of the Fund. As a consequence,
BANC ONE CORPORATION may be deemed to be a controlling person of the Fiduciary
Class shares of the Fund under the Investment Company Act of 1940.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT
WITH THE PROSPECTUS FOR FUTURE REFERENCE
<PAGE> 2
THE ONE GROUP(R) TAX-FREE BOND FUND PROSPECTUS
- --------------------------------------------------------------------------------
Investment Adviser: BANC ONE INVESTMENT ADVISORS CORPORATION
The One Group(R) (the "Trust") is a mutual fund seeking to provide a convenient
and economical means of investing in one or more professionally managed
portfolios of securities. This Prospectus relates to The One Group(R) Tax-Free
Bond Fund Class A, Class B and Fiduciary Class shares.
THE ONE GROUP(R) TAX-FREE BOND FUND (THE "FUND") SEEKS CURRENT INCOME EXEMPT
FROM FEDERAL INCOME TAXES.
Class A and Class B shares are offered to the general public.
Fiduciary Class shares are offered to institutional investors, including
affiliates of BANC ONE CORPORATION and any bank, depository institution,
insurance company, pension plan or other organization authorized to act in
fiduciary, advisory, agency, custodial or similar capacities (each an
"Authorized Financial Organization").
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY BANC ONE CORPORATION OR ITS BANK OR NON-BANK AFFILIATES. THE TRUST'S SHARES
ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY
ANY OTHER GOVERNMENTAL AGENCY OR GOVERNMENT SPONSORED AGENCY OF THE FEDERAL
GOVERNMENT OR ANY STATE. AN INVESTMENT IN MUTUAL FUND SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. BANC ONE
INVESTMENT ADVISORS CORPORATION RECEIVES FEES FROM THE FUND FOR INVESTMENT
ADVISORY AND OTHER SERVICES.
This Prospectus sets forth concisely the information about the Trust that a
prospective investor should know before investing. Investors are advised to read
this Prospectus and retain it for future reference. A Statement of Additional
Information dated November 1, 1995 has been filed with the Securities and
Exchange Commission and is available without charge through the Distributor, The
One Group(R) Services Company, 3435 Stelzer Road, Columbus, OH 43219 or by
calling 1-800-480-4111 during business hours. The Statement of Additional
Information is incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
November 1, 1995
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY................................................................................ 3
ABOUT THE FUND......................................................................... 4
Expense Summary...................................................................... 4
Financial Highlights................................................................. 5
The Fund............................................................................. 7
Investment Objective................................................................. 7
Investment Policies.................................................................. 7
HOW TO DO BUSINESS WITH THE ONE GROUP(R)............................................... 8
How to Invest in The One Group(R).................................................... 8
Alternative Sales Arrangements....................................................... 11
Exchanges............................................................................ 12
Redemptions.......................................................................... 12
FUND MANAGEMENT........................................................................ 13
The Adviser.......................................................................... 13
The Distributor...................................................................... 14
The Administrator.................................................................... 14
The Transfer Agent and Custodian..................................................... 15
Counsel and Independent Accountants.................................................. 15
OTHER INFORMATION...................................................................... 15
The Trust............................................................................ 15
Other Investment Policies............................................................ 16
Description of Permitted Investments................................................. 16
Description of Ratings............................................................... 24
Miscellaneous........................................................................ 25
Performance.......................................................................... 25
Taxes................................................................................ 26
</TABLE>
PROSPECTUS
2
<PAGE> 4
SUMMARY
THE ONE GROUP(R) (the "Trust") is an open-end management investment company that
provides a convenient way to invest in professionally managed portfolios of
securities. The following provides basic information about the Class A, Class B
and Fiduciary Class shares of The One Group(R) Tax-Free Bond Fund.
WHAT IS THE INVESTMENT OBJECTIVE? The Fund seeks current income exempt from
Federal income taxes. See "Investment Objective."
WHAT ARE THE PERMITTED INVESTMENTS? The Fund will invest at least 80% of its
total assets in securities issued by or on behalf of states, territories and
possessions of the United States, the District of Columbia, and their respective
authorities, agencies, instrumentalities, and political subdivisions, the
interest on which is exempt from Federal income tax and not treated as a
preference item for purposes of the Federal alternative minimum tax. As a matter
of fundamental policy, at least 65% of the Fund's total assets will consist of
bonds. The Fund's investments are subject to market and interest rate
fluctuations which may affect the value of the Fund's shares. The Fund may only
invest in select derivatives; their characteristics and limitations on their use
are more fully described in "Description of Permitted Investments." There are
many types of derivative securities with varying degrees of potential risk and
return. See "Investment Policies."
WHO IS THE ADVISER? Banc One Investment Advisors Corporation, an indirect
subsidiary of BANC ONE CORPORATION, serves as the Adviser of the Trust. The
Adviser is entitled to a fee for advisory services provided to the Trust. The
Adviser may voluntarily agree to waive a part of its fees. See "The Adviser" and
"Expense Summary."
WHO IS THE ADMINISTRATOR? The One Group(R) Services Company serves as the
Administrator of the Trust. The Administrator is entitled to a fee for services
provided to the Trust. Banc One Investment Advisors Corporation serves as the
Sub-Administrator of the Trust, pursuant to an agreement with the Administrator
for which Banc One Investment Advisors Corporation receives a fee paid by the
Administrator. See "The Administrator" and "Expense Summary."
WHO IS THE TRANSFER AGENT AND CUSTODIAN? State Street Bank and Trust Company
serves as Transfer Agent and Custodian for the Trust for which services it
receives a fee. Bank One Trust Company, N.A. serves as Sub-Custodian for the
Trust, for which services it receives a fee. See "The Transfer Agent and
Custodian."
WHO IS THE DISTRIBUTOR? The One Group(R) Services Company acts as Distributor
of the Trust's shares. The Distributor is entitled to fees for distribution
services for the Class A and Class B shares. No compensation is paid to the
Distributor for the distribution services for the Fiduciary Class shares of the
Fund. See "The Distributor."
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be made
through the Distributor on any day that the New York Stock Exchange is open for
trading ("Business Days"). See "How to Invest in The One Group(R)" and
"Redemptions."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is determined and declared daily, and
is distributed in the form of periodic dividends to Shareholders of the Fund on
the first Business Day of each month. Any capital gains are distributed at least
annually. Distributions are paid in additional shares of the same class unless
the Shareholder elects to take the payment in cash. See "Dividends."
PROSPECTUS
3
<PAGE> 5
ABOUT THE FUND
EXPENSE SUMMARY -- THE ONE GROUP(R) TAX-FREE BOND FUND
<TABLE>
<CAPTION>
FIDUCIARY
CLASS A CLASS B CLASS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES(1)
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................................... 4.50% none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or redemption
proceeds, as applicable).............................................. none 5.00% none
Redemption Fees......................................................... none none none
Exchange Fees........................................................... none none none
ANNUAL OPERATING EXPENSES(2)
(as a percentage of average daily net assets)
Investment Advisory Fees (after fee waivers)(3)......................... .35% .35% .35%
12b-1 Fees (after fee waivers)(4)....................................... .25% .90% none
Other Expenses.......................................................... .25% .25% .25%
- -----------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES(5)............................................. .85% 1.50% .60%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) A person who purchases shares through an account with a financial
institution or broker/dealer may be charged separate transaction fees by the
financial institution or broker/dealer. In addition, a wire redemption
charge, currently $7.00, is deducted from the amount of a wire redemption
payment made at the request of a Shareholder.
(2) The expense information in the table has been restated to reflect current
fees that would have been applicable had they been in effect during the
previous fiscal year.
(3) Investment Advisory Fees have been revised to reflect fee waivers effective
as of the date of this Prospectus. The Adviser may voluntarily agree to
waive a part of its fees. Absent this voluntary reduction, Investment
Advisory Fees would be .45% for all classes of shares.
(4) Absent the voluntary waiver of fees under the Trust's Distribution and
Shareholder Services Plans, 12b-1 fees (as a percentage of average daily net
assets) would be .35% for Class A shares and 1.00% for Class B shares. There
are no 12b-1 fees charged to Fiduciary Class shares. The 12b-1 fees include
a Shareholder servicing fee of .25% of the average daily net assets of the
Fund's Class B shares and may include a Shareholder servicing fee of .25% of
the average daily net assets of the Fund's Class A shares. See "The
Distributor."
(5) Total Operating Expenses have been revised to reflect fee waivers effective
as of the date of this Prospectus. Other expenses are based on the Fund's
expenses during the most recent fiscal year. Absent the voluntary reduction
of Investment Advisory and 12b-1 fees, Total Operating Expenses would be
1.05% for Class A Shares, 1.70% for Class B Shares and .70% for Fiduciary
Class Shares.
PROSPECTUS
4
<PAGE> 6
EXAMPLE: An investor would pay the following expenses on a $1,000 investment in
Class A and Fiduciary Class shares of the Fund, assuming: (1) imposition of the
maximum sales charge for Class A shares; (2) 5% annual return; and (3)
redemption at the end of each time period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Class A $ 53 $ 71 $ 90 $ 145
Fiduciary Class $ 6 $ 19 $ 33 $ 75
</TABLE>
Absent the voluntary reduction of fees, the dollar amounts in the above example
would be as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Class A $ 55 $ 77 $100 $ 167
Fiduciary Class $ 7 $ 22 $ 39 $ 87
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXAMPLE: An investor would pay the following expenses on a $1,000 investment in
Class B shares, assuming: (1) deduction of the applicable maximum Contingent
Deferred Sales Charge; and (2) 5% annual return.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Assuming a complete redemption at end of period $ 65 $ 77 $102 $ 161
Assuming no redemption $ 15 $ 47 $ 82 $ 161
</TABLE>
Absent the voluntary reduction of fees, the dollar amounts in the above example
would be as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Assuming a complete redemption at end of period $ 67 $ 84 $112 $ 183
Assuming no redemption $ 17 $ 54 $ 92 $ 183
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" examples above reflect the effect of such conversion.
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
purpose of these tables is to assist the investor in understanding the various
costs and expenses that may be directly or indirectly borne by investors in the
Trust.
The rules of the Securities and Exchange Commission (the "SEC") require that the
maximum sales charge be reflected in the above table. However, investors of the
Fund ("Shareholders") may, under certain circumstances, qualify for reduced
sales charges. See "How to Invest in The One Group(R)." Long-term Shareholders
of Class A shares and Class B shares may pay more than the equivalent of the
maximum front-end sales charges otherwise permitted by the National Association
of Securities Dealers' Rules.
FINANCIAL HIGHLIGHTS
The Trust was organized as a Massachusetts Business Trust on May 23, 1985. The
Trust currently consists of 29 separate investment portfolios (the "funds").
Currently, shares in The One Group(R) Tax-Free Bond Fund are offered in three
separate classes: Class A shares, Class B shares and Fiduciary Class shares.
The following tables set forth financial information with respect to the
Financial Highlights for Class A, Class B and Fiduciary Class shares of the Fund
for the period from commencement of operations to June 30, 1995. Such
information is a part of the financial statements audited by Coopers & Lybrand
L.L.P., independent accountants for the Trust, whose report on the Trust's
financial statements for the year ended June 30, 1995 appears in the Statement
of Additional Information. Further information about the Fund's performance is
contained in the Annual Report to Shareholders, which may be obtained without
charge from the Distributor by calling 1-800-480-4111 during business hours.
PROSPECTUS
5
<PAGE> 7
THE ONE GROUP(R) TAX-FREE BOND FUND
FINANCIAL HIGHLIGHTS
For a share of each class outstanding throughout each period
<TABLE>
<CAPTION>
TAX-FREE BOND FUND
---------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------------
1995 1994
----------------------------------- ----------------------------------------
FIDUCIARY CLASS A CLASS B FIDUCIARY CLASS A CLASS B (A)
--------- -------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 9.66 $ 9.67 $ 9.62 $ 10.11 $ 10.12 $10.10
--------- -------- -------- ---------- -------- ------
Investment Activities:
Net Investment Income................... 0.57 0.55 0.49 0.56 0.55 0.24
Net Realized and Unrealized Gain
(Losses) from Investments............. 0.03 0.05 0.07 (0.42) (0.43 ) (0.48)
--------- -------- -------- ---------- -------- ------
Total from Investment Activities......... 0.60 0.60 0.56 0.14 0.12 (0.24)
--------- -------- -------- ---------- -------- ------
Distributions
Net Investment Income................... (0.57) (0.55 ) (0.49) (0.56) (0.54 ) (0.24)
In Excess of Net Realized Gains......... (0.03) (0.03 )
--------- -------- -------- ---------- -------- ------
Total Distributions...................... (0.57) (0.55 ) (0.49) (0.59) (0.57 ) (0.24)
--------- -------- -------- ---------- -------- ------
Net Asset Value, End of Period........... $ 9.69 $ 9.72 $ 9.69 $ 9.66 $ 9.67 $ 9.62
======== ======= ======= ========= ======= ===========
Total Return (Excludes Sales Charge)..... 6.46% 6.21 % 5.58% 1.36% 1.34 % (1.98)%(e)
Ratios/Supplemental Data:
Net Assets at end of period (000)....... $ 185,916 $11,462 $8,326 $152,763 $10,725 $4,855
Ratio of expenses to average net
assets................................ 0.56% 0.81 % 1.46% 0.54% 0.79 % 1.41%(d)
Ratio of net investment income to
average net assets.................... 6.02% 5.76 % 5.14% 5.61% 5.44 % 4.95%(d)
Ratio of expenses to average net
assets*............................... 0.74% 1.09 % 1.74% 0.71% 1.06 % 1.62%(d)
Ratio of net investment income to
average net assets*................... 5.84% 5.48 % 4.86% 5.44% 5.17 % 4.74%(d)
Portfolio Turnover...................... 66.02% 66.02 % 66.02% 101.48% 101.48 % 101.48%
<CAPTION>
1993
---------------------------
FIDUCIARY(B) CLASS A (C)
---------- ------------
<S> <C> <C>
Net Asset Value, Beginning of Period..... $ 10.00 $10.06
---------- ------
Investment Activities:
Net Investment Income................... 0.19 0.19
Net Realized and Unrealized Gain
(Losses) from Investments............. 0.11 0.05
---------- ------
Total from Investment Activities......... 0.30 0.24
---------- ------
Distributions
Net Investment Income................... (0.19) (0.18)
In Excess of Net Realized Gains.........
---------- ------
Total Distributions...................... (0.19) (0.18)
---------- ------
Net Asset Value, End of Period........... $ 10.11 $10.12
========= ===========
Total Return (Excludes Sales Charge)..... 5.18%(d) 6.86%(d)
Ratios/Supplemental Data:
Net Assets at end of period (000)....... $ 40,777 $4,106
Ratio of expenses to average net
assets................................ 0.54%(d) 0.80%(d)
Ratio of net investment income to
average net assets.................... 5.66%(d) 5.71%(d)
Ratio of expenses to average net
assets*............................... 1.01%(d) 1.36%(d)
Ratio of net investment income to
average net assets*................... 5.19%(d) 5.15%(d)
Portfolio Turnover...................... 66.12% 66.12%
</TABLE>
- ---------------
* During the period the investment advisory, 12b-1, and administration fees
were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) The Fund commenced operations on February 9, 1993.
(c) Class A Shares commenced offering on February 23, 1993.
(d) Annualized.
(e) Not Annualized.
PROSPECTUS
6
<PAGE> 8
THE FUND
The One Group(R) Tax-Free Bond Fund (the "Fund") is part of The One Group(R)
(the "Trust"), which is an open-end management investment company that offers
units of beneficial interest ("shares") in 29 separate funds and different
classes of certain of the funds. This Prospectus relates to Class A, Class B and
Fiduciary Class shares of The One Group(R) Tax-Free Bond Fund, which provide for
variations in distribution costs, voting rights, dividends and per share net
asset value pursuant to a multiple class plan (the "Multiple Class Plan")
adopted by the Board of Trustees of the Trust. Except for these differences
among classes, each share of the Fund represents an undivided, proportionate
interest in the Fund. The Fund is a diversified mutual fund. Information
regarding the Trust's other funds and their classes is contained in separate
prospectuses which may be obtained from the Trust's Distributor, The One
Group(R) Services Company, 3435 Stelzer Road, Columbus, OH 43219, or by calling
1-800-480-4111.
INVESTMENT OBJECTIVE
The Fund seeks current income exempt from Federal income taxes.
The investment objective of the Fund is fundamental and may not be changed
without a vote of the holders of a majority of the Fund's outstanding shares (as
defined in the Statement of Additional Information).
There is no assurance that the Fund will meet its investment objective.
INVESTMENT POLICIES
The investment policies of the Fund may be changed without an affirmative vote
of the holders of a majority of the Fund's outstanding shares unless a policy is
expressly deemed to be fundamental or is expressly deemed to be changeable only
by such a majority vote.
PERMISSIBLE INVESTMENTS
The Fund will invest at least 80% of its total assets in securities issued by or
on behalf of states, territories and possessions of the United States, the
District of Columbia, and their respective authorities, agencies,
instrumentalities, and political subdivisions, and the interest on which is
exempt from Federal income tax and not treated as a preference item for purposes
of the Federal alternative minimum tax ("Municipal Securities"). As a matter of
fundamental policy, at least 65% of the Fund's total assets will consist of
bonds. For purposes of this policy "bonds" include debt instruments issued by
the U.S. Treasury, U.S. government agencies and municipalities, mortgage-related
securities and zero coupon obligations.
As a fundamental policy, the Fund will not invest more than 25% of its net
assets in securities within a single industry including revenue bonds payable
only from revenues derived from facilities or revenues within a single industry;
however, the industry limitation does not apply to housing authority obligations
or securities issued by governments or political subdivisions of governments.
The Fund will invest, from time to time, more than 25% of its net assets in
obligations of municipal housing authorities and single-family mortgage revenue
bonds. The Fund does not intend to invest more than 25% of its net assets in
securities of governmental units or issuers located in the same state, territory
or possession of the U.S. Under normal market conditions, it is anticipated that
the Fund's average weighted maturity will range from five to fifteen years.
However, the Fund may shorten its average weighted maturity to as little as two
years if deemed appropriate for temporary defensive purposes.
Municipal Securities, if bonds, must be rated in one of the four highest rating
categories by at least one nationally recognized statistical rating organization
("NRSRO") at the time of investment (for example, BBB or better by Standard &
Poor's Corporation ("S&P") or Baa or better by Moody's Investors Service
("Moody's")) or, if unrated, determined by the Adviser to be of comparable
quality. Other Municipal Securities, such as tax-exempt commercial paper, notes
and variable rate demand obligations, must be rated in one of the two highest
rating categories by at least one NRSRO at the time of investment (such as A-2
by S&P or P-2 by Moody's, with respect to tax-exempt commercial paper; SP-2 by
S&P or MIG-2 by Moody's, with respect to notes; and A-2 by S&P or VMIG-2 by
Moody's, with respect to variable rate demand obligations) or, if unrated,
determined by the Adviser to be of comparable quality.
In addition to the permissible investments described above, the Fund also may
invest in mortgage-backed securities, securities purchased on a when-issued
basis and forward commitments, investment company securities, variable and
floating rate notes, commercial paper, time deposits, certificates of deposit,
receipts, which may include Treasury Receipts ("TRS"), Treasury Investment
Growth Receipts ("TIGRS") and Certificates of Accrual on Treasury Securities
("CATS"), obligations of U.S. government agencies, U.S. Treasury obligations,
which may include Separately Traded Registered Interest and Principal Securities
("STRIPS") and Coupon Under Book Entry Safekeeping ("CUBES"), bankers'
acceptances, repurchase agreements, reverse repurchase agreements, restricted
securities and mortgage dollar rolls. As further described under the
"Description of Permitted Investments," the Fund may use the following
investment instruments and/or techniques: options, futures contracts, options on
futures contracts, participation interests, zero coupon obligations, swap
transactions; municipal leases, securities subject to a demand feature,
structured instruments, inverse floating rate instruments, and securities
lending transactions.
In addition to those instruments and techniques listed above, the Fund may
invest in new options, futures contracts and other financial products that may
be developed, to the extent that these products are consistent with the Fund's
investment objective and policies.
This list of permissible investments includes select securities that may be
commonly considered to be derivatives, including: mortgage dollar rolls,
multiple class pass-through securities and collateralized mortgage obligations
(CMOs and REMICs), inverse floating rate instruments, swap, cap and floor
transactions, new financial products and structured instruments. These
securities and limitations on their use are more fully described in the
"Description of Permitted Investments."
For a description of the Fund's permitted investments and ratings, see
"Description of Permitted Investments" and "Description of Ratings" and the
Statement of Additional Information. For a description of permitted investments
for temporary defensive purposes, see "Temporary Defensive Position." In the
event a security owned by the Fund is downgraded below these rating
PROSPECTUS
7
<PAGE> 9
categories, the Adviser will review and take appropriate action with regard to
the security.
RISK FACTORS
The market value of the Fund's fixed income investments will change in response
to interest rate changes and other factors. During periods of falling interest
rates, the values of outstanding fixed income securities generally rise.
Conversely, during periods of rising interest rates, the values of such
securities generally decline. Moreover, while securities with longer maturities
tend to produce higher yields, the prices of longer maturity securities are also
subject to greater market fluctuations as a result of changes in interest rates.
Changes by recognized agencies in the rating of any fixed income security and in
the ability of an issuer to make payments of interest and principal also affect
the value of these investments. Except under condition of default, changes in
the value of fixed income securities will not affect cash income derived from
these securities but will affect the Fund's net asset value.
Municipal Securities rated in the fourth highest rating category by an NRSRO are
generally considered to be investment grade, although S&P indicates that such
Municipal Securities have speculative characteristics. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
of the issuers of such securities to make principal and interest payments than
is the case with higher grade securities.
The investment characteristics of mortgage-related securities differ from
traditional debt securities. These differences can result in significantly
greater price and yield volatility than is the case with traditional fixed
income securities. The major differences typically include more frequent
interest and principal payments, usually monthly, the adjustability of interest
rates, and the possibility that prepayments of principal may be made at any
time. Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social, and other factors. During periods of
declining interest rates, prepayment rates can be expected to accelerate. Under
certain interest rate and prepayment rate scenarios, the Fund may fail to recoup
fully its investment in mortgage-related securities notwithstanding a direct or
indirect governmental or agency guarantee. The Fund intends to use hedging
techniques to control this risk. In general, changes in the rate of prepayments
on a mortgage-related security will change that security's market value and its
yield to maturity. When interest rates fall, high prepayments could force the
Fund to reinvest principal at a time when investment opportunities are not
attractive. Thus, mortgage-related securities may not be an effective means for
the Fund to lock in long-term interest rates. Conversely, during periods when
interest rates rise, slow prepayments could cause the average life of the
security to lengthen and the value to decline more than anticipated.
Certain investment management techniques that the Fund may use may expose the
Fund to special risks. These include, but are not limited to, the purchase and
sale of futures and options engaging in hedging transactions (including mortgage
and interest rate swaps and interest rate floors and caps), making forward
commitments, purchasing structured instruments, lending portfolio securities and
entering into mortgage dollar rolls. These practices could expose the Fund to
potentially greater risk of loss than more traditional fixed income investments.
For additional information on each of the Fund's permitted investments and
associated risks, see "Description of Permitted Investments."
HOW TO DO BUSINESS WITH
THE ONE GROUP(R)
HOW TO INVEST IN THE ONE GROUP(R)
Shares of the Fund are sold on a continuous basis and may be purchased directly
from the Trust's Distributor, The One Group(R) Services Company, by mail, by
telephone, or by wire. Shares may also be purchased through a financial
institution, such as a bank, savings and loan association or insurance company
(each a "Shareholder Servicing Agent"), that has established a Shareholder
servicing agreement with the Distributor, or through a broker-dealer that has
established a dealer agreement with the Distributor.
Purchases and redemptions of shares of the Fund may be made on any day that the
New York Stock Exchange is open for trading ("Business Days"). The minimum
initial and subsequent investments in the Fund are $1,000 and $100, respectively
($100 and $25, respectively, for employees of BANC ONE CORPORATION and its
affiliates). Initial and subsequent investment minimums may be waived at the
Distributor's discretion.
Investors may purchase up to a maximum of $250,000 of Class B shares per
individual purchase order.
Class A and Class B shares are offered to the general public. Fiduciary Class
shares are offered to institutional investors, including affiliates of BANC ONE
CORPORATION and any bank, depository institution, insurance company, pension
plan or other organization authorized to act in fiduciary, advisory, agency,
custodial or similar capacities (each an "Authorized Financial Organization").
For additional details regarding eligibility, call the Distributor at
1-800-480-4111.
BY MAIL
Investors may purchase Class A and Class B shares of the Fund by completing and
signing an Account Application Form and mailing it, along with a check (or other
negotiable bank instrument or money order) payable to "The One Group(R)," to
State Street Bank and Trust Company (the Trust's Transfer Agent and Custodian),
P.O. Box 8500, Boston, MA 02266-8500. Subsequent purchases of shares may be made
at any time by mailing a check to the Transfer Agent. Account Application Forms
are available through the Distributor by calling 1-800-480-4111.
Purchases of Fiduciary Class shares are made by an institutional investor and/or
other intermediary on behalf of an investor (each also a "Shareholder Servicing
Agent"). The Shareholder Servicing Agent may require an investor to complete
forms in addition to the Account Application Form and to follow procedures
established by the Shareholder Servicing Agent. Such Shareholders should contact
their Shareholder Servicing Agents regarding purchases, exchanges and
redemptions of shares. See "Additional Information Regarding Purchases."
BY TELEPHONE OR BY WIRE
Once an Account Application Form has been received, Shareholders are eligible to
make purchases by telephone or wire (if that
PROSPECTUS
8
<PAGE> 10
option has been selected by a Shareholder) by calling the Transfer Agent at
1-800-480-4111 or the Shareholder Servicing Agents, if applicable.
Shareholders may revoke their automatic eligibility to make purchases and/or
redemptions by telephone or by wire, by sending a letter so stating to the
Transfer Agent, State Street Bank and Trust Company, P.O. Box 8500, Boston, MA
02266-8500.
SYSTEMATIC INVESTMENT PLAN
Class A and Class B investors may make automatic monthly investments in the Fund
from their bank, savings and loan or other depository institution accounts. The
minimum initial and subsequent investments must be $25 under the Systematic
Investment Plan, which minimum may be waived at the discretion of the
Distributor. The Trust pays the costs associated with these transfers, but
reserves the right, upon thirty days' written notice, to impose reasonable
charges for this service. A depository institution may impose a charge for
debiting an investor's account which would reduce the investor's return from an
investment in the Fund.
ADDITIONAL INFORMATION REGARDING PURCHASES
A purchase order will be effective as of the day received by the Distributor if
the Distributor receives the order before 4:00 p.m., eastern time. However, an
order may be cancelled if the Transfer Agent does not receive Federal funds
before the close of business on the next Business Day for Fiduciary Class
shares, and before the close of business on the third Business Day for Class A
and Class B shares, and the investor could be liable for any fees or expenses
incurred by the Trust. Federal funds are monies credited to a bank's account
with a Federal Reserve Bank. The purchase price of shares of the Fund is the net
asset value next determined after a purchase order is effected plus any
applicable sales charge (the "offering price"). The net asset value per share of
the Fund is determined by dividing the total market value of the Fund's
investments and other assets allocable to a class, less any liabilities
allocable to that class, by the total number of outstanding shares of such
class. Net asset value per share is determined daily as of 4:00 p.m., eastern
time, on each Business Day. For a further discussion of the calculation of net
asset value, see the Statement of Additional Information. Shares may also be
issued in transactions involving the acquisition by the Fund of securities held
by collective investment funds sponsored and administered by affiliates of the
Adviser. Purchases will be made in full and fractional shares of the Fund
calculated to three decimal places. Although the methodology and procedures are
identical, the net asset value per share of classes within the Fund may differ
because the distribution expenses charged to Class A shares and Class B shares
are not charged to Fiduciary Class shares.
The Trust reserves the right to reject a purchase order when the Distributor
determines that it is not in the best interest of the Trust and/or its
Shareholders to accept such order. Except as provided below, neither the Trust's
Transfer Agent nor the Trust will be responsible for any loss, liability, cost
or expense for acting upon telephone or wire instructions, and the investor will
bear all risk of loss. The Trust will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine, including requiring a
form of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions. If such procedures are not
employed, the Trust may be liable for any losses due to unauthorized or
fraudulent instructions.
Fiduciary Class shares offered to institutional investors will normally be held
in the name of the Shareholder Servicing Agent effecting the purchase on the
Shareholder's behalf, and it is the Shareholder Servicing Agent's responsibility
to transmit purchase orders to the Distributor. A Shareholder Servicing Agent
may impose an earlier cut-off time for receipt of purchase orders directed
through it to allow for processing and transmittal of these orders to the
Distributor for effectiveness the same day. The Shareholder should contact his
or her Shareholder Servicing Agent for information as to the Shareholder
Servicing Agent's procedures for transmitting purchase, exchange or redemption
orders to the Trust. A Shareholder who desires to transfer the registration of
shares beneficially owned by him or her, but held of record by a Shareholder
Servicing Agent, should contact the Shareholder Servicing Agent to accomplish
such change. Other Shareholders who desire to transfer the registration of their
shares should contact the Transfer Agent.
No certificates representing shares of the Fund will be issued. In
communications to Shareholders, the Fund will not duplicate mailings of Fund
material to Shareholders who reside at the same address.
SALES CHARGE
The following table shows the initial sales charge on Class A shares to a
"single purchaser" (defined below) together with the sales charge reallowed to
financial institutions and intermediaries (the "commission"):
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE COMMISSION
AS A AS APPROPRIATE AS A
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
OFFERING NET AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
- --------------------- ------------- -------------- -------------
<S> <C> <C> <C>
less than $50,000.... 4.50% 4.71% 4.05%
$50,000 but less than
$100,000........... 3.50% 3.63% 3.15%
$100,000 but less
than $250,000...... 2.50% 2.56% 2.25%
$250,000 but less
than $500,000...... 1.50% 1.52% 1.35%
$500,000 but less
than $1,000,000.... 1.00% 1.01% 0.90%
$1,000,000 or more... 0.00% 0.00% 0.00%
</TABLE>
The commissions shown in the table apply to sales through financial institutions
and intermediaries. Under certain circumstances, the Distributor will use its
own funds to compensate financial institutions and intermediaries in amounts
that are additional to the commissions shown above. The maximum cash
compensation payable by the Distributor as a sales charge is 4.50% of the
offering price (including the commission shown above and additional cash
compensation described below). In addition, the Distributor will, from time to
time and at its own expense, provide promotional incentives to financial
institutions and intermediaries, whose registered representatives have sold or
are expected to sell significant amounts of the shares of the Funds, in the form
of payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives to places within or outside
the United States, and additional compensation in an amount up to .25% of the
offering price of Class A shares of the Fund for sales of $1 million or more.
However, the Distributor will be reimbursed by the person receiving such
additional compensation for sales of the Fund of $1 million or more, if a
Shareholder redeems any or all of the shares for which such additional
compensation was paid by
PROSPECTUS
9
<PAGE> 11
the Distributor prior to the first anniversary of purchase. Under certain
circumstances, commissions up to the amount of the entire sales charge will be
reallowed to financial institutions and intermediaries, which might then be
deemed to be "underwriters" under the Securities Act of 1933.
RIGHT OF ACCUMULATION
In calculating the sales charge rates applicable to current purchases of Class A
shares, a "single purchaser" is entitled to cumulate current purchases with the
current value at the offering price of previously purchased Class A and Class B
shares of the Fund and other eligible funds of the Trust, other than the Trust's
money market funds, that are sold subject to a comparable sales charge.
The term "single purchaser" refers to (i) an individual, (ii) an individual and
spouse purchasing shares of the Fund for their own account or for trust or
custodial accounts for their minor children, or (iii) a fiduciary purchasing for
any one trust, estate or fiduciary account, including employee benefit plans
created under Sections 401 or 457 of the Internal Revenue Code of 1986, as
amended (the "Code"), and including related plans of the same employer. To be
entitled to a reduced sales charge based upon shares already owned, the investor
must ask the Distributor for such reduction at the time of purchase and provide
the account number(s) of the investor, the investor and spouse, and their minor
children, and give the age of such children. The Fund may amend or terminate
this right of accumulation at any time as to subsequent purchases.
LETTER OF INTENT
By initially investing at least $2,000 in Class A shares of one or more funds
that impose a comparable sales charge over the next 13 months, the sales charge
may be reduced by completing the Letter of Intent section of the Account
Application Form. The Letter of Intent includes a provision for a sales charge
adjustment depending on the amount actually purchased within the 13-month
period. In addition, pursuant to a Letter of Intent, the Custodian will hold in
escrow the difference between the sales charge applicable to the amount
initially purchased and the sales charge paid at the time of investment, which
is based on the amount covered by the Letter of Intent.
For example, assume an investor signs a Letter of Intent to purchase $250,000 in
Class A shares of one (or more) of the funds of the Trust that impose a
comparable sales charge and, at the time of signing the Letter of Intent,
purchases $100,000 of Class A shares of one of these funds. The investor would
pay an initial sales charge of 1.50% (the sales charge applicable to purchases
of $250,000) and 1.00% of the investment (representing the difference between
the 2.50% sales charge applicable to purchases of $100,000 and the 1.50% sales
charge already paid) would be held in escrow until the investor has purchased
the remaining $150,000 or more in Class A shares under the investor's Letter of
Intent.
The amount held in escrow will be applied to the investor's account at the end
of the 13-month period unless the amount specified in the Letter of Intent is
not purchased. In order to qualify for a Letter of Intent, the investor will be
required to make a minimum purchase of at least $2,000.
The Letter of Intent will not obligate the investor to purchase Class A shares,
but if he or she does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. The Letter of
Intent may be dated as of a prior date to include any purchases made within the
past 90 days.
OTHER CIRCUMSTANCES
No sales charge is imposed on Class A shares of the Fund: (i) issued through
reinvestment of dividends and capital gains distributions; (ii) acquired through
the exercise of exchange privileges where a comparable sales charge has been
paid for exchanged shares; (iii) purchased by officers, directors or trustees,
retirees and employees (and their spouses and immediate family members) of the
Trust, of BANC ONE CORPORATION and its subsidiaries and affiliates, of the
Distributor and its subsidiaries and affiliates, or of an investment sub-adviser
of a fund of the Trust and such sub-adviser's subsidiaries and affiliates; (iv)
sold to affiliates of BANC ONE CORPORATION and certain accounts (other than
Individual Retirement Accounts) for which Authorized Financial Organizations act
in fiduciary, advisory, agency, custodial or similar capacities, or purchased by
investment advisers, financial planners or other intermediaries who have a
dealer arrangement with the Distributor, who place trades for their own accounts
or for the accounts of their clients and who charge a management, consulting or
other fee for their services, as well as clients of such investment advisers,
financial planners or other intermediaries who place trades for their own
accounts if the accounts are linked to the master account of such investment
adviser, financial planner or other intermediary; (v) purchased with proceeds
from the recent redemption of Fiduciary Class shares of a fund of the Trust or
acquired in an exchange of Fiduciary Class shares of a fund for Class A shares
of the same fund; (vi) purchased with proceeds from the recent redemption of
shares of a mutual fund (other than a fund of the Trust) for which a sales
charge was paid; (vii) purchased in an Individual Retirement Account with the
proceeds of a distribution from an employee benefit plan, provided that, at the
time of distribution, the employee benefit plan had plan assets invested in a
fund of the Trust; (viii) purchased with Trust assets; (ix) purchased in
accounts as to which a bank or broker-dealer charges an asset allocation fee,
provided the bank or broker-dealer has an agreement with the Distributor; or (x)
directly purchased with the proceeds of a distribution on a bond for which a
BANC ONE CORPORATION affiliate bank or trust company is the Trustee or Paying
Agent.
An investor relying upon any of the categories of waivers of the sales charge
must qualify for such waiver in advance of the purchase with the Distributor or
the financial institution or intermediary through which shares are purchased by
the investor.
The waiver of the sales charge under circumstances (v), (vi) and (vii) above
applies only if the purchase is made within 60 days of the redemption or
distribution and if conditions imposed by the Distributor are met. The waiver
policy with respect to the purchase of shares through the use of proceeds from a
recent redemption or distribution as described in clauses (v), (vi) and (vii)
above will not be continued indefinitely and may be discontinued at any time
without notice. Investors should call the Distributor at 1-800-480-4111 to
determine whether they are eligible to purchase shares without paying a sales
charge through the use of proceeds from a recent redemption or distribution as
described above, and to confirm continued availability of these waiver policies
prior to initiating the procedures described in clauses (v), (vi) and (vii).
PROSPECTUS
10
<PAGE> 12
ALTERNATIVE SALES ARRANGEMENTS
CLASS B SHARES
Class B shares are not subject to a sales charge when they are purchased, but
are subject to a sales charge (the "Contingent Deferred Sales Charge") if a
Shareholder redeems them prior to the sixth anniversary of purchase. When a
Shareholder purchases Class B shares, the full purchase amount is invested
directly in the Fund. Class B shares of the Fund are subject to an ongoing
distribution and Shareholder service fee at an annual rate of 1.00% of the
Fund's average daily net assets as provided in the Class B Plan (described below
under "The Distributor"). The Distributor has voluntarily agreed to reduce the
amount of this fee to .90% of the Fund's average daily net assets attributable
to the Class B shares, for the indefinite future. This ongoing fee will cause
Class B shares to have a higher expense ratio and to pay lower dividends than
Class A shares. Class B shares convert automatically to Class A shares after
eight years, commencing from the end of the calendar month in which the purchase
order was accepted under the circumstances and subject to the qualifications
described in this Prospectus.
Proceeds from the Contingent Deferred Sales Charge and the distribution and
Shareholder service fees under the Class B Plan are payable to the Distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
Shareholder services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to dealers and agents for selling
Class B shares. A dealer reallowance of 4.00% of the original purchase price of
the Class B shares of the Fund will be paid to financial institutions and
intermediaries.
CONTINGENT DEFERRED SALES CHARGE
If the Shareholder redeems Class B shares prior to the sixth anniversary of
purchase, the Shareholder will pay a Contingent Deferred Sales Charge at the
rates set forth below. The Contingent Deferred Sales Charge is assessed on an
amount equal to the lesser of the then-current market value or the cost of the
shares being redeemed. Accordingly, no sales charge is imposed on increases in
net asset value above the initial purchase price. In addition, no charge is
assessed on shares derived from reinvestment of dividends or capital gain
distributions.
The amount of the Contingent Deferred Sales Charge, if any, varies depending on
the number of years from the time of payment for the purchase of Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of shares, all
payments during a month are aggregated and deemed to have been made on the first
day of the month.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
YEAR(S) PERCENTAGE OF
SINCE DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
- ------------------------------------ --------------------
<S> <C>
0-1................................. 5.00%
1-2................................. 4.00%
2-3................................. 3.00%
3-4................................. 3.00%
4-5................................. 2.00%
5-6................................. 1.00%
6-7................................. None
7-8................................. None
</TABLE>
In determining whether a particular redemption is subject to a Contingent
Deferred Sales Charge, it is assumed that the redemption is first of any Class A
shares in the Shareholder's Fund account (unless the Shareholder elects to have
Class B shares redeemed first) or shares representing capital appreciation, next
of shares acquired pursuant to reinvestment of dividends and capital gain
distributions, and finally of other shares held by the Shareholder for the
longest period of time. This method should result in the lowest possible sales
charge.
To provide an example, assume you purchased 100 shares at $10 per share (a total
cost of $1,000) and prior to the second anniversary after purchase, the net
asset value per share is $12 and during such time you have acquired 10
additional shares through dividends paid in shares. If you then make your first
redemption of 50 shares (proceeds of $600), 10 shares will not be subject to
charge because you received them as dividends. With respect to the remaining 40
shares, the charge is applied only to the original cost of $10 per share and not
to the increase in net asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds is subject to a Contingent Deferred Sales Charge at a rate
of 4.00% (the applicable rate prior to the second anniversary after purchase).
The Contingent Deferred Sales Charge is waived on redemption of shares: (i) for
distributions that are made under a Systematic Withdrawal Plan of the Trust and
that are limited to no more than 10% of the account value annually, determined
in the first year as of the date the redemption request is received by the
Transfer Agent, and in subsequent years, as of the most recent anniversary of
that date; (ii) following the death or disability (as defined in the Code) of a
Shareholder or a participant or beneficiary of a qualifying retirement plan if
redemption is made within one year of such death or disability; or (iii) to the
extent that the redemption represents a minimum required distribution from an
Individual Retirement Account or other qualifying retirement plan to a
Shareholder who has attained the age of 70 1/2. A Shareholder or his or her
representative should contact the Transfer Agent to determine whether a
retirement plan qualifies for a waiver and must notify the Transfer Agent prior
to the time of redemption if such circumstances exist and the Shareholder is
eligible for this waiver. In addition, the following circumstances are not
deemed to result in a "redemption" of Class B shares for purposes of the
assessment of a Contingent Deferred Sales Charge, which is therefore waived: (i)
plans of reorganization of the Fund, such as mergers, asset acquisitions and
exchange offers to which the Fund is a party; or (ii) exchanges for Class B
shares of other funds of the Trust as described under "Exchanges."
CONVERSION FEATURE
Class B shares include all shares purchased pursuant to the Contingent Deferred
Sales Charge which have been outstanding
PROSPECTUS
11
<PAGE> 13
for less than the period ending eight years after the end of the month in which
the shares were purchased. At the end of this period, Class B shares will
automatically convert to Class A shares and will be subject to the lower
distribution and Shareholder service fees charged to Class A shares. Such
conversion will be on the basis of the relative net asset values of the two
classes, without the imposition of any sales charge, fee or other charge. The
conversion is not a taxable event to a Shareholder.
For purposes of conversion to Class A shares, shares received as dividends and
other distributions paid on Class B shares in a Shareholder's Fund account will
be considered to be held in a separate sub-account. Each time any Class B shares
in a Shareholder's Fund account (other than those in the sub-account) convert to
Class A shares, a pro-rata portion of the Class B shares in the sub-account will
also convert to Class A shares.
If a Shareholder effects one or more exchanges among Class B shares of the funds
of the Trust during the eight-year period, the Trust will aggregate the holding
periods for the shares of each fund of the Trust for purposes of calculating
that eight-year period. Because the per share net asset value of the Class A
shares may be higher than that of the Class B shares at the time of conversion,
a Shareholder may receive fewer Class A shares than the number of Class B shares
converted, although the dollar value will be the same.
EXCHANGES
CLASS A AND FIDUCIARY CLASS
Fiduciary Class Shareholders of the Fund may exchange their shares for Class A
shares of the Fund or for Class A shares or Fiduciary Class shares of another
fund of the Trust.
Class A Shareholders may exchange their shares for Fiduciary Class shares of the
Fund or for Fiduciary Class shares or Class A shares of another fund of the
Trust, if the Shareholder is eligible to purchase such shares.
The exchange privilege may be exercised only in those states where the shares of
the Fund or such other fund of the Trust may be legally sold. All exchanges
discussed herein are made at the net asset value of the exchanged shares, except
as provided below. The Trust does not impose a charge for processing exchanges
of shares. If a Shareholder seeks to exchange Class A shares of a fund that does
not impose a sales charge for Class A shares of a fund that does or the fund
being exchanged into has a higher sales charge, the Shareholder will be required
to pay a sales charge in the amount equal to the difference between the sales
charge applicable to the fund into which the shares are being exchanged and any
sales charges previously paid for the exchanged shares, including any sales
charges incurred on any earlier exchanges of the shares (unless such sales
charge is otherwise waived, as provided in "Other Circumstances"). The exchange
of Fiduciary Class for Class A shares also will require payment of the sales
charge unless the sales charge is waived, as provided in "Other Circumstances."
CLASS B
Class B Shareholders of the Fund may exchange their shares for Class B shares of
any other fund of the Trust on the basis of the net asset value of the exchanged
Class B shares, without the payment of any Contingent Deferred Sales Charge that
might otherwise be due upon redemption of the outstanding Class B shares. The
newly acquired Class B shares will be subject to the higher Contingent Deferred
Sales Charge of either the fund from which the shares were exchanged or the fund
into which the shares were exchanged. With respect to outstanding Class B shares
as to which previous exchanges have taken place, "higher Contingent Deferred
Sales Charge" shall mean the higher of the Contingent Deferred Sales Charge
applicable to either the fund the shares are exchanging into or any other fund
from which the shares previously have been exchanged. For purposes of computing
the Contingent Deferred Sales Charge that may be payable upon a disposition of
the newly acquired Class B shares, the holding period for outstanding Class B
shares of the fund from which the exchange was made is "tacked" to the holding
period of the newly acquired Class B shares. For purposes of calculating the
holding period applicable to the newly acquired Class B shares, the newly
acquired Class B shares shall be deemed to have been issued on the date of
receipt of the Shareholder's order to purchase the outstanding Class B shares of
the fund from which the initial exchange was made.
ADDITIONAL INFORMATION REGARDING EXCHANGES
In the case of shares held of record by a Shareholder Servicing Agent but
beneficially owned by a Shareholder, to exchange such shares the Shareholder
should contact the Shareholder Servicing Agent, who will contact the Transfer
Agent and effect the exchange on behalf of the Shareholder. If an exchange
request in good order is received by the Transfer Agent by 4:00 p.m., eastern
time, on any Business Day, the exchange usually will occur on that day. Any
Shareholder who wishes to make an exchange must receive a current prospectus of
the fund of the Trust in which he or she wishes to invest before the exchange
will be effected.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon sixty days' written notice. An exchange between
classes of shares of the same fund is not considered a taxable event; however,
an exchange between funds of the Trust is considered a sale of shares and
usually results in a capital gain or loss for Federal income tax purposes.
Shareholders should consult their tax advisers for a more complete explanation
of the Federal income tax consequences of an exchange of shares of the Fund.
A more detailed description of the above is set forth in the Statement of
Additional Information.
REDEMPTIONS
Shareholders may redeem their shares without charge (except Class B shares, as
provided above) on any Business Day; shares may ordinarily be redeemed by mail,
by telephone or by wire. All redemption orders are effected at the net asset
value per share next determined for Class A shares and Fiduciary Class shares,
and at net asset value per share next determined reduced by any applicable
Contingent Deferred Sales Charge for Class B shares, after receipt of a valid
request for redemption. Payment to Shareholders for shares redeemed will be made
within seven days after receipt by the Transfer Agent of the request for
redemption.
BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to constitute a valid request for redemption. All written redemption requests
should be sent to The One Group(R), c/o State Street Bank and Trust Company,
P.O. Box 8500, Boston,
PROSPECTUS
12
<PAGE> 14
MA 02266-8500 or the Shareholder Servicing Agent, if applicable. The Transfer
Agent may require that the signature on the written request be guaranteed by a
commercial bank, a member firm of a domestic stock exchange, or by a member of
the Securities Transfer Association Medallion Program or the Stock Exchange
Medallion Program.
The signature guarantee requirement will be waived if all of the following
conditions apply: (i) the redemption is for $5,000 worth of shares or less; (ii)
the redemption check is payable to the Shareholder(s) of record; and (iii) the
redemption check is mailed to the Shareholder(s) at the address of record. The
Shareholder may also have the proceeds mailed to a commercial bank account
previously designated on the Account Application Form or by written instruction
to the Transfer Agent or the Shareholder Servicing Agent, if applicable. There
is no charge for having redemption requests mailed to a designated bank account.
BY TELEPHONE OR BY WIRE
Shareholders may have the payment of redemption requests wired or mailed to a
domestic commercial bank account previously designated on the Account
Application Form. Wire redemption requests may be made by the Shareholder by
telephone to the Transfer Agent at 1-800-480-4111, provided that the Shareholder
has elected the telephone redemption privilege in writing to the Distributor, or
to the Shareholder Servicing Agent, if applicable. The Transfer Agent may reduce
the amount of a wire redemption payment by its then-current wire redemption
charge, which, as of the date of this Prospectus, is $7.00.
Neither the Trust nor the Transfer Agent will be responsible for the
authenticity of the redemption instructions received by telephone if it
reasonably believes those instructions to be genuine. The Trust and the Transfer
Agent will each employ reasonable procedures to confirm that telephone
instructions are genuine, and may be liable for losses resulting from
unauthorized or fraudulent telephone transactions if it does not employ those
procedures. Such procedures may include requesting personal identification
information or recording telephone conversations.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders whose accounts have a value of at least $10,000 may elect to
receive, or may designate another person to receive, monthly, quarterly or
annual payments in a specified amount of not less than $100 each. There is no
charge for this service. Under the Systematic Withdrawal Plan, all dividends and
distributions must be reinvested in shares of the Fund. Purchases of additional
Class A shares while the Systematic Withdrawal Plan is in effect are generally
undesirable because a sales charge is incurred whenever purchases are made.
Pursuant to the Systematic Withdrawal Plan, Class B Shareholders may elect to
receive, or may designate another person to receive, distributions provided the
distributions are limited to no more than 10% of their account value annually,
determined in the first year as of the date the redemption request is received
by the Transfer Agent, and in subsequent years, as of the most recent
anniversary of that date.
If the amount of the systematic withdrawal exceeds the income accrued since the
previous withdrawal under the Systematic Withdrawal Plan, the principal balance
invested will be reduced and shares will be redeemed.
OTHER INFORMATION REGARDING REDEMPTIONS
At various times, the Fund may be requested to redeem shares for which it has
not yet received good payment. In such circumstances, the forwarding of proceeds
may be delayed for 15 or more days until payment has been collected for the
purchase of such shares. The Fund intends to pay cash for all shares redeemed.
Due to the relatively high costs of handling small investments, the Fund
reserves the right to redeem, at net asset value, the shares of any Shareholder
if, because of redemptions of shares by or on behalf of the Shareholder, the
account of such Shareholder in the Fund has a value of less than $1,000, the
minimum initial purchase amount. Accordingly, an investor purchasing shares of
the Fund in only the minimum investment amount may be subject to such
involuntary redemption if he or she thereafter redeems any of these shares.
Before the Fund exercises its right to redeem such shares and to send the
proceeds to the Shareholder, the Shareholder will be given notice that the value
of the shares in his or her account is less than the minimum amount and will be
allowed 60 days to make an additional investment in the Fund in an amount which
will increase the value of the account to at least $1,000.
See the Statement of Additional Information for examples of when the Trust may
suspend the right of redemption or redeem shares involuntarily if it appears
appropriate to do so in light of the Trust's responsibilities under the
Investment Company Act of 1940.
FUND MANAGEMENT
THE ADVISER
The Trust and Banc One Investment Advisors Corporation (the "Adviser") have
entered into an investment advisory agreement (the "Advisory Agreement"). Under
the Advisory Agreement, the Adviser makes the investment decisions for the
assets of the Fund and continuously reviews, supervises and administers the
Fund's investment program. The Adviser discharges its responsibilities subject
to the supervision of, and policies established by, the Trustees of the Trust.
The Trust's shares are not deposits or obligations of, or endorsed or guaranteed
by BANC ONE CORPORATION or its bank or non-bank affiliates. The Trust's shares
are not insured or guaranteed by the Federal Deposit Insurance Corporation
("FDIC") or by any other governmental agency or government sponsored agency of
the Federal government or any state.
The Adviser is an indirect, wholly-owned subsidiary of BANC ONE CORPORATION, a
bank holding company incorporated in the state of Ohio. BANC ONE CORPORATION
currently has affiliate banking organizations in Arizona, Colorado, Illinois,
Indiana, Kentucky, Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin. In
addition, BANC ONE CORPORATION has several affiliates that engage in data
processing, venture capital, investment and merchant banking, and other
diversified services including trust management, investment management,
brokerage, equipment leasing, mortgage banking, consumer finance and insurance.
On a consolidated basis, BANC ONE CORPORATION had assets of over $86 billion as
of June 30, 1995.
The Adviser represents a consolidation of the investment advisory staffs of a
number of bank affiliates of BANC ONE CORPORATION, which have considerable
experience in the management of
PROSPECTUS
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open-end management investment company portfolios, including The One Group(R)
since 1985 (then known as "The Helmsman Fund").
Gary J. Madich, CFA, is Senior Managing Director of Fixed Income Securities. Mr.
Madich joined the Adviser in February 1995. Prior to joining the Adviser, Mr.
Madich was a Senior Vice President and Portfolio Manager with Federated
Investors. Mr. Madich has seventeen years of investment management experience.
Patrick M. Morrissey has served as the Manager of the Fund since its inception
in February 1993. Mr. Morrissey has served as a Fund Manager for the Adviser
since October 1992. Mr. Morrissey has also served as Fund Manager of the
Intermediate Tax-Free Bond Fund of the Trust since February 1994. From September
1986 to October 1992, Mr. Morrissey served as a Portfolio Manager at Norwest
Investments and Trust.
The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .45% of the average daily net assets of the Fund. The Adviser
may voluntarily agree to waive a part of its fees. (See "About the
Fund -- Expense Summary.") These fee waivers are voluntary and may be terminated
at any time. Shareholders will be notified in advance if and when these waivers
are terminated. During the fiscal year ended June 30, 1995, the Fund paid
investment advisory fees to the Adviser of .32% of the Fund's average daily net
assets.
THE DISTRIBUTOR
The One Group(R) Services Company (the "Distributor"), a wholly-owned subsidiary
of the BISYS Group, Inc., and the Trust are parties to a distribution agreement
(the "Distribution Agreement") under which shares of the Fund are sold on a
continuous basis.
Class A shares are subject to a distribution and Shareholder services plan (the
"Plan"). As provided in the Plan, the Trust will pay the Distributor a fee of
.35% of the average daily net assets of Class A shares of the Fund. Currently,
the Distributor has voluntarily agreed to limit payments under the Plan to .25%
of the average daily net assets of Class A shares of the Fund. Up to .25% of the
fees payable under the Plan may be used as compensation for Shareholder services
by the Distributor and/or financial institutions and intermediaries. All such
fees that may be paid under the Plan will be paid pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The Distributor may apply these fees toward: (i)
compensation for its services in connection with distribution assistance or
provision of Shareholder services; or (ii) payments to financial institutions
and intermediaries such as banks (including affiliates of the Adviser), savings
and loan associations, insurance companies, investment counselors, broker-
dealers, and the Distributor's affiliates and subsidiaries, as compensation for
services or reimbursement of expenses incurred in connection with distribution
assistance or provision of Shareholder services.
Class B shares are subject to a Contingent Deferred Sales Charge if such shares
are redeemed prior to the sixth anniversary of purchase. Class B shares of the
Fund are subject to an ongoing distribution and Shareholder service fee as
provided in the Class B distribution and Shareholder services plan (the "Class B
Plan") at an annual rate of 1.00% of the Fund's average daily net assets, which
includes Shareholder servicing fees of .25% of the Fund's average daily net
assets. Currently, the Distributor has voluntarily agreed to limit payments
under the Class B Plan to .90% of the average daily net assets of the Class B
shares of the Fund.
Proceeds from the Contingent Deferred Sales Charge and the distribution and the
Shareholder service fees under the Class B Plan are payable to the Distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
Shareholder services to the Fund in connection with the sale of Class B shares,
such as the payment of compensation to dealers and agents for selling Class B
shares. The combination of the Contingent Deferred Sales Charge and the
distribution and Shareholder service fees facilitate the ability of the Fund to
sell the Class B shares without a sales charge being deducted at the time of
purchase.
The Plan and the Class B Plan are characterized as compensation plans since the
distribution fees will be paid to the Distributor without regard to the
distribution or Shareholder service expenses incurred by the Distributor or the
amount of payments made to financial institutions and intermediaries. The Fund
also may execute brokerage or other agency transactions through an affiliate of
the Adviser or through the Distributor for which the affiliate or the
Distributor receives compensation. Pursuant to guidelines adopted by the Board
of Trustees of the Trust, any such compensation will be reasonable and fair
compared to compensation received by other brokers in connection with comparable
transactions.
During the fiscal year ended June 30, 1995, 440 Financial Distributors, Inc.,
the previous distributor to the Trust, received fees aggregating .25% of the
average daily net assets of Class A shares of the Fund. In addition, 440
Financial Distributors, Inc. received annualized fees of .90% of the average
daily net assets of the Class B shares of the Fund.
Fiduciary Class shares of the Fund are offered without distribution fees to
institutional investors, including Authorized Financial Organizations. It is
possible that an institution may offer different classes of shares to its
customers and thus receive different compensation with respect to different
classes of shares. In addition, a financial institution that is the record owner
of shares for the account of its customers may impose separate fees for account
services to its customers.
THE ADMINISTRATOR
The One Group(R) Services Company (the "Administrator"), a wholly-owned
subsidiary of the BISYS Group, Inc., and the Trust are parties to an
administration agreement relating to the Fund (the "Administration Agreement").
Under the terms of the Administration Agreement, the Administrator is
responsible for providing the Trust with administrative services (other than
investment advisory services), including regulatory reporting and all necessary
office space, equipment, personnel and facilities.
The Adviser also serves as Sub-Administrator to each fund of the Trust, pursuant
to an agreement between the Administrator and the Adviser. Pursuant to this
agreement, the Adviser performs many of the Administrator's duties, for which
the Adviser receives a fee paid by the Administrator.
The Administrator is entitled to a fee for administrative services, which is
calculated daily and paid monthly, at an annual rate of .20% of each fund's
average daily net assets on the first $1.5 billion in Trust assets (excluding
the Treasury Only Money Market Fund and the Government Money Market Fund), .18%
of each fund's
PROSPECTUS
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<PAGE> 16
average daily net assets to $2 billion in Trust assets (excluding the Treasury
Only Money Market Fund and the Government Money Market Fund), and .16% of each
fund's average daily net assets when Trust assets exceed $2 billion (excluding
the Treasury Only Money Market Fund and the Government Money Market Fund).
During the fiscal year ended June 30, 1995, 440 Financial, the previous
Administrator to the Trust, received annualized fees of .13% of the Fund's
average daily net assets.
THE TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500 acts
as Transfer Agent and Custodian for the Trust, for which services it receives a
fee. The Custodian holds cash, securities and other assets of the Trust as
required by the Investment Company Act of 1940. Bank One Trust Company, N.A.
serves as Sub-Custodian in connection with the Trust's securities lending
activities, pursuant to an agreement between State Street Bank and Trust Company
and Bank One Trust Company. Bank One Trust Company receives a fee paid by the
Trust.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Ropes & Gray serves as counsel to the Trust. Coopers & Lybrand L.L.P. serves as
the independent accountants of the Trust.
OTHER INFORMATION
THE TRUST
The Trust was organized as a Massachusetts Business Trust under a Declaration of
Trust filed on May 23, 1985. The Declaration of Trust permits the Trust to offer
separate funds and different classes of each fund. All consideration received by
the Trust for shares of any fund and all assets of such fund belong to that fund
and would be subject to liabilities related thereto.
The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to Shareholders, costs of custodial services and registering the
shares under Federal and state securities laws, pricing, insurance expenses,
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organizational expenses. During the fiscal year of the Trust ended
June 30, 1995, the expenses of the Fund were .81% of the average daily net
assets of the Class A shares of the Fund, 1.46% of the average daily net assets
of the Class B shares of the Fund on an annual basis and .56% of the average
daily net assets of the Fiduciary Class shares of the Fund. These expenses would
have been 1.09%, 1.74% and .74%, respectively, of the average daily net assets
of such classes, but for the voluntary reduction of fees.
The Adviser and the Administrator of the Fund each bears all expenses incurred
in connection with the performance of their services as investment adviser and
administrator, respectively, other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund.
As a general matter, as set forth in the Multiple Class Plan, expenses are
allocated to each class of shares of the Fund on the basis of the net asset
value of that class in relation to the net asset value of the Fund. At present,
the only expenses that are allocated to Class A and Class B shares, other than
in accordance with the relative net asset value of the class, are the
distribution and Shareholder services costs. See "Expense Summary." At present,
no expenses are allocated to Fiduciary Class shares as a class that are not also
borne by the other classes of shares of the Fund in proportion to the relative
net asset values of the shares of such classes.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described above, certain
companies provide essential management services to the Trust.
VOTING RIGHTS
As set forth in the Multiple Class Plan, each share held entitles the
Shareholder of record to one vote. Each fund of the Trust will vote separately
on matters relating solely to that fund. In addition, each class of a fund shall
have exclusive voting rights on any matter submitted to Shareholders that
relates solely to that class, and shall have separate voting rights on any
matter submitted to Shareholders in which the interests of one class differ from
the interests of any other class. However, all fund Shareholders will have equal
voting rights on matters that affect all fund Shareholders equally. As a
Massachusetts Business Trust, the Trust is not required to hold annual meetings
of Shareholders but approval will be sought for certain changes in the operation
of the Trust and for the election of Trustees under certain circumstances. In
addition, a Trustee may be elected or removed by the remaining Trustees or by
Shareholders at a special meeting called upon written request of Shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the Shareholders requesting the meeting.
DIVIDENDS
Net investment income (exclusive of capital gains) is determined and declared
daily, and is distributed in the form of periodic dividends to Shareholders of
the Fund on the first Business Day of each month. Capital gains of the Fund, if
any, will be distributed at least annually.
To maintain a relatively even rate of distributions from the Fund rather than
having substantial fluctuations from period to period, the monthly distributions
level from the Fund may be fixed from time to time at rates consistent with the
Adviser's long-term earnings expectations.
Shareholders automatically receive all income dividends and capital gain
distributions in additional Class A, Class B or Fiduciary Class shares, as
applicable, at the net asset value next determined following the record date,
unless the Shareholder has elected to take such payment in cash. Such election,
or any revocation thereof, must be made in writing, at least 15 days prior to
distribution, to the Transfer Agent at P.O. Box 8500, Boston, MA 02266-8500, and
will become effective with respect to dividends and distributions having record
dates after its receipt by the Transfer Agent. Reinvested dividends and
distributions receive the same tax treatment as dividends and distributions paid
in cash.
Class B shares received as dividends and capital gains distributions at the net
asset value next determined following the record date shall be held in a
separate Class B sub-account. Each time any
PROSPECTUS
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Class B shares (other than those in the sub-account) convert to Class A shares,
a pro-rata portion of the Class B shares in the sub-account will also convert to
Class A shares. (See "Conversion Feature.")
Dividends and distributions of the Fund are paid on a per-share basis. The value
of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a dividend or the distribution of
capital gains, a Shareholder will pay the full price for the shares and receive
some portion of the price back as a taxable dividend or distribution even though
such distribution would, in effect, represent a return of the Shareholder's
investment.
The amount of dividends payable on Fiduciary Class shares will be more than the
dividends payable on Class A and Class B shares because of the distribution
expenses charged to Class A and Class B shares.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Administrator, The One Group(R)
Services Company, 3435 Stelzer Road, Columbus, OH 43219.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes proxy statements and other
reports to Shareholders of record.
OTHER INVESTMENT POLICIES
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes during periods when the Adviser determines that
market conditions warrant such action, the Fund may invest up to 100% of its
assets in money market instruments, and may hold a portion of its assets in cash
for liquidity purposes.
To the extent the Fund is engaged in a temporary defensive position, it will not
be pursuing its investment objective.
PORTFOLIO TURNOVER
For the fiscal year ended June 30, 1995, the portfolio turnover rate for the
Fund was 66.02%.
The portfolio turnover for the Fund may vary greatly from year to year, as well
as within a particular year. Higher portfolio turnover rates will likely result
in higher transaction costs to the Fund, and may result in additional tax
consequences to the Fund's shareholders.
INVESTMENT LIMITATIONS
The investment objective and the following investment limitations are
fundamental policies of the Fund. Fundamental policies cannot be changed without
the consent of the holders of a majority of the Fund's outstanding shares. The
term "majority of the outstanding shares" means the vote of (i) 67% or more of
the Fund's shares present at a meeting, if more than 50% of the outstanding
shares of the Fund are present or represented by proxy, or (ii) more than 50% of
the Fund's outstanding shares, whichever is less.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and, if consistent with the
Fund's investment objective and policies, repurchase agreements involving such
securities) if as a result more than 5% of the total assets of the Fund would be
invested in the securities of such issuer or the Fund would own more than 10% of
the outstanding voting securities of such issuer. This restriction applies to
75% of the Fund's assets. For purposes of these limitations, a security is
considered to be issued by the government entity whose assets and revenues
guarantee or back the security. With respect to private activity bonds or
industrial development bonds backed only by the assets and revenues of a
non-governmental user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total assets of
the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to Municipal Securities or governmental guarantees of
Municipal Securities. For the purposes of this limitation only, private activity
bonds that are backed only by the assets and revenues of a non-governmental
issuer shall not be deemed to be Municipal Securities. For purposes of this
limitation (i) utilities will be divided according to their services (for
example, gas, gas transmission, electric and telephone will each be considered a
separate industry); and (ii) wholly-owned finance companies will be considered
to be in the industries of their parents if their activities are primarily
related to financing the activities of their parents.
3. Make loans, except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described in
this Prospectus and in the Statement of Additional Information.
The foregoing percentages will apply at the time of the purchase of a security.
Additional investment limitations are set forth in the Statement of Additional
Information.
DESCRIPTION OF PERMITTED INVESTMENTS
The following is a description of certain of the permitted investments for the
Fund.
U.S. TREASURY OBLIGATIONS -- The Fund may invest in bills, notes and bonds
issued by the U.S. Treasury and separately traded interest and principal
component parts of such obligations that are transferable through the Federal
book-entry system known as Separately Traded Registered Interest and Principal
Securities ("STRIPS") and Coupon Under Book Entry Safekeeping ("CUBES").
RECEIPTS -- The Fund may purchase interests in separately traded interest and
principal component parts of U.S. Treasury obligations that are issued by banks
or brokerage firms and are created by depositing U.S. Treasury notes and U.S.
Treasury bonds into a special account at a custodian bank. The custodian holds
the interest and principal payments for the benefit of the registered owners of
the certificates or receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains the register.
Receipts include Treasury Receipts ("TRS"), Treasury Investment Growth Receipts
("TIGRS"), and Certificates of Accrual on Treasury Securities ("CATS").
PROSPECTUS
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STRIPS, CUBES, TRS, TIGRS and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
interest rate volatility than interest-paying U.S. Treasury obligations. The
Fund may invest up to 20% of its total assets in STRIPS, CUBES, TRS, TIGRS and
CATS. See also "Taxes."
CERTIFICATES OF DEPOSIT -- Certificates of deposit are negotiable interest
bearing instruments with a specific maturity. Certificates of deposit ("CDs")
are issued by banks and savings and loan institutions in exchange for the
deposit of funds and normally can be traded in the secondary market prior to
maturity.
TIME DEPOSITS -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, a time deposit
("TD") earns a specified rate of interest over a definite period of time;
however, it cannot be traded in the secondary market. Time deposits with a
withdrawal penalty are considered to be illiquid securities; therefore, the Fund
will not invest more than 15% of its total assets in such time deposits and
other illiquid securities.
BANKERS' ACCEPTANCES -- Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by (i.e., made an obligation of) a commercial bank.
They are used by corporations to finance the shipment and storage of goods and
to furnish dollar exchange. Maturities are generally six months or less.
COMMERCIAL PAPER -- Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations and other entities.
Maturities on these issues vary from a few days to nine months.
U.S. GOVERNMENT AGENCIES -- Certain Federal agencies have been established as
instrumentalities of the U.S. government to supervise and finance specific types
of activities. Select agencies, such as the Government National Mortgage
Association ("Ginnie Mae") and the Export-Import Bank, are supported by the full
faith and credit of the U.S. Treasury; others, such as the Federal National
Mortgage Association ("Fannie Mae"), are supported by the credit of the
instrumentality and have the right to borrow from the U.S. Treasury; others are
supported by the authority of the U.S. government to purchase the agency's
obligations; while still others, such as the Federal Farm Credit Banks and the
Federal Home Loan Mortgage Corporation ("Freddie Mac"), are supported solely by
the credit of the instrumentality itself. No assurance can be given that the
U.S. government would provide financial support to U.S. government sponsored
agencies or instrumentalities if it is not obligated to do so by law.
Obligations of U.S. government agencies include debt issues and mortgage-backed
securities issued or guaranteed by select agencies.
INVESTMENT COMPANY SECURITIES -- The Fund may invest up to 5% of its total
assets in the securities of any one investment company, but may not own more
than 3% of the securities of any one investment company or invest more than 10%
of its assets in the securities of other investment companies. In accordance
with an exemptive order issued to the Trust by the SEC, such other investment
company securities may include securities of a money market fund of the Trust,
and such companies may include companies of which the Adviser or a sub-adviser
to a fund of the Trust, or an affiliate of such Adviser or sub-adviser, serves
as investment adviser, administrator or distributor. Because other investment
companies employ an investment adviser, such investment by the Fund may cause
Shareholders to bear duplicate fees. The Adviser will waive its fee attributable
to the assets of the investing fund invested in a money market fund of the
Trust; and, to the extent required by the laws of any state in which shares of
the Trust are sold, the Adviser will waive its fees attributable to the assets
of the Fund invested in any investment company.
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a person
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. The custodian or
its agent will hold the security as collateral for the repurchase agreement.
Collateral must be maintained at a value at least equal to 100% of the
repurchase price. The Fund bears a risk of loss in the event the other party
defaults on its obligations and the Fund is delayed or prevented from its right
to dispose of the collateral securities or if the Fund realizes a loss on the
sale of the collateral securities. The Adviser will enter into repurchase
agreements on behalf of the Fund only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the agreement based on
guidelines established and periodically reviewed by the Trustees. Repurchase
agreements are considered by the SEC to be loans under the Investment Company
Act of 1940.
REVERSE REPURCHASE AGREEMENTS -- The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Fund would sell portfolio securities to financial institutions
such as banks and broker-dealers and agree to repurchase them at a mutually
agreed-upon date and price. The Fund will enter into reverse repurchase
agreements only to avoid otherwise selling securities during unfavorable market
conditions to meet redemptions. At the time the Fund enters into a reverse
repurchase agreement, it would place in a segregated custodial account assets,
such as liquid high grade debt securities, consistent with the Fund's investment
restrictions and having a value equal to the repurchase price (including accrued
interest), and would subsequently monitor the account to ensure that such
equivalent value was maintained. Reverse repurchase agreements involve the risk
that the market value of securities sold by the Fund may decline below the price
at which the Fund is obligated to repurchase the securities. Reverse repurchase
agreements are considered by the SEC to be borrowings by the Fund under the
Investment Company Act of 1940.
SECURITIES LENDING -- In order to generate additional income, the Fund may lend
up to 33% of the securities in which it is invested pursuant to agreements
requiring that the loan be continuously secured by cash, securities of the U.S.
government or its agencies, shares of an investment trust or mutual fund or any
combination of cash and such securities as collateral equal at all times to at
least 100% of the market value plus accrued interest on the securities lent. The
Fund will continue to receive interest on the securities lent while
simultaneously seeking to earn interest on the investment of cash collateral in
U.S. government securities, shares of an investment trust or mutual fund, or
other short-term, highly liquid investments. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of the
PROSPECTUS
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<PAGE> 19
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities fail
financially. However, loans will only be made to borrowers deemed by the Adviser
to be of good standing under guidelines established by the Trust's Board of
Trustees and when, in the judgment of the Adviser, the consideration which can
be earned currently from such securities loans justifies the attendant risk. The
Fund will enter into loan arrangements only with counterparties which the
Adviser has deemed to be creditworthy under guidelines established by the Board
of Trustees. Loans are subject to termination by the Fund or the borrower at any
time, and are therefore, not considered to be illiquid investments.
RESTRICTED SECURITIES -- The Fund may invest in commercial paper issued in
reliance on the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, Section 4(2) commercial paper is restricted as to
disposition under Federal securities law and is generally sold to institutional
investors, such as the Fund, who agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) commercial paper is
normally resold to other institutional investors like the Fund through or with
the assistance of the issuer or investment dealers who make a market in Section
4(2) commercial paper, thus providing liquidity. The Fund believes that Section
4(2) commercial paper and possibly certain other restricted securities that meet
the criteria for liquidity established by the Trustees are quite liquid. The
Fund intends, therefore, to treat the restricted securities that meet the
criteria for liquidity established by the Trustees, including Section 4(2)
commercial paper, as determined by the Adviser, as liquid and not subject to the
investment limitation applicable to illiquid securities. In addition, because
Section 4(2) commercial paper is liquid, the Fund will not subject such paper to
the limitation applicable to restricted securities.
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under an SEC staff position set forth in the adopting
release for Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule is
a nonexclusive safe-harbor for certain secondary market transactions involving
securities subject to restrictions on resale under Federal securities laws. The
Rule provides an exemption from registration for resales of otherwise restricted
securities to qualified institutional buyers. The Rule is expected to further
enhance the liquidity of the secondary market for securities eligible for resale
under Rule 144A. The Fund believes that the staff of the SEC has left the
question of determining the liquidity of all restricted securities to the
Trustees. The Trustees have directed the Adviser to consider the following
criteria in determining the liquidity of certain restricted securities:
- - the frequency of trades and quotes for the security;
- - number of dealers willing to purchase or sell the security and the number of
other potential buyers;
- - dealer undertakings to make a market in the security; and
- - the nature of the security and the nature of the marketplace trades.
VARIABLE AND FLOATING RATE INSTRUMENTS
Certain of the obligations purchased by the Fund may carry variable or floating
rates of interest, may involve a conditional or unconditional demand feature and
may include variable amount master demand notes. A demand instrument with a
demand notice period exceeding seven days may be considered illiquid if there is
no secondary market for such security; therefore, the Fund will not invest more
than 15% of its total assets in such instruments and other illiquid securities.
The interest rates on these securities may be reset daily, weekly, quarterly or
some other reset period, and may have a floor or ceiling on interest rate
charges.
There is a risk that the current interest rate on such obligations may not
accurately reflect existing market interest rates.
There is no limit on the extent to which the Fund may purchase variable and
floating rate instruments that are not illiquid. The Fund will purchase variable
and floating rate instruments to facilitate portfolio liquidity or to permit the
investment of the Fund's assets at a favorable rate of return.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS AND FORWARD COMMITMENTS -- The Fund
may purchase securities on a when-issued basis when deemed by the Adviser to
present attractive investment opportunities. When-issued securities are
purchased for delivery beyond the normal settlement date at a stated price and
yield, thereby involving the risk that the yield obtained will be less than that
available in the market at delivery. Although the purchase of securities on a
when-issued basis is not considered leveraging, it has the effect of leveraging.
When the Adviser purchases a when-issued security, the Custodian will set aside
cash or liquid securities to satisfy the purchase commitment. The Fund generally
will not pay for such securities or earn interest on them until received.
Commitments to purchase when-issued securities will not, under normal market
conditions, exceed 40% of the Fund's total assets, and a commitment will not
exceed 180 days. The Fund will only purchase when-issued securities for the
purpose of acquiring portfolio securities and not for speculative purposes.
In a forward commitment transaction, the Fund contracts to purchase securities
for a fixed price at a future date beyond customary settlement time. The Fund is
required to hold and maintain in a segregated account until the settlement date,
cash, U.S. government securities or liquid high-grade debt obligations in an
amount sufficient to meet the purchase price. Alternatively, the Fund may enter
into offsetting contracts for the forward sale of other securities that it owns.
The purchase of securities on a when-issued or forward commitment basis involves
a risk of loss if the value of the security to be purchased declines prior to
the settlement date. Although the Fund would generally purchase securities on a
when-issued or forward commitment basis with the intention of actually acquiring
securities for its portfolio, the Fund may dispose of a when-issued security or
forward commitment prior to settlement if the Adviser deems it appropriate to do
so.
OPTIONS -- The Fund may purchase and write (i.e., sell) call options and put
options on securities and indices, which options are traded on national
securities exchanges. A call option gives the purchaser the right to buy, and
obligates the writer of the option to sell, the underlying security at the
agreed upon exercise (or "strike") price during the option period. A put option
gives the purchaser the right to sell, and obligates the writer to buy, the
underlying security at the strike price during the option period. Purchasers of
options pay an amount, known as a premium, to the option writer in exchange for
the right under the option contract. Option contracts may be written with terms
that would permit the
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holder of the option to purchase or sell the underlying security only upon the
expiration date of the option. The initial purchase (sale) of an option contract
is an "opening transaction." In order to close out an option position, the Fund
may enter into a "closing transaction," the sale (purchase) of an option
contract on the same security with the same exercise price and expiration date
as the option contract originally opened.
The Fund may purchase put and call options in hedging transactions to protect
against a decline in the market value of the securities in the Fund (e.g., by
the purchase of a put option) and to protect against an increase in the cost of
fixed-income securities that the Fund may seek to purchase in the future (e.g.,
by the purchase of a call option). In the event that paying premiums for put and
call options, together with price movements in the underlying securities, are
such that exercise of the options would not be profitable for the Fund, losses
of the premiums paid may be offset by an increase in the value of the Fund's
securities (in the case of a purchase of put options) or by a decrease in the
cost of acquisition of securities by the Fund (in the case of a purchase of call
options).
The Fund also may write secured put and covered call options as a means of
increasing the yield on the Fund and as a means of providing limited protection
against decreases in market value of the Fund.
There are risks associated with options transactions, including the following:
(i) the success of a hedging strategy may depend on the ability of the Adviser
to predict movements in the prices of the individual securities, fluctuations in
markets and movements in interest rates; (ii) there may be an imperfect or no
correlation between the changes in market value of the securities held by the
Fund and the prices of options; (iii) there may not be a liquid secondary market
for options; and (iv) while the Fund will receive a premium when it writes
covered call options, it may not participate fully in a rise in the market value
of the underlying security. It is expected that the Fund will only engage in
option transactions with respect to permitted investments and related indices.
Generally, the policy of the Fund, in order to avoid the exercise of an option
sold by it, will be to cancel its obligation under the option by entering into a
closing purchase transaction, if available, unless selling (in the case of a
call option) or purchasing (in the case of a put option) the underlying
securities is determined to be in the Fund's interest. A closing purchase
transaction consists of the Fund purchasing an option having the same terms as
the option sold by the Fund, and has the effect of cancelling the Fund's
position as a seller. The premium which the Fund will pay in executing a closing
purchase transaction may be higher (or lower) than the premium received when the
option was sold, depending in large part upon the relative price of the
underlying security at the time of each transaction. To the extent options sold
by the Fund are exercised and the Fund either delivers securities to the holder
of a call option or liquidates securities as a source of funds to purchase
securities put to the Fund, the Fund's turnover rate will increase, which would
cause the Fund to incur additional brokerage expenses.
During the option period, the Fund, as a covered call writer, gives up the
potential appreciation above the exercise price should the underlying security
rise in value, and the Fund, as a covered put writer, retains the risk of loss
should the underlying security decline in value. For the covered call writer,
substantial appreciation in the value of the underlying security would result in
the security being "called away" at the strike price of the option which may be
substantially below the fair market value of such security. For the covered put
writer, substantial depreciation in the value of the underlying security would
result in the security being "put to" the writer at the strike price of the
option which may be substantially in excess of the fair market value of such
security. If a covered call option or a covered put option expires unexercised,
the writer realizes a gain, and the buyer a loss, in the amount of the premium.
The SEC requires that obligations of investment companies such as the Fund, in
connection with option sale positions, must comply with certain segregation or
coverage requirements, which are more fully described in the Statement of
Additional Information.
The Fund will only write covered call options on its securities and will limit
such activities to provide that the aggregate market value of such options and
the Fund's obligations under such written puts does not exceed 25% of the Fund's
total assets as of the time such options are entered into by the Fund.
FUTURES CONTRACTS AND RELATED OPTIONS -- The Fund may enter into futures
contracts, options on futures contracts, index futures and options thereon that
are traded on an exchange regulated by the Commodities Futures Trading
Commission ("CFTC") if, to the extent that such futures and options are not for
"bona fide hedging purposes" (as defined by the CFTC), the aggregate initial
margin and premiums on such positions (excluding the amount by which options are
in the money) do not exceed 5% of the Fund's total assets at current value. The
Fund, however, may invest more than such amount for bona fide hedging purposes,
and also may invest more than such amount if it obtains authority to do so from
the appropriate regulatory agencies without rendering the Fund a commodity pool
operator or adversely affecting its status as an investment company for Federal
securities law or income tax purposes.
The Fund may buy and sell futures contracts and related options to manage its
exposure to changing interest rates and security prices. Some futures
strategies, including selling futures, buying puts and writing calls, may reduce
the Fund's exposure to price fluctuations. Other strategies, including buying
futures, writing puts and buying calls, tend to increase market exposure.
Futures and options may be combined with each other in order to adjust the risk
and return characteristics of the overall portfolio. The Fund expects to enter
into these transactions to "lock in" a return or spread on a particular
investment or portion of its assets, to protect against any increase in the
price of securities the Fund anticipates purchasing at a later date, or for
other risk management strategies.
Options and futures can be volatile instruments, and involve certain risks. If
the Adviser applies a hedge at an inappropriate time or judges interest rates
incorrectly, options and futures strategies may lower the Fund's return. The
Fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other instruments, or if it could not
close out its positions because of an illiquid secondary market.
Typically, investment in these contracts requires the Fund to deposit with the
applicable exchange or other specified financial intermediary as a good faith
deposit for its obligations, known as "initial margin," an amount of cash or
specified debt securities that initially is 1%-15% of the face amount of the
contract and that
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thereafter fluctuates on a periodic basis as the value of the contract
fluctuates. Thereafter, the Fund must make additional deposits equal to any net
losses due to unfavorable price movements of the contract and will be credited
with an amount equal to any net gains due to favorable price movements. These
additional deposits or credits are calculated and required daily and are known
as "variation margin."
The SEC requires that when an investment company such as the Fund effects
transactions of the foregoing nature, it must either segregate cash or high
quality, readily marketable Fund securities with its custodian in the amount of
its obligations under the foregoing transactions or must cover such obligations
by maintaining positions in portfolio securities, futures contracts or options
that would serve to satisfy or offset the risk of such obligations. When
effecting transactions of the foregoing nature, the Fund will comply with such
segregation or cover requirements. No limitation exists on the amount of the
Fund's assets that may be used to comply with such segregation or cover
requirements.
The Fund also may engage in straddles and spreads with respect to 15% of its
assets. In a straddle transaction, the Fund either buys a call and a put or
sells a call and a put on the same security. In a spread, the Fund purchases and
sells a call or a put. The Fund will sell a straddle when the Adviser believes
the price of a security will be stable. The Fund will receive a premium on the
sale of the put and the call. A spread permits the Fund to make a hedged
investment that the price of a security will increase or decline.
STRUCTURED INSTRUMENTS -- The Fund may invest, from time to time, in one or more
structured instruments. Structured instruments are debt securities issued by
agencies of the U.S. government (such as the Student Loan Marketing Association
("Sallie Mae"), Ginnie Mae, Fannie Mae, and Freddie Mac), banks, corporations,
and other business entities whose interest and/or principal payments are indexed
to certain specific foreign currency exchange rates, interest rates, or one or
more other reference indexes. Structured instruments frequently are assembled in
the form of medium-term notes, but a variety of forms are available and may be
used in particular circumstances.
The terms of such structured instruments provide that their principal and/or
interest payments are adjusted upwards or downwards to reflect changes in the
reference index while the structured instruments are outstanding. In addition,
the reference index may be used in determining when the principal is redeemed.
As a result, the interest and/or principal payments that may be made on a
structured product may vary widely, depending on a variety of factors, including
the volatility of the reference index and the effect of changes in the reference
index on principal and/or interest payments.
While structured instruments may offer the potential for a favorable rate of
return, from time to time, they also entail certain risks. Structured
instruments may be less liquid than other debt securities, and the price of
structured instruments may be more volatile. If the value of the reference index
changes in a manner other than that expected by the Adviser, principal and/or
interest payments on the structured instrument may be substantially less than
expected. The Fund will only invest in structured securities that are consistent
with the Fund's investment objective, policies and restrictions and the
Adviser's outlook on market conditions. In some cases, depending on the terms of
the reference index, a structured instrument may provide that the principal
and/or interest payments may be adjusted below zero; however, the Fund will not
invest in structured instruments if the terms of the structured instrument
provide that the Fund may be obligated to pay more than its initial investment
in the structured instrument, or to repay any interest or principal that has
already been collected or paid back. In addition, many structured instruments
may not be registered under the Federal securities laws. In that event, the
Fund's ability to resell such a structured instrument may be more limited than
its ability to resell other portfolio securities. The Fund will treat such
instruments as illiquid, and will limit its investments in such instruments to
no more than 15% of its total assets, when combined with all other illiquid
investments of the Fund. Structured instruments that are registered under
Federal securities laws may be treated as liquid. In addition, although
structured instruments may be sold in the form of a corporate debt obligation,
they may not have some of the protection against counterparty default that may
be available with respect to publicly traded debt securities (i.e., the
existence of a trust indenture). In that respect, the risks of default
associated with structured instruments may be similar to those associated with
swap contracts. See "Swaps, Caps and Floors."
SWAPS, CAPS AND FLOORS -- In order to protect the value of the Fund from
interest rate fluctuations and to hedge against fluctuations in the floating
rate market in which the Fund's investments are traded, the Fund may enter into
swaps, caps, and floors on various securities (such as U.S. government
securities), securities indexes, interest rates, prepayment rates or other
financial instruments or indexes, for both hedging and non-hedging purposes. The
Fund may enter into these transactions to manage its exposure to changing
interest rates and other market factors. Some transactions may reduce the Fund's
exposure to market fluctuations while others may tend to increase market
exposure.
Swap contracts typically involve an exchange of obligations by two sophisticated
parties. For example, in an interest rate swap, the Fund may exchange with
another party their respective rights to receive interest, such as an exchange
of fixed rate payments for floating rate payments. Currency swaps involve the
exchange of respective rights to make or receive payments in specified
currencies. Mortgage swaps are similar to interest rate swaps in that they
represent commitments to pay and receive interest. The notional principal
amount, however, is tied to a reference pool or pools of mortgages.
Caps and floors are variations on swaps. The purchase of a cap entitles the
purchaser to receive a principal amount from the party selling the cap to the
extent that a specified index exceeds a predetermined interest rate or amount.
The purchase of an interest rate floor entitles the purchaser to receive
payments on a notional principal amount from the party selling the floor to the
extent that a specified index falls below a predetermined interest rate or
amount. Caps and floors are similar in many respects to over-the-counter options
transactions, and may involve investment risks that are similar to those
associated with options transactions and options on futures contracts.
Because swap contracts are individually negotiated, they remain the obligation
of the respective counterparties, and there is a risk that a counterparty will
be unable to meet its obligations under a particular swap contract. If a
counterparty defaults on a swap contract with the Fund, the Fund may suffer a
loss. To address this risk, the Fund will usually enter into interest rate swaps
on a net basis, which means that the two payment streams (one from the
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Fund to the counterparty, one to the Fund from the counterparty) are netted out,
with the Fund receiving or paying, as the case may be, only the net amount of
the two payments. Interest rate swaps do not involve the delivery of securities,
other underlying assets, or principal, except for purposes of collateralization,
as discussed below. Accordingly, the risk of loss with respect to interest rate
swaps entered into on a net basis would be limited to the net amount of the
interest payments that the Fund is contractually obligated to make. If the other
party to an interest rate swap defaults, the Fund's risk of loss consists of the
net amount of interest payments that the Fund is contractually entitled to
receive. To protect against losses related to counterparty default, the Fund may
enter into swap contracts that require transfers of collateral for changes in
market value. In contrast, currency swaps and other types of swaps may involve
the delivery of the entire principal value of one designated currency or
financial instrument in exchange for the other designated currency or financial
instrument. Therefore, the entire principal value of such swaps may be subject
to the risk that the other party will default on its contractual delivery
obligations.
In addition, because swap contracts are individually negotiated and ordinarily
non-transferable, there also may be circumstances in which it would be
impossible for the Fund to close out its obligations under the swap contract
prior to its maturity. Under such circumstances, the Fund might be able to
negotiate another swap contract with a different counterparty to offset the risk
associated with the first swap contract. Unless the Fund is able to negotiate
such an offsetting swap contract, however, the Fund could be subject to
continued adverse developments, even after the Adviser has determined that it
would be prudent to close out or offset the first swap contract.
The Fund will not enter into any mortgage swap, interest rate swap, cap or floor
transaction unless the unsecured commercial paper, senior debt, or the claims
paying ability of the other party thereto is rated in the highest or second
highest rating category by at least one NRSRO at the time of investment, or, if
unrated, determined by the Adviser to be of comparable quality.
The use of swaps involves investment techniques and risks different from and
potentially greater than those associated with ordinary portfolio securities
transactions. If the Adviser is incorrect in its expectations of market values,
interest rates, or currency exchange rates, the investment performance of the
Fund would be less favorable than it would have been if this investment
technique were not used.
The staff of the SEC is presently considering its position with respect to
swaps, caps and floors as senior securities. Pending a determination by the
staff, the Fund will either treat swaps, caps and floors as being subject to its
senior securities restrictions or will refrain from engaging in swaps, caps and
floors. Once the staff has expressed a position with respect to swaps, caps and
floors, the Fund intends to engage in swaps, caps and floors, if at all, in a
manner consistent with such position. To the extent the net amount of a mortgage
swap is held in a segregated account, consisting of cash or liquid, high grade
debt securities, the Adviser believes that swaps do not constitute senior
securities under the Investment Company Act of 1940 and, accordingly, will not
treat them as being subject to the Fund's borrowing restrictions. The net amount
of the excess, if any, of the Fund's obligations over its entitlements with
respect to each interest rate swap will be accrued on a daily basis and an
amount of cash or liquid securities having an aggregate net asset value at least
equal to the accrued excess will be maintained in a segregated account by the
Fund's Custodian.
The Fund will generally limit its investments in swaps, caps and floors to 25%
of its total assets.
NEW FINANCIAL PRODUCTS -- New financial products continue to be developed and
the Fund may invest in such products as may be developed to the extent
consistent with its investment objective, policies and restrictions and the
regulatory requirements applicable to investment companies.
These various products may be used to adjust the risk and return characteristics
of the Fund's portfolio of investments. These products may increase or decrease
exposure to security prices, interest rates, commodity prices, or other factors
that affect security values, regardless of the issuer's credit risk. If market
conditions do not perform consistent with expectations, the performance of the
Fund would be less favorable than it would have been if these products were not
used. In addition, losses may occur if counterparties involved in transactions
do not perform as promised. These products may expose the Fund to potentially
greater return as well as potentially greater risk of loss than more traditional
fixed income investments.
The Fund will generally limit its investments in new financial products to 25%
of its total assets.
MUNICIPAL SECURITIES -- The Fund may invest in Municipal Securities. Municipal
Securities consist of (i) debt obligations issued by or on behalf of public
authorities to obtain funds to be used for various public facilities, for
refunding outstanding obligations, for general operating expenses, and for
lending such funds to other public institutions and facilities; and (ii) certain
private activity and industrial development bonds issued by or on behalf of
public authorities to obtain funds to provide for the construction, equipment,
repair, or improvement of privately operated facilities. Municipal notes include
general obligation notes, tax anticipation notes, revenue anticipation notes,
bond anticipation notes, certificates of indebtedness, demand notes and
construction loan notes and participation interests in municipal notes.
Municipal bonds include general obligation bonds, revenue or special obligation
bonds, private activity and industrial development bonds, and participation
interests in municipal bonds. General obligation bonds are backed by the taxing
power of the issuing municipality. Revenue bonds are backed by the revenues of a
project or facility, tolls from a toll bridge for example. The payment of
principal and interest on private activity and industrial development bonds
generally is dependent solely on the ability of the facility's user to meet its
financial obligations and the pledge, if any, of real and personal property so
financed as security for such payment.
Municipal Securities may include obligations of municipal housing authorities
and single-family mortgage revenue bonds. Weaknesses in Federal housing subsidy
programs and their administration may result in a decrease of subsidies
available for payment of principal and interest on housing authority bonds.
Economic developments, including fluctuations in interest rates and increasing
construction and operating costs, may also adversely impact revenues of housing
authorities. In the case of some housing authorities, inability to obtain
additional financing could also reduce revenues available to pay existing
obligations. Single-family mortgage revenue bonds are subject to extraordinary
mandatory redemption at par in whole or in part from the proceeds derived from
prepayments of underlying
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mortgage loans and also from the unused proceeds of the issue within a stated
period which may be within a year from the date of issue.
Municipal leases are obligations issued by state and local governments or
authorities to finance the acquisition of equipment and facilities and may be
considered to be illiquid. They may take the form of a lease, an installment
purchase contract, a conditional sales contract, or a participation interest in
any of the above. The Fund will limit its investment in municipal leases to no
more than 5% of total assets. The Board of Trustees is responsible for
determining the credit quality of unrated municipal leases, on an ongoing basis,
including an assessment of the likelihood that the lease will not be cancelled.
The exclusion from gross income for Federal income tax purposes for certain
housing authority bonds depends on qualification under relevant provisions of
the Code and on other provisions of Federal law. These provisions of Federal law
contain certain ongoing requirements relating to the cost and location of the
residences financed with the proceeds of the single-family mortgage bonds and
the income levels of tenants of the rental projects financed with the proceeds
of the multi-family housing bonds. While the issuers of the bonds, and other
parties, including the originators and servicers of the single-family mortgages
and the owners of the rental projects financed with the multi-family housing
bonds, covenant to meet these ongoing requirements and generally agree to
institute procedures designed to insure that these requirements are met, there
can be no assurance that these ongoing requirements will be consistently met.
The failure to meet these requirements could cause the interest on the bonds to
become taxable, possibly retroactively from the date of issuance, thereby
reducing the value of the bonds and subjecting Shareholders to unanticipated tax
liabilities, possibly requiring the Fund to sell the bonds at the reduced value.
Furthermore, any failure to meet these ongoing requirements might constitute an
event of default under the applicable mortgage or permit the holder to
accelerate payment of the bond or require the issuer to redeem the bond. In any
event, where the mortgage is insured by the Federal Housing Administration
("FHA"), the consent of the FHA may be required before insurance proceeds would
become payable to redeem the mortgage subsidy bonds.
DEMAND FEATURES -- The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities or by
another third party, and may not be transferred separately from the underlying
security.
The underlying municipal securities subject to a put may be sold at any time at
the market rates. However, unless the put was an integral part of the security
as originally issued, it may not be marketable or assignable; therefore, the put
would only have value to the Fund. The Fund expects that it will generally
acquire puts only where the puts are available without the payment of any direct
or indirect consideration. However, if advisable or necessary, in certain cases
a premium may be paid for put features. A premium paid will have the effect of
reducing the yield otherwise payable on the underlying security. The purpose of
engaging in transactions involving puts is to maintain flexibility and liquidity
to permit the Fund to meet redemption requests and remain as fully invested as
possible in municipal securities. The Fund will limit its put transactions to
institutions that the Adviser believes present minimal credit risk.
There is no limit to the percentage of portfolio securities that may be
purchased subject to a put. However, the Fund will not acquire a put which was
not an integral part of the security as originally issued if such acquisition
would cause the aggregate value of all such puts held in the portfolio to exceed
1/2 of 1% of the value of the Fund's total assets. Under a "stand-by
commitment," a dealer would agree to purchase, at the Fund's option, specified
municipal securities at a specified price. When entering into stand-by
commitments, the Fund will set aside sufficient assets invested in cash
equivalent securities to pay for all stand-by commitments on their scheduled
delivery dates. The Fund will acquire these commitments solely to facilitate
portfolio liquidity and does not intend to exercise its rights thereunder for
trading purposes. Stand-by commitments may also be referred to as put options.
The Fund will limit its investment in stand-by commitments to 25% of total
assets.
MORTGAGE-BACKED SECURITIES -- Mortgage-backed securities are debt obligations
secured by real estate loans and pools of loans on single family homes,
multi-family homes, mobile homes, and in some cases, commercial properties. The
Fund may acquire securities representing an interest in a pool of mortgage loans
that are issued or guaranteed by a U.S. government agency. The primary issuers
or guarantors of these mortgage-backed securities are Ginnie Mae, Fannie Mae and
Freddie Mac. Mortgage-backed securities may also be issued by non-governmental
entities and may or may not have private insurer guarantees of timely payments.
Such non-governmental mortgage securities cannot be treated as U.S. government
securities for purposes of investment policies. The Fund also may invest in
mortgage-backed securities issued by non-government entities, which consist of
Collateralized Mortgage Obligations ("CMOs") and Real Estate Mortgage Investment
Conduits("REMICs") that are rated the highest or second highest rating category
at least one NRSRO at the time of investment, or, if unrated, determined by the
Adviser to be of comparable quality. The mortgages backing these securities
include conventional thirty-year fixed rate mortgages, graduated payment
mortgages, and adjustable rate mortgages. The Fund will only purchase CMOs and
REMICs that are backed solely by Ginnie Mae Certificates or other mortgage
pass-through instruments issued or guaranteed by the U.S. government or its
agencies and instrumentalities. However, the guarantees do not extend to the
mortgage-backed securities' value, which is likely to vary inversely with
fluctuations in interest rates. Mortgage-backed securities are in most cases
"pass-through" instruments, through which the holder receives a share of all
interest and principal payments from the mortgages underlying the certificate.
Because the prepayment characteristics of the underlying mortgages vary, it is
not possible to predict accurately the average life or realized yield of a
particular issue of pass-through certificates. During periods of declining
interest rates, prepayment of mortgages underlying mortgage-backed securities
can be expected to accelerate. When the mortgage obligations are prepaid, the
Fund reinvests the prepaid amounts in securities, the yield of which reflects
interest rates prevailing at the time. Moreover, prepayment of mortgages which
underlie securities purchased at a premium could result in capital losses.
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The Fund also may invest in multiple class securities issued by U.S. government
agencies and instrumentalities such as Fannie Mae, Freddie Mac and Ginnie Mae,
or private issuers, including guaranteed CMOs and REMIC pass-through or
participation certificates, when consistent with the Fund's investment
objective, policies and limitations. A REMIC is a CMO that qualifies for special
tax treatment under the Code and invests in certain mortgages principally
secured by interests in real property and other permitted investments.
CMOs and guaranteed REMIC pass-through certificates ("REMIC Certificates")
issued by Fannie Mae, Freddie Mac, and Ginnie Mae are types of multiple class
pass-through securities. Investors may purchase beneficial interests in REMICs,
which are known as "regular" interests or "residual" interests. The Fund does
not currently intend to purchase residual interests in REMICs. The REMIC
Certificates represent beneficial ownership interests in a REMIC trust,
generally consisting of mortgage loans or Fannie Mae, Freddie Mac or Ginnie Mae
guaranteed mortgage pass-through certificates (the "Mortgage Assets"). The
obligations of Fannie Mae, Freddie Mac or Ginnie Mae under their respective
guaranty of the REMIC Certificates are obligations solely of Fannie Mae, Freddie
Mac or Ginnie Mae, respectively.
Fannie Mae REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by Fannie Mae. In addition, Fannie Mae
will be obligated to distribute the principal balance of each class of REMIC
Certificates in full, whether or not sufficient funds are otherwise available.
For Freddie Mac REMIC Certificates, Freddie Mac guarantees the timely payment of
interest, and also guarantees the payment of principal as payments are required
to be made on the underlying mortgage participation certificates ("PCs"). PCs
represent undivided interests in specified residential mortgages or
participation therein purchased by Freddie Mac and placed in a PC pool. With
respect to principal payments on PCs, Freddie Mac generally guarantees ultimate
collection of all principal of the related mortgage loans without offset or
deduction. Freddie Mac also guarantees timely payment of principal on certain
PCs referred to as "Gold PCs."
Ginnie Mae REMIC Certificates guarantee the full and timely payment of interest
and principal on each class of securities (in accordance with the terms of those
classes, as specified in the related offering circular supplement). The Ginnie
Mae guaranty is backed by the full faith and credit of the United States of
America.
REMIC Certificates issued by Fannie Mae, Freddie Mac, and Ginnie Mae are treated
as U.S. government securities for purposes of investment policies. CMOs and
REMIC Certificates are issued in multiple classes. Each class of CMOs or REMIC
Certificates, often referred to as a "tranche," is issued at a specific
adjustable or fixed interest rate and must be fully retired no later than its
final distribution date. Principal prepayments on the mortgage loans or the
Mortgage Assets underlying the CMOs or REMIC Certificates may cause some or all
of the classes of CMOs or REMIC Certificates to be retired substantially earlier
than their final distribution dates. Generally, interest is paid or accrues on
all classes of CMOs or REMIC Certificates on a monthly basis.
The principal of and interest on the Mortgage Assets may be allocated among the
several classes of CMOs or REMIC Certificates in various ways. In certain
structures (known as "sequential pay" CMOs or REMIC Certificates), payments of
principal, including any principal prepayments, on the Mortgage Assets generally
are applied to the classes of CMOs or REMIC Certificates in the order of their
respective final distribution dates. Thus no payment of principal will be made
on any class of sequential pay CMOs or REMIC Certificates until all other
classes having an earlier final distribution date have been paid in full.
Additional structures of CMOs and REMIC Certificates include, among others,
"parallel pay" CMOs and REMIC Certificates. Parallel pay CMOs or REMIC
Certificates are those which are structured to apply principal payments and
prepayments of the Mortgage Assets to two or more classes concurrently on a
proportionate or disproportionate basis. These simultaneous payments are taken
into account in calculating the final distribution date of each class.
A wide variety of REMIC Certificates may be issued in the parallel pay or
sequential pay structures. These securities include accrual certificates (also
known as "Z-Bonds"), which only accrue interest at a specified rate until all
other certificates having an earlier final distribution date have been retired
and are converted thereafter to an interest-paying security, and planned
amortization class ("PAC") certificates, which are parallel pay REMIC
Certificates which generally require that specified amounts of principal be
applied on each payment date to one or more classes of REMIC Certificates (the
"PAC Certificates"), even though all other principal payments and prepayments of
the Mortgage Assets are then required to be applied to one or more other classes
of the certificates. The scheduled principal payments for the PAC Certificates
generally have the highest priority on each payment date after interest due has
been paid to all classes entitled to receive interest currently. Shortfalls, if
any, are added to the amount of principal payable on the next payment date. The
PAC Certificate payment schedule is taken into account in calculating the final
distribution date of each class of PAC. In order to create PAC tranches, one or
more tranches generally must be created that absorb most of the volatility in
the underlying Mortgage Assets. These tranches tend to have market prices and
yields that are much more volatile than the PAC classes.
Although the Fund invests only in securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, the Z-Bonds in which the Fund may
invest may bear the same non-credit-related risks as do other types of Z-Bonds.
Z-Bonds in which the Fund may invest will not include residual interest.
There can be no assurance that the United States government would provide
financial support to Fannie Mae, Freddie Mac or Ginnie Mae if necessary in the
future.
The Fund will generally limit its investments in mortgage-backed securities to
35% of its total assets.
REGULATION OF MORTGAGE LOANS -- Mortgage loans are subject to a variety of state
and Federal regulations designed to protect borrowers which may impair the
ability of the mortgage lender to enforce its rights under the mortgage
documents. These regulations include legal restraints on foreclosures, homeowner
rights of redemption after foreclosure, Federal and state bankruptcy and debtor
relief laws, restrictions on enforcement of mortgage loan "due on sale" clauses
and state usury laws. Even though the Fund will invest in mortgage-backed
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities, these regulations may adversely affect the Fund's investments
by delay-
PROSPECTUS
23
<PAGE> 25
ing the Fund's receipt of payments derived from principal or interest on
mortgage loans affected by such regulations.
MORTGAGE DOLLAR ROLLS -- The Fund may enter into mortgage "dollar rolls" in
which the Fund sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar (same
type, coupon and maturity) but not identical securities on a specified future
date. The Fund gives up the right to receive principal and interest paid on the
securities sold. However, the Fund would benefit to the extent of any difference
between the price received for the securities sold and the lower forward price
for the future purchase (often referred to as the "drop") or fee income plus the
interest earned on the cash proceeds of the securities sold until the settlement
date of the forward purchase. Unless such benefits exceed the income, capital
appreciation and gain or loss due to mortgage prepayments that would have been
realized on the securities sold as part of the mortgage dollar roll, the use of
this technique will diminish the investment performance of the Fund compared
with what such performance would have been without the use of mortgage dollar
rolls. The Fund will hold and maintain in a segregated account until the
settlement date, cash or liquid, high grade debt securities in an amount equal
to the forward purchase price. The benefits derived from the use of mortgage
dollar rolls may depend upon the Adviser's ability to predict correctly mortgage
prepayments and interest rates. There is no assurance that mortgage dollar rolls
can be successfully employed.
For financial reporting and tax purposes, the Fund proposes to treat mortgage
dollar rolls as two separate transactions: one involving the purchase of a
security and a separate transactions involving a sale. The Fund does not
currently intend to enter into mortgage dollar rolls that are accounted for as a
financing.
For purposes of diversification and investment limitations, mortgage dollar
rolls are considered to be mortgage-backed securities.
PARTICIPATION INTERESTS -- The Fund may purchase interests in municipal
securities from financial institutions such as commercial and investment banks,
savings and loan associations and insurance companies. These interests may take
the form of participations, beneficial interests in a trust, partnership
interests, or any other form of indirect ownership that allows the Fund to treat
the income from the investment as exempt from Federal income tax. The Fund
invests in these participation interests in order to obtain credit enhancement
or demand features that would not be available through direct ownership of the
underlying municipal securities.
The Fund may invest up to 5% of its total assets in participation interests.
ZERO COUPON OBLIGATIONS -- The Fund may acquire zero coupon obligations, that
have greater price volatility than coupon obligations and that will not result
in the payment of interest until maturity. The Fund will purchase these
obligations to permit investment of the Fund's assets at a favorable rate of
return.
INVERSE FLOATING RATE INSTRUMENTS -- The Fund may seek to increase yield by
investing in leveraged inverse floating rate debt instruments ("inverse
floaters"). The interest rate on an inverse floater resets in the opposite
direction from the market rate of interest to which the inverse floater is
indexed. An inverse floater may be considered to be leveraged to the extent that
its interest rate varies by a magnitude that exceeds the magnitude of the change
in the index rate of interest. The higher degree of leverage inherent in inverse
floaters is associated with greater volatility in their market values.
Accordingly, the duration of an inverse floater may exceed its stated final
maturity.
The Fund will generally limit its investments in inverse floating rate
instruments to 15% of its total assets.
DESCRIPTION OF RATINGS
The following descriptions are summaries of published ratings.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
The following descriptions of commercial paper ratings have been published by
Standard & Poor's Corporation ("S&P"), Moody's Investors Service ("Moody's"),
Fitch's Investors Service ("Fitch"), Duff and Phelps ("Duff"), and IBCA Limited
("IBCA"), respectively.
Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1+, 1 and 2 to indicate the relative degree of safety. Issues rated A-1+
are those with an "overwhelming degree" of credit protection. Those rated A-1
reflect a "very strong" degree of safety regarding timely payment. Those rated
A-2 reflect a high degree of safety regarding timely payment but not as high as
A-1.
Commercial paper issues rated Prime-1 and Prime-2 by Moody's are judged by
Moody's to be of the "highest" quality and "higher" quality respectively on the
basis of relative repayment capacity.
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the second
highest commercial paper rating assigned by Fitch which reflects an assurance of
timely payment only slightly less in degree than the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by ample asset protection. Risk
factors are minor. Paper rated Duff-2 is regarded as having good certainty of
timely payment, good access to capital markets and sound liquidity factors and
company fundamentals. Risk factors are small.
The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. Those obligations rated A1+ are supported
by the highest capacity for timely repayment. Obligations rated A2 are supported
by a strong capacity for timely repayment, although such capacity may be
susceptible to adverse changes in business, economic or financial conditions.
DESCRIPTION OF CORPORATE/MUNICIPAL BOND RATINGS
The following descriptions of S&P's and Moody's corporate and municipal bond
ratings have been published by S&P and Moody's, respectively.
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA
PROSPECTUS
24
<PAGE> 26
issues only in a small degree. Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories.
Bonds that are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by all
standards. Together with bonds rated Aaa, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.
Bonds that are rated A possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Debt rated BBB by S&P is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
Bonds that are rated Baa by Moody's are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity of the issuers of securities rated BBB or Baa to make
principal and interest payments than is the case with higher grade securities.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
Moody's highest rating for state, municipal and other short-term notes is MIG-1
and VMIG-1. Short-term municipal securities rated MIG-1 or VMIG-1 are of the
best quality. They have strong protection from established cash flows of funds
for their servicing or from established and broad-based access to the market for
refinancing or both. Short-term municipal securities rated MIG-2 and VMIG-2 are
of high quality. Margins of protection are ample although not so large as in the
preceding group.
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating. The following criteria will be used in making that assessment:
- - Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
- - Source of Payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
Note rating symbols are as follows:
SP-1 Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
MISCELLANEOUS
The Trust believes that as of August 4, 1995, BANC ONE CORPORATION (100 East
Broad Street, Columbus, OH 43271), through its affiliates, owned of record
substantially all the Fiduciary Class shares of the Fund. The Trust believes
that as of the same date, BANC ONE CORPORATION, through its affiliates,
possessed on behalf of its underlying accounts, voting or investment power with
respect to 95.83% of the Fiduciary Class shares of the Fund. As a consequence,
BANC ONE CORPORATION may be deemed to be a controlling person of the Fiduciary
Class shares of the Fund under the Investment Company Act of 1940.
PERFORMANCE
From time to time, the Fund may advertise yield, total return and/or
distribution rate. These figures will be based on historical earnings and are
not intended to indicate future performance. The yield of the Fund refers to the
annualized income generated by an investment in the Fund over a specified 30-day
period. The yield is calculated by assuming that the income generated by the
investment during that period is generated over a one-year period and is shown
as a percentage of the investment.
Total return is the change in value of an investment in the Fund over a given
period, assuming reinvestment of any dividends and capital gains. A cumulative
total return reflects an actual rate of return over a stated period of time. An
average annual total return is a hypothetical rate of return that, if achieved
annually, would have produced the same cumulative total return if performance
had been constant over the entire period. Average annual total returns smooth
out variations in performance; they are not the same as actual year-by-year
results.
The distribution rate is computed by dividing the total amount of the dividends
per share paid out during the past period by the maximum offering price or
month-end net asset value depending on the class of the Fund. This figure is
then "annualized" (multiplied by 365 days and divided by the applicable number
of days in the period). Funds with a front-end sales charge would incorporate
the offering price into the distribution yield in place of month-end net asset
value.
Distribution rate is a measure of the level of income paid out in cash to
Shareholders over a specified period. It differs from yield and total return and
is not intended to be a complete measure of performance. Furthermore, the
distribution rate may include return of principal and/or capital gains. Total
return is the change in value of a hypothetical investment over a given period
assuming reinvestment of dividends and capital gain distributions. The yield
refers to the cumulative 30-day rolling net investment income, divided by
maximum offering price and multiplied by average shares outstanding during this
period. See the Statement of Additional Information.
PROSPECTUS
25
<PAGE> 27
The Fund may also advertise a "taxable equivalent yield" which is calculated by
taking into account the investor's current tax bracket. This is the yield the
investor would need to earn from a taxable investment in order to realize an
"after-tax" benefit equal to the tax-free yield provided by the Fund. See the
Statement of Additional Information.
The Trust will include information on all classes of shares of the Fund in any
advertisement or information including performance data for the Fund. The
performance for Fiduciary Class shares may be higher than for Class A shares and
Class B shares because Fiduciary Class shares are not subject to sales charges
and distribution expenses.
The performance of each class of the Fund may from time to time be compared to
that of other mutual funds tracked by mutual fund rating services, to that of
broad groups of comparable mutual funds or to that of unmanaged indices that may
assume investment of dividends but do not reflect deductions for administrative
and management costs. In addition, performance of each class of the Fund may be
compared to other funds or to relevant indices that may calculate total return
without reflecting sales charges; in which case, the Fund may advertise its
total return in the same manner. If reflected, sales charges would reduce these
total return calculations.
Further information about the performance of each class of the Fund is contained
in the Trust's Annual Report to Shareholders for The One Group(R) Tax-Free Bond
Fund, which may be obtained without charge by calling 1-800-480-4111.
TAXES
The following summary of Federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial, or
administrative action. No attempt has been made to present a complete
explanation of the Federal, state, local or foreign tax treatment of the Fund or
its Shareholders. Accordingly, Shareholders are urged to consult their tax
advisers regarding specific questions as to the tax consequences of investing in
the Fund.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for Federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify as a
"regulated investment company" for Federal income tax purposes and to meet all
other requirements that are necessary for it to be relieved of Federal taxes on
that part of its net investment income and net capital gains (the excess of net
long-term capital gain over net short-term capital loss) that is distributed to
Shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gain) to Shareholders of
each class of shares of the Fund on at least an annual basis. If, at the close
of each quarter of its taxable year, at least 50% of the value of the Fund's
assets consists of obligations the interest on which is excludable from gross
income, the Fund may pay "exempt-interest dividends" to Shareholders. Those
dividends constitute the portion of the aggregate dividends as designated by the
Fund, equal to the excess of the excludable interest over certain amounts
disallowed as deductions. Exempt-interest dividends are generally excludable
from a Shareholder's gross income for regular Federal income tax purposes.
However, the receipt of exempt-interest dividends may cause persons receiving
Social Security or Railroad Retirement benefits to be taxed on a portion of such
benefits. In addition, the receipt of exempt-interest dividends may result in
liability for Federal alternative minimum tax and for state and local taxes,
both for individual and corporate Shareholders. See the Statement of Additional
Information.
Current Federal law limits the types and volume of bonds qualifying for the
Federal income tax exemption of interest, which may have an effect on the
ability of the Fund to purchase sufficient amounts of tax-exempt securities to
satisfy the Code's requirements for the payment of "exempt-interest dividends."
Any dividends attributable to the Fund's taxable investment income (if any) will
be taxable to Shareholders as ordinary income (whether received in cash or
additional shares) to the extent of the Fund's earnings and profits and will not
qualify for the corporate dividends-received deduction. Any distribution of net
long-term capital gains will be taxable to Shareholders as such regardless of
how long the Shareholder has held shares.
Interest on indebtedness incurred or continued by a Shareholder in order to
purchase shares is not deductible. Furthermore, entities or persons who are
"substantial users" (or persons related to "substantial users") of facilities
financed by "private activity bonds" or certain industrial development bonds
should consult their tax advisers before purchasing shares.
The Fund will make annual reports to Shareholders of the Federal income tax
status of all distributions.
Certain securities purchased by the Fund (such as STRIPS, CUBES, TRS, TIGRS and
CATS), as defined in the "Description of Permitted Investments," are sold at
original issue discount and thus do not make periodic cash interest payments.
The Fund will be required to include as part of its current income the imputed
interest on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because the Fund distributes
substantially all of its net investment income to its Shareholders (including
such imputed interest), the Fund may have to sell portfolio securities in order
to generate the cash necessary for the required distributions. Such sales may
occur at a time when the Adviser would not have chosen to sell such securities
and may result in a taxable gain or loss.
Dividends declared by the Fund in October, November or December of any year and
payable to Shareholders of record on a date in such a month will be deemed to
have been paid by the Fund and received by Shareholders on December 31 of that
year, if paid by the Fund at any time during the following January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for Federal excise tax.
Dividends received by a Shareholder that are derived from the Fund's investments
in U.S. government obligations may not be entitled to the exemptions from state
and local income taxes that would be available if the Shareholder had purchased
U.S. government obligations directly. The Fund will inform Shareholders annually
of the percentage of income and distributions derived from U.S. government
obligations. Shareholders should consult their tax advisers regarding the state
and local tax treatment of the dividends received from the Fund.
Sale, exchange, or redemption of Fund shares by a Shareholder will generally be
a taxable event to such Shareholder.
PROSPECTUS
26
<PAGE> 28
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 29
Investment Adviser and Sub-Administrator
Banc One Investment Advisors Corporation
774 Park Meadow Road
Columbus, OH 43271-0211
Distributor
The One Group(R) Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group(R) Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
Suite 1200 South
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Independent Accountants
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
TOG-F-101
<PAGE> 30
The One Group(R)
Small Company Growth Fund
Supplement dated February 7, 1996 to
Prospectus dated November 1, 1995
The name of The One Group(R) Small Company Growth Fund has been changed
to The One Group(R) Growth Opportunities Fund. All references in the prospectus
to The One Group(R) Small Company Growth Fund should be changed accordingly.
In the second paragraph under "Investment Policies -- Permissible
Investments" on page 7, the second sentence is deleted. The third sentence is
revised to read as follows: "It is expected that issuers will generally include
established companies with a history of above-average growth or companies that
are expected to enter periods of above-average growth, and smaller companies
which are positioned in emerging growth industries.
After the fifth paragraph under "The Adviser" on page 13 the following
paragraph is added:
Ashi S. Parikh is Co-Portfolio Manager of the Fund. Upon joining
Banc One Corporation in 1992, Mr. Parikh worked with the Adviser as a Research
Analyst and Assistant Fund Manager. From 1990 to 1992, Mr. Parikh earned his
MBA from Harvard Business School.
The paragraph under the heading "Miscellaneous" on page 21 is deleted
and is replaced in its entirety by the following paragraph:
The Trust believes that as of November 6, 1995, BANC ONE CORPORATION
(100 East Broad Street, Columbus, OH 43271), through its affiliates, owned of
record substantially all the Fiduciary Class shares of the Fund. The Trust
believes that as of the same date, BANC ONE CORPORATION, through its affiliates,
possessed on behalf of its underlying accounts, voting or investment power with
respect to approximately 79.48% of the Fiduciary Class shares of the Fund. As a
consequence, BANC ONE CORPORATION may be deemed to be a controlling person of
the Fiduciary Class shares of the Fund under the Investment Company Act of 1940.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT
WITH THE PROSPECTUS FOR FUTURE REFERENCE
<PAGE> 31
THE ONE GROUP(R) SMALL COMPANY GROWTH FUND PROSPECTUS
- --------------------------------------------------------------------------------
Investment Adviser: BANC ONE INVESTMENT ADVISORS CORPORATION
The One Group(R) (the "Trust") is a mutual fund seeking to provide a convenient
and economical means of investing in one or more professionally managed
portfolios of securities. This Prospectus relates to The One Group(R) Small
Company Growth Fund Class A, Class B and Fiduciary Class shares.
THE ONE GROUP(R) SMALL COMPANY GROWTH FUND (THE "FUND") SEEKS GROWTH OF CAPITAL
AND, SECONDARILY, CURRENT INCOME, BY INVESTING PRIMARILY IN EQUITY SECURITIES.
Class A and Class B shares are offered to the general public.
Fiduciary Class shares are offered to institutional investors, including
affiliates of BANC ONE CORPORATION and any bank, depository institution,
insurance company, pension plan or other organization authorized to act in
fiduciary, advisory, agency, custodial or similar capacities (each an
"Authorized Financial Organization").
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY BANC ONE CORPORATION OR ITS BANK OR NON-BANK AFFILIATES. THE TRUST'S SHARES
ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY
ANY OTHER GOVERNMENTAL AGENCY OR GOVERNMENT SPONSORED AGENCY OF THE FEDERAL
GOVERNMENT OR ANY STATE. AN INVESTMENT IN MUTUAL FUND SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. BANC ONE
INVESTMENT ADVISORS CORPORATION RECEIVES FEES FROM THE FUND FOR INVESTMENT
ADVISORY AND OTHER SERVICES.
This Prospectus sets forth concisely the information about the Trust that a
prospective investor should know before investing. Investors are advised to read
this Prospectus and retain it for future reference. A Statement of Additional
Information dated November 1, 1995 has been filed with the Securities and
Exchange Commission and is available without charge through the Distributor, The
One Group(R) Services Company, 3435 Stelzer Road, Columbus, OH 43219 or by
calling 1-800-480-4111 during business hours. The Statement of Additional
Information is incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
November 1, 1995
<PAGE> 32
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY................................................................................ 3
ABOUT THE FUND......................................................................... 4
Expense Summary...................................................................... 4
Financial Highlights................................................................. 5
The Fund............................................................................. 7
Investment Objective................................................................. 7
Investment Policies.................................................................. 7
HOW TO DO BUSINESS WITH THE ONE GROUP(R)............................................... 8
How to Invest in The One Group(R).................................................... 8
Alternative Sales Arrangements....................................................... 10
Exchanges............................................................................ 11
Redemptions.......................................................................... 12
FUND MANAGEMENT........................................................................ 13
The Adviser.......................................................................... 13
The Distributor...................................................................... 14
The Administrator.................................................................... 14
The Transfer Agent and Custodian..................................................... 14
Counsel and Independent Accountants.................................................. 14
OTHER INFORMATION...................................................................... 15
The Trust............................................................................ 15
Other Investment Policies............................................................ 16
Description of Permitted Investments................................................. 16
Description of Ratings............................................................... 20
Miscellaneous........................................................................ 21
Performance.......................................................................... 21
Taxes................................................................................ 21
</TABLE>
PROSPECTUS
2
<PAGE> 33
SUMMARY
THE ONE GROUP(R) (the "Trust") is an open-end management investment company that
provides a convenient way to invest in professionally managed portfolios of
securities. The following provides basic information about the Class A, Class B
and Fiduciary Class shares of The One Group(R) Small Company Growth Fund.
WHAT IS THE INVESTMENT OBJECTIVE? The Fund seeks growth of capital and,
secondarily, current income, by investing primarily in equity securities. See
"Investment Objective."
WHAT ARE THE PERMITTED INVESTMENTS? The Fund will invest primarily in common
stocks, but may also invest in debt securities and preferred stock that are
convertible into common stock. Equity securities such as those in which the Fund
may invest are more volatile and carry more risk than some other forms of
investment. Accordingly, the net asset value per share of the Fund may decrease
over time. The Fund may only invest in a select few derivatives; their
characteristics and limitations on their use are more fully described in
"Description of Permitted Investments." There are many different types of
derivative securities with varying degrees of potential risk and return. See
"Investment Policies."
WHO IS THE ADVISER? Banc One Investment Advisors Corporation, an indirect
subsidiary of BANC ONE CORPORATION, serves as the Adviser of the Trust. The
Adviser is entitled to a fee for advisory services provided to the Trust. The
Adviser may voluntarily agree to waive a part of its fees. See "The Adviser" and
"Expense Summary."
WHO IS THE ADMINISTRATOR? The One Group(R) Services Company serves as the
Administrator of the Trust. The Administrator is entitled to a fee for services
provided to the Trust. Banc One Investment Advisors Corporation serves as the
Sub-Administrator of the Trust, pursuant to an agreement with the Administrator
for which Banc One Investment Advisors Corporation receives a fee paid by the
Administrator. See "The Administrator" and "Expense Summary."
WHO IS THE TRANSFER AGENT AND CUSTODIAN? State Street Bank and Trust Company
serves as Transfer Agent and Custodian for the Trust for which services it
receives a fee. Bank One Trust Company, N.A. serves as Sub-Custodian for the
Trust, for which services it receives a fee. See "The Transfer Agent and
Custodian."
WHO IS THE DISTRIBUTOR? The One Group(R) Services Company acts as Distributor of
the Trust's shares. The Distributor is entitled to fees for distribution
services for the Class A and Class B shares of the Fund. No compensation is paid
to the Distributor for distribution services for the Fiduciary Class shares of
the Fund. See "The Distributor."
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions of shares of the
Fund may be made through the Distributor on any day that the New York Stock
Exchange is open for trading ("Business Days"). See "How to Invest in The One
Group(R)" and "Redemptions."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is declared on the last Business Day of
each month as a dividend for Shareholders of record as of the close of business
on that day and is distributed in the form of periodic dividends to such
Shareholders of the Fund on the first Business Day of each month. Any capital
gains are distributed at least annually. Distributions are paid in additional
shares of the same class unless the Shareholder elects to take the payment in
cash. See "Dividends."
PROSPECTUS
3
<PAGE> 34
ABOUT THE FUND
EXPENSE SUMMARY -- THE ONE GROUP(R) SMALL COMPANY GROWTH FUND
<TABLE>
<CAPTION>
FIDUCIARY
CLASS A CLASS B CLASS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES(1)
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................................... 4.50% none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or redemption
proceeds, as applicable).............................................. none 5.00% none
Redemption Fees......................................................... none none none
Exchange Fees........................................................... none none none
ANNUAL OPERATING EXPENSES(2)
(as a percentage of average daily net assets)
Investment Advisory Fees................................................ .74% .74% .74%
12b-1 Fees (after fee waiver)(3)........................................ .25% 1.00% none
Other Expenses.......................................................... .32% .32% .32%
- -----------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES(4)............................................. 1.31% 2.06% 1.06%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) A person who purchases shares through an account with a financial
institution or broker/dealer may be charged separate transaction fees by the
financial institution or broker/dealer. In addition, a wire redemption
charge, currently $7.00, is deducted from the amount of a wire redemption
payment made at the request of a Shareholder.
(2) The expense information in the table has been restated to reflect current
fees that would have been applicable had they been in effect during the
previous fiscal year.
(3) Absent the voluntary waiver of fees under the Trust's Distribution and
Shareholder Services Plans, 12b-1 fees (as a percentage of average daily net
assets) would be .35% for Class A shares. There are no 12b-1 fees charged to
Fiduciary Class shares. See "The Distributor." The 12b-1 fees include a
Shareholder servicing fee of .25% of the average daily net assets of the
Fund's Class B shares and may include a Shareholder servicing fee of .25% of
the average daily net assets of the Fund's Class A shares.
(4) Total Operating Expenses have been revised to reflect fee waivers effective
as of the date of this Prospectus. The Adviser may voluntarily agree to
waive a part of its fees. Absent the voluntary 12b-1 fee waiver, Total
Operating Expenses would be 1.41% for Class A shares.
PROSPECTUS
4
<PAGE> 35
EXAMPLE: An investor would pay the following expenses on a $1,000 investment in
Class A and Fiduciary Class shares of the Fund, assuming: (1) imposition of the
maximum sales charge for Class A shares; (2) 5% annual return; and (3)
redemption at the end of each time period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Class A $ 58 $ 85 $113 $ 196
Fiduciary Class $ 11 $ 34 $ 58 $ 129
</TABLE>
Absent the voluntary reduction of 12b-1 fees, the dollar amounts in the above
example would be as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Class A $ 59 $ 88 $119 $ 206
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXAMPLE: An investor would pay the following expenses on a $1,000 investment in
Class B shares, assuming: (1) deduction of the applicable maximum Contingent
Deferred Sales Charge; and (2) 5% annual return.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Assuming a complete redemption at end of period $ 71 $ 95 $131 $ 220
Assuming no redemption $ 21 $ 65 $111 $ 220
</TABLE>
Class B shareholders do not receive a voluntary reduction in 12b-1 fees.
However, after eight (8) years, Class B shares automatically convert to Class A
shares, which do receive a voluntary reduction in fees. Therefore, a purchaser
of Class B shares remaining in the Fund for ten (10) years would pay $220 with
the voluntary reduction applicable to Class A Shareholders, and $222 absent the
voluntary reduction.
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
purpose of these tables is to assist the investor in understanding the various
costs and expenses that may be directly or indirectly borne by investors in the
Trust.
The rules of the Securities and Exchange Commission (the "SEC") require that the
maximum sales charge be reflected in the above table. However, investors of the
Fund ("Shareholders") may, under certain circumstances, qualify for reduced
sales charges. See "How to Invest in The One Group(R)." Long-term Shareholders
of Class A shares and Class B shares may pay more than the equivalent of the
maximum front-end sales charges otherwise permitted by the National Association
of Securities Dealers' Rules.
FINANCIAL HIGHLIGHTS
The Trust was organized as a Massachusetts Business Trust on May 23, 1985. The
Trust currently consists of 29 separate investment portfolios (the "funds").
Currently, shares in The One Group(R) Small Company Growth Fund are offered in
three separate classes: Class A shares, Class B shares and Fiduciary Class
shares.
The following tables set forth certain financial information with respect to the
Financial Highlights for Class A, Class B and Fiduciary Class shares of the Fund
for the period from commencement of operations of each such class of the Fund to
June 30, 1995. Such information is a part of the financial statements audited by
Coopers & Lybrand L.L.P., independent accountants for the Trust, whose report on
the Trust's financial statements for the year ended June 30, 1995 appears in the
Statement of Additional Information. Further information about the Fund's
performance is contained in the Annual Report to Shareholders, which may be
obtained without charge from the Distributor by calling 1-800-480-4111 during
business hours.
PROSPECTUS
5
<PAGE> 36
THE ONE GROUP(R) SMALL COMPANY GROWTH FUND
FINANCIAL HIGHLIGHTS
For a share of each class outstanding throughout each period
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND
--------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------------------------
1995 1994
------------------------------------------------- -------------------------------------
FIDUCIARY CLASS A CLASS B SERVICE (E) FIDUCIARY CLASS A CLASS B (C)
--------- -------- -------- ------------ --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.............. $ 15.96 $ 15.93 $ 15.85 $15.95 $ 16.96 $ 16.96 $17.44
--------- -------- -------- ----- --------- -------- -----
Investment Activities
Net Investment Income............ 0.06 0.02 (0.07) (0.03) 0.07 0.04 (0.02)
Net Realized and Unrealized Gains
(Losses) from Investments....... 2.98 2.98 2.90 2.14 (0.05) (0.08) (1.56)
--------- -------- -------- ----- --------- -------- -----
Total from Investment
Activities....................... 3.04 3.00 2.83 2.11 0.02 (0.04) (1.58)
--------- -------- -------- ----- --------- -------- -----
Distributions
Net Investment Income............ (0.06) (0.01) (0.07) (0.03) (0.01)
In Excess of Net Investment
Income.......................... (0.02) (0.01)
Net Realized Gains............... (0.54) (0.54) (0.54) (0.54) (0.95) (0.95)
--------- -------- -------- ----- --------- -------- -----
Total Distributions............... (0.60) (0.57) (0.54) (0.54) (1.02) (0.99) (0.01)
--------- -------- -------- ----- --------- -------- -----
Net Asset Value, End of Period.... $ 18.40 $ 18.36 $ 18.14 $17.52 $ 15.96 $ 15.93 $15.85
======== ======= ======= ========== ======== ======= ==========
Total Return (Excludes Sales
Charge).......................... 19.75% 19.50% 18.47% (e) (0.16)% (0.52)% (9.07)%(d)
Ratios/Supplementary Data:
Net Assets, end of period
(000)........................... $ 413,518 $ 11,178 $ 2,787 $ 389,567 $ 8,097 $1,131
Ratio of expenses to average net
assets.......................... 0.98% 1.23% 1.98% 1.87%(b) 0.98% 1.22% 2.12%(b)
Ratio of net investment income to
average net assets.............. 0.38% 0.12% (0.63)% (0.39)%(b) 0.42% 0.27% (0.55)%(b)
Ratio of expenses to average net
assets*......................... 0.98% 1.33% 1.98% 1.87%(b) 1.03% 1.38% 2.12%(b)
Ratio of net investment income to
average net assets*............. 0.38% 0.02% (0.63)% (0.39)%(b) 0.37% 0.11% (0.55)%(b)
Portfolio Turnover............... 132.63% 132.63% 132.63% 132.63% 70.67% 70.67% 70.67%
<CAPTION>
1993 1992 1991
--------------------- ------------------------- ---------
RETIREMENT FIDUCIARY CLASS A FIDUCIARY CLASS A (A) FIDUCIARY
---------- --------- -------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.............. $17.47 $ 14.54 $14.54 $ 12.92 $16.53 $ 12.14
----- --------- -------- --------- ----- ---------
Investment Activities
Net Investment Income............ (0.01) 0.06 0.03 0.09 0.01 0.21
Net Realized and Unrealized Gains
(Losses) from Investments....... (1.50) 2.99 3.00 1.87 (1.99) 0.92
----- --------- -------- --------- ----- ---------
Total from Investment
Activities....................... (1.51) 3.05 3.03 1.96 (1.98) 1.13
----- --------- -------- --------- ----- ---------
Distributions
Net Investment Income............ (0.01) (0.06) (0.04) (0.08) (0.01) (0.21)
In Excess of Net Investment
Income..........................
Net Realized Gains............... (0.57) (0.57) (0.26) (0.14)
----- --------- -------- --------- ----- ---------
Total Distributions............... (0.01) (0.63) (0.61) (0.34) (0.01) (0.35)
----- --------- -------- --------- ----- ---------
Net Asset Value, End of Period.... $15.95 $ 16.96 $16.96 $ 14.54 $14.54 $ 12.92
========= ======== ======= ======== ========== ========
Total Return (Excludes Sales
Charge).......................... (8.64)%(d) 21.36% 21.70% 15.15% (34.00)%(b) 9.85%
Ratios/Supplementary Data:
Net Assets, end of period
(000)........................... $ 35 $ 232,898 $5,757 $ 131,533 $ 84 $53,831
Ratio of expenses to average net
assets.......................... 1.91%(b) 0.89% 1.11% 0.75% 1.31%(b) 0.45%
Ratio of net investment income to
average net assets.............. (0.36)%(b) 0.41% 0.25% 0.51% 0.12%(b) 1.75%
Ratio of expenses to average net
assets*......................... 1.91%(b) 1.11% 1.48% 1.23% 1.50%(b) 1.19%
Ratio of net investment income to
average net assets*............. (0.36)%(b) 0.19% (0.12)% 0.03% (0.07)%(b) 1.01%
Portfolio Turnover............... 70.67% 64.64% 64.64% 42.77% 42.77% 68.83%
</TABLE>
- ---------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on February 18, 1992.
(b) Annualized.
(c) Class B Shares commenced offering on January 14, 1994.
(d) Not Annualized.
(e) The Service Shares commenced offering on January 17, 1994 when they were
designated as "Retirement" Shares. On April 4, 1994, the name of the
Retirement Shares was changed to "Service" Shares. As of June 1, 1995,
Service Shares transferred to Class A Shares, and as of June 30, 1995, there
were no Shareholders in the Service Class. The return for the period from
July 1, 1994 to June 1, 1995 for the Service Shares was 13.12%.
PROSPECTUS
6
<PAGE> 37
THE FUND
The One Group(R) Small Company Growth Fund (the "Fund") is part of The One
Group(R) (the "Trust"), which is an open-end management investment company that
offers units of beneficial interest ("shares") in 29 separate funds and
different classes of certain of the funds. This Prospectus relates to the Class
A, Class B and Fiduciary Class shares of The One Group(R) Small Company Growth
Fund which provide for variations in distribution costs, voting rights,
dividends and per share net asset value pursuant to a multiple class plan (the
"Multiple Class Plan") adopted by the Board of Trustees of the Trust. Except for
these differences among classes, each share of the Fund represents an undivided,
proportionate interest in the Fund. The Fund is a diversified mutual fund.
Information regarding the Trust's other funds and their classes is contained in
separate prospectuses which may be obtained from the Trust's Distributor, The
One Group(R) Services Company, 3435 Stelzer Road, Columbus, OH 43219 or by
calling 1-800-480-4111.
INVESTMENT OBJECTIVE
The Fund seeks growth of capital and, secondarily, current income, by investing
primarily in equity securities.
The investment objective of the Fund is fundamental and may not be changed
without a vote of the holders of a majority of the Fund's outstanding shares (as
defined in the Statement of Additional Information).
There is no assurance that the Fund will meet its investment objective.
INVESTMENT POLICIES
The investment policies of the Fund may be changed without an affirmative vote
of the holders of a majority of the Fund's outstanding shares unless a policy is
expressly deemed to be fundamental or is expressly deemed to be changeable only
by such a majority vote.
PERMISSIBLE INVESTMENTS
The Fund will, under normal conditions, invest at least 80% of the value of its
total assets in equity securities consisting of common stocks and debt
securities and preferred stocks that are convertible into common stocks. The
Fund may also enter into futures contracts, provided that the value of these
contracts does not exceed 25% of the Fund's total assets. In addition, the Fund
may write covered call options on securities it owns and enter into related
closing purchase transactions when such activity will further the Fund's
investment objective, and may also engage in other options transactions in
furtherance of its investment objective. The balance of the Fund's assets will
be held in cash equivalents rated within one of the rating categories assigned
by at least one nationally recognized statistical rating organization ("NRSRO"),
which categories are described below in "Description of Ratings," at the time of
investment or, if unrated, to be of comparable quality.
The Fund will invest in issues which are identified and selected based on the
potential to produce above-average earnings growth per share over a one-to-three
year period. Under normal market conditions, at least 65% of the Fund's assets
will consist of the securities of issuers with a market capitalization of $1.5
billion or less. Issuers include medium-sized, established companies with a
history of above-average growth or companies that are expected to enter periods
of above-average growth, and smaller companies which are positioned in emerging
growth industries. The Fund may invest in securities listed on a stock exchange
as well as those traded over-the-counter. The Adviser, in its discretion, may
purchase securities of companies which do not pay dividends but which are
believed to have superior growth potential.
In addition to the permissible investments described above, the Fund may invest
in U.S. Treasury obligations, including Separately Traded Registered Interest
and Principal Securities ("STRIPS") and Coupon Under Book Entry Safekeeping
("CUBES"), receipts, including Treasury Receipts ("TRS"), Treasury Investment
Growth Receipts ("TIGRS"), and Certificates of Accrual on Treasury Securities
("CATS"), certificates of deposit, time deposits, U.S. government agency
securities, repurchase agreements, reverse repurchase agreements, securities of
other investment companies, when-issued securities, forward commitments,
options, futures contracts, and options on futures contracts. The Fund may also
invest in variable and floating rate notes, bankers' acceptances, commercial
paper and securities of foreign issuers, including sponsored and unsponsored
American Depository Receipts ("ADRs"). The Fund may also engage in securities
lending transactions. All of the Fund's investments, where applicable, must
possess one of the ratings described below in the "Description of Ratings" at
the time of investment or, if unrated, to be of comparable quality.
This list of permissible investments includes select securities that may be
commonly considered to be derivatives, including: options, futures contracts and
options on futures contracts. These securities and limitations on their use are
more fully described in the "Description of Permitted Investments."
For a description of the Fund's permitted investments, see "Description of
Permitted Investments." For a description of permitted investments for temporary
defensive purposes, see "Temporary Defensive Position."
RISK FACTORS
Changes in the value of portfolio securities will not affect cash income, if
any, derived from these securities but will affect the Fund's net asset value.
Because the Fund invests primarily in equity securities, which fluctuate in
value, the Fund's shares will fluctuate in value.
Smaller, less seasoned companies may be subject to greater business risk than
larger, established companies. They may be more vulnerable to changes in
economic conditions, specific industry conditions, market fluctuations and other
factors affecting the profitability of companies. Therefore, the stock price of
smaller capitalization companies may be subject to greater price fluctuations
than that of larger, established companies. Due to these and other risk factors,
the price movement of the securities held by the Fund may be volatile and the
net asset value of a share of the Fund may fluctuate.
Certain investment management techniques that the Fund may use, such as the
purchase and sale of futures, options and forward commitments, could expose the
Fund to potentially greater risk of loss than more traditional equity
investments.
Investments in securities of foreign issuers may involve greater risks than are
present in U.S. investments. In general, issuers in many foreign countries are
not subject to accounting, auditing and
PROSPECTUS
7
<PAGE> 38
financial reporting standards, practices and requirements comparable to those
applicable to U.S. companies. There is generally less information publicly
available about, and less regulation of, foreign issuers than U.S. companies.
Transaction costs are generally higher for investments in foreign issuers.
Securities of some foreign companies are less liquid, and their prices are more
volatile, than securities of comparable U.S. companies. Settlement of
transactions in some foreign markets may be delayed or may be less frequent than
in the United States, which could adversely affect the liquidity of the Fund. In
addition, with respect to some foreign countries, there are the possibilities of
expropriation or confiscatory taxation, the imposition of additional taxes or
tax withholding, limitations on the removal of securities, property or other
assets of the Fund, political or social instability, and diplomatic
developments, which could affect the value of investments in those countries.
For additional information on each of the Fund's permitted investments and
associated risks, see "Description of Permitted Investments."
HOW TO DO BUSINESS WITH
THE ONE GROUP(R)
HOW TO INVEST IN THE ONE GROUP(R)
Shares of the Fund are sold on a continuous basis and may be purchased directly
from the Trust's Distributor, The One Group(R) Services Company by mail, by
telephone, or by wire. Shares may also be purchased through a financial
institution, such as a bank, savings and loan association or insurance company
(each a "Shareholder Servicing Agent"), that has established a Shareholder
servicing agreement with the Distributor or through a broker-dealer that has
established a dealer agreement with the Distributor.
Purchases and redemptions of shares of the Fund may be made on any day that the
New York Stock Exchange is open for trading ("Business Days"). The minimum
initial and subsequent investments in the Fund are $1,000 and $100, respectively
($100 and $25, respectively, for employees of BANC ONE CORPORATION and its
affiliates). Initial and subsequent investment minimums may be waived at the
Distributor's discretion. Investors may purchase up to a maximum of $250,000 of
Class B shares per individual purchase order.
Class A and Class B shares are offered to the general public. Fiduciary Class
shares are offered to institutional investors, including affiliates of BANC ONE
CORPORATION and any bank, depository institution, insurance company, pension
plan or other organization authorized to act in fiduciary, advisory, agency,
custodial or similar capacities (each an "Authorized Financial Organization").
For additional details regarding eligibility, call the Distributor at
1-800-480-4111.
BY MAIL
Investors may purchase Class A and Class B shares of the Fund by completing and
signing an Account Application Form and mailing it, along with a check (or other
negotiable bank instrument or money order) payable to "The One Group(R)," to
State Street Bank and Trust Company (the Trust's Transfer Agent and Custodian),
P.O. Box 8500, Boston, MA 02266-8500. Subsequent purchases of shares may be made
at any time by mailing a check to the Transfer Agent. Account Application Forms
are available through the Distributor by calling 1-800-480-4111.
Purchases of Fiduciary Class shares and Class A shares that are being offered to
investors in certain retirement plans such as 401(k) and similar plans, other
than Individual Retirement Accounts, are made by an institutional investor
and/or other intermediary on behalf of an investor (each also a "Shareholder
Servicing Agent"). The Shareholder Servicing Agent may require an investor to
complete forms in addition to the Account Application Form and to follow
procedures established by the Shareholder Servicing Agent. Such Shareholders
should contact their Shareholder Servicing Agents regarding purchases, exchanges
and redemptions of shares. See "Additional Information Regarding Purchases."
BY TELEPHONE OR BY WIRE
Once an Account Application Form has been received, Shareholders are eligible to
make purchases by telephone or wire (if that option has been selected by a
Shareholder) by calling the Transfer Agent at 1-800-480-4111 or their
Shareholder Servicing Agents, if applicable.
Shareholders may revoke their automatic eligibility to make purchases and/or
redemptions by telephone or by wire, by sending a letter so stating to the
Transfer Agent, State Street Bank and Trust Company, P.O. Box 8500, Boston, MA
02266-8500.
SYSTEMATIC INVESTMENT PLAN
Class A and Class B investors may make automatic monthly investments in the Fund
from their bank, savings and loan or other depository institution accounts. The
minimum initial and subsequent investments must be $25 under the Systematic
Investment Plan, which minimum may be waived at the discretion of the
Distributor. The Trust pays the costs associated with these transfers, but
reserves the right, upon thirty days' written notice, to impose reasonable
charges for this service. A depository institution may impose a charge for
debiting an investor's account, which would reduce the investor's return from an
investment in the Fund.
FUND-DIRECT IRA
The Trust offers a tax-advantaged retirement plan for which shares of the Fund
may be an appropriate investment. The Trust's retirement plan allows
participants to defer taxes while helping them build their retirement savings.
The One Group(R)'s Fund-Direct IRA is a retirement plan with a wide choice of
investments, offering people with earned income the opportunity to compound
earnings on a tax-deferred basis. An IRA Adoption Agreement may be obtained by
calling the Distributor at 1-800-480-4111.
ADDITIONAL INFORMATION REGARDING PURCHASES
A purchase order will be effective as of the day received by the Distributor if
the Distributor receives the order before 4:00 p.m., eastern time. However, an
order may be cancelled if the Transfer Agent does not receive Federal funds
before the close of business on the next Business Day for Fiduciary Class
shares, and before the close of business on the third Business Day for Class A
and Class B shares, and the investor could be liable for any fees or expenses
incurred by the Trust. Federal funds are monies credited
PROSPECTUS
8
<PAGE> 39
to a bank's account with a Federal Reserve Bank. The purchase price of shares of
the Fund is the net asset value next determined after a purchase order is
effected plus any applicable sales charge (the "offering price"). The net asset
value per share of the Fund is determined by dividing the total market value of
the Fund's investments and other assets allocable to a class, less any
liabilities allocable to that class, by the total number of outstanding shares
of such class. Net asset value per share is determined daily as of 4:00 p.m.,
eastern time, on each Business Day. For a further discussion of the calculation
of net asset value, see the Statement of Additional Information. Shares may also
be issued in transactions involving the acquisition by the Fund of securities
held by collective investment funds sponsored and administered by affiliates of
the Adviser. Purchases will be made in full and fractional shares of the Fund
calculated to three decimal places. Although the methodology and procedures are
identical, the net asset value per share of classes within the Fund may differ
because the distribution fees and expenses charged to Class A shares and Class B
shares are not charged to Fiduciary Class shares.
The Trust reserves the right to reject a purchase order when the Distributor
determines that it is not in the best interest of the Trust and/or its
Shareholders to accept such order. Except as provided below, neither the Trust's
Transfer Agent nor the Trust will be responsible for any loss, liability, cost
or expense for acting upon telephone or wire instructions, and the investor will
bear all risk of loss. The Trust will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine, including requiring a
form of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions. If such procedures are not
employed, the Trust may be liable for any losses due to unauthorized or
fraudulent instructions.
Fiduciary Class shares offered to institutional investors and investors in
certain retirement plans, and Class A shares that are being offered to investors
in certain retirement plans such as 401(k) and similar plans, other than
Individual Retirement Accounts, will normally be held in the name of the
Shareholder Servicing Agent effecting the purchase on the Shareholder's behalf,
and it is the Shareholder Servicing Agent's responsibility to transmit purchase
orders to the Distributor. A Shareholder Servicing Agent may impose an earlier
cut-off time for receipt of purchase orders directed through it to allow for
processing and transmittal of these orders to the Distributor for effectiveness
the same day. The Shareholder should contact his or her Shareholder Servicing
Agent for information as to the Shareholder Servicing Agent's procedures for
transmitting purchase, exchange or redemption orders to the Trust. A Shareholder
who desires to transfer the registration of shares beneficially owned by him or
her, but held of record by a Shareholder Servicing Agent, should contact the
Shareholder Servicing Agent to accomplish such change. Other Shareholders who
desire to transfer the registration of their shares should contact the Transfer
Agent.
No certificates representing the shares of the Fund will be issued. In
communications to Shareholders, the Fund will not duplicate mailings of Fund
material to Shareholders who reside at the same address.
SALES CHARGE
The following table shows the initial sales charge on Class A shares to a
"single purchaser" (defined below) together with the sales charge reallowed to
financial institutions and intermediaries (the "commission"):
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE COMMISSION
AS A AS APPROPRIATE AS A
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
OFFERING NET AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
- --------------------- ------------- -------------- -------------
<S> <C> <C> <C>
less than $50,000.... 4.50% 4.71% 4.05%
$50,000 but less than
$100,000........... 3.50% 3.63% 3.15%
$100,000 but less
than $250,000...... 2.50% 2.56% 2.25%
$250,000 but less
than $500,000...... 1.50% 1.52% 1.35%
$500,000 but less
than $1,000,000.... 1.00% 1.01% 0.90%
$1,000,000 or more... 0.00% 0.00% 0.00%
</TABLE>
The commissions shown in the table apply to sales through financial institutions
and intermediaries. Under certain circumstances, the Distributor will use its
own funds to compensate financial institutions and intermediaries in amounts
that are additional to the commission shown above. The maximum cash compensation
payable by the Distributor as a sales charge is 4.50% of the offering price
(including the commission shown above and additional cash compensation described
below). In addition, the Distributor will, from time to time and at its own
expense, provide promotional incentives to financial institutions and
intermediaries, whose registered representatives have sold or are expected to
sell significant amounts of shares of the Fund, in the form of payment for
travel expenses, including lodging, incurred in connection with trips taken by
qualifying registered representatives to places within or outside the United
States, and additional compensation in an amount up to .50% of the offering
price of Class A shares of the Fund for sales of $1 million or more. However,
the Distributor will be reimbursed by the person receiving such additional
compensation for sales of the Fund of $1 million or more, if a Shareholder
redeems any or all of the shares for which such additional compensation was paid
by the Distributor prior to the first year anniversary of purchase. Under
certain circumstances, commissions up to the amount of the entire sales charge
will be reallowed to financial institutions and intermediaries, which might then
be deemed to be "underwriters" under the Securities Act of 1933.
RIGHT OF ACCUMULATION
In calculating the sales charge rates applicable to current purchases of Class A
shares, a "single purchaser" is entitled to cumulate current purchases with the
current value at the offering price of previously purchased Class A and Class B
shares of the Fund and other eligible funds of the Trust, other than the Trust's
money market funds, that are sold subject to a comparable sales charge.
The term "single purchaser" refers to (i) an individual, (ii) an individual and
spouse purchasing shares of the Fund for their own account or for trust or
custodial accounts for their minor children, or (iii) a fiduciary purchasing for
any one trust, estate or fiduciary account, including employee benefit plans
created under Sections 401 or 457 of the Internal Revenue Code of 1986, as
amended (the "Code"), and including related plans of the same employer. To be
entitled to a reduced sales charge based upon shares already owned, the investor
must ask the Distributor for such reduction at the time of purchase and provide
the account number(s) of the investor, the investor and spouse, and their
PROSPECTUS
9
<PAGE> 40
minor children, and give the age of such children. The Fund may amend or
terminate this right of accumulation at any time as to subsequent purchases.
LETTER OF INTENT
By initially investing at least $2,000 in Class A shares of one or more funds of
the Trust that impose a comparable sales charge over the next 13 months, the
sales charge may be reduced by completing the Letter of Intent section of the
Account Application Form. The Letter of Intent includes a provision for a sales
charge adjustment depending on the amount actually purchased within the 13-month
period. In addition, pursuant to a Letter of Intent, the Custodian will hold in
escrow the difference between the sales charge applicable to the amount
initially purchased and the sales charge paid at the time of the investment,
which is based on the amount covered by the Letter of Intent.
For example, assume an investor signs a Letter of Intent to purchase $250,000 in
Class A shares of one (or more) of the funds of the Trust that impose a
comparable sales charge and, at the time of signing the Letter of Intent,
purchases $100,000 of Class A shares of one of these funds. The investor would
pay an initial sales charge of 1.50% (the sales charge applicable to purchases
of $250,000) and 1.00% of the investment (representing the difference between
the 2.50% sales charge applicable to purchases of $100,000 and the 1.50% sales
charge already paid) would be held in escrow until the investor has purchased
the remaining $150,000 or more in Class A shares under the investor's Letter of
Intent.
The amount held in escrow will be applied to the investor's account at the end
of the 13-month period unless the amount specified in the Letter of Intent is
not purchased. In order to qualify for a Letter of Intent, the investor will be
required to make a minimum purchase of at least $2,000.
The Letter of Intent will not obligate the investor to purchase Class A shares,
but if he or she does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. The Letter of
Intent may be dated as of a prior date to include any purchases made within the
past 90 days.
OTHER CIRCUMSTANCES
No sales charge is imposed on Class A shares of the Fund: (i) issued through
reinvestment of dividends and capital gains distributions; (ii) acquired through
the exercise of exchange privileges where a comparable sales charge has been
paid for exchanged shares; (iii) purchased by officers, directors or trustees,
retirees and employees (and their spouses and immediate family members) of the
Trust, of BANC ONE CORPORATION and its subsidiaries and affiliates, of the
Distributor and its subsidiaries and affiliates, or of an investment sub-adviser
of a fund of the Trust and such sub-adviser's subsidiaries and affiliates; (iv)
sold to affiliates of BANC ONE CORPORATION and to certain accounts (other than
Individual Retirement Accounts) for which Authorized Financial Organizations act
in fiduciary, advisory, agency, custodial or similar capacities, or purchased by
investment advisers, financial planners or other intermediaries who have a
dealer arrangement with the Distributor, who place trades for their own accounts
or for the accounts of their clients and who charge a management, consulting or
other fee for their services, as well as clients of such investment advisers,
financial planners or other intermediaries who place trades for their own
accounts if the accounts are linked to the master account of such investment
adviser, financial planner or other intermediary; (v) purchased with proceeds
from the recent redemption of Fiduciary Class shares of a fund of the Trust or
acquired in an exchange of Fiduciary Class shares of a fund for Class A shares
of the same fund; (vi) purchased with proceeds from the recent redemption of
shares of a mutual fund (other than a fund of the Trust) for which a sales
charge was paid; (vii) purchased in an Individual Retirement Account with the
proceeds of a distribution from an employee benefit plan, provided that, at the
time of distribution, the employee benefit plan had plan assets invested in a
fund of the Trust; (viii) purchased with Trust assets; (ix) purchased in
accounts as to which a bank or broker-dealer charges an asset allocation fee,
provided the bank or broker-dealer has an agreement with the Distributor; or (x)
directly purchased with the proceeds of a distribution on a bond for which a
BANC ONE CORPORATION affiliate bank or trust company is the Trustee or Paying
Agent.
An investor relying upon any of the categories of waivers of the sales charge
must qualify for such waiver in advance of the purchase with the Distributor or
the financial institution or intermediary through which shares are purchased by
the investor.
The waiver of the sales charge under circumstances (v), (vi) and (vii) above
applies only if the purchase is made within 60 days of the redemption or
distribution and if conditions imposed by the Distributor are met. The waiver
policy with respect to the purchase of shares through the use of proceeds from a
recent redemption or distribution as described in clauses (v), (vi) and (vii)
above will not be continued indefinitely and may be discontinued at any time
without notice. Investors should call the Distributor at 1-800-480-4111 to
determine whether they are eligible to purchase shares without paying a sales
charge through the use of proceeds from a recent redemption or distribution as
described above, and to confirm continued availability of these waiver policies
prior to initiating the procedures described in clauses (v), (vi) and (vii).
ALTERNATIVE SALES ARRANGEMENTS
CLASS B SHARES
Class B shares are not subject to a sales charge when they are purchased, but
are subject to a sales charge (the "Contingent Deferred Sales Charge") if a
Shareholder redeems them prior to the sixth anniversary of purchase. When a
Shareholder purchases Class B shares, the full purchase amount is invested
directly in the Fund. Class B shares of the Fund are subject to an ongoing
distribution and Shareholder service fee at an annual rate of 1.00% of the
Fund's average daily net assets as provided in the Class B Plan (described below
under "The Distributor"). This ongoing fee will cause Class B shares to have a
higher expense ratio and to pay lower dividends than Class A shares. Class B
shares convert automatically to Class A shares after eight years, commencing
from the end of the calendar month in which the purchase order was accepted
under the circumstances and subject to the qualifications described in this
Prospectus.
Proceeds from the Contingent Deferred Sales Charge and the distribution and
Shareholder service fees under the Class B Plan are payable to the Distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
Shareholder services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to dealers and agents
PROSPECTUS
10
<PAGE> 41
for selling Class B shares. A dealer reallowance of 4.00% of the original
purchase price of the Class B shares will be paid to financial institutions and
intermediaries.
CONTINGENT DEFERRED SALES CHARGE
If the Shareholder redeems Class B shares prior to the sixth anniversary of
purchase, the Shareholder will pay a Contingent Deferred Sales Charge at the
rates set forth below. The Contingent Deferred Sales Charge is assessed on an
amount equal to the lesser of the then-current market value or the cost of the
shares being redeemed. Accordingly, no sales charge is imposed on increases in
net asset value above the initial purchase price. In addition, no charge is
assessed on shares derived from reinvestment of dividends or capital gain
distributions.
The amount of the Contingent Deferred Sales Charge, if any, varies depending on
the number of years from the time of payment for the purchase of Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of shares, all
payments during a month are aggregated and deemed to have been made on the first
day of the month.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
YEAR(S) PERCENTAGE OF
SINCE DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
- ----------------------------------- --------------------
<S> <C>
0-1................................ 5.00%
1-2................................ 4.00%
2-3................................ 3.00%
3-4................................ 3.00%
4-5................................ 2.00%
5-6................................ 1.00%
6-7................................ None
7-8................................ None
</TABLE>
In determining whether a particular redemption is subject to a Contingent
Deferred Sales Charge, it is assumed that the redemption is first of any Class A
shares in the Shareholder's Fund account (unless the Shareholder elects to have
Class B shares redeemed first) or shares representing capital appreciation, next
of shares acquired pursuant to reinvestment of dividends and capital gain
distributions, and finally of other shares held by the Shareholder for the
longest period of time. This method should result in the lowest possible sales
charge.
To provide an example, assume you purchased 100 shares at $10 per share (a total
cost of $1,000) and prior to the second anniversary after purchase, the net
asset value per share is $12 and during such time you have acquired 10
additional shares through dividends paid in shares. If you then make your first
redemption of 50 shares (proceeds of $600), 10 shares will not be subject to
charge because you received them as dividends. With respect to the remaining 40
shares, the charge is applied only to the original cost of $10 per share and not
to the increase in net asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds is subject to a Contingent Deferred Sales Charge at a rate
of 4.00% (the applicable rate prior to the second anniversary after purchase).
The Contingent Deferred Sales Charge is waived on redemption of shares: (i) for
distributions that are made under a Systematic Withdrawal Plan of the Trust and
that are limited to no more than 10% of the account value annually, determined
in the first year as of the date the redemption request is received by the
Transfer Agent, and in subsequent years, as of the most recent anniversary of
that date; (ii) following the death or disability (as defined in the Code) of a
Shareholder or a participant or beneficiary of a qualifying retirement plan if
redemption is made within one year of such death or disability; or (iii) to the
extent that the redemption represents a minimum required distribution from an
Individual Retirement Account or other qualifying retirement plan to a
Shareholder who has attained the age of 70 1/2. A Shareholder or his or her
representative should contact the Transfer Agent to determine whether a
retirement plan qualifies for a waiver and must notify the Transfer Agent prior
to the time of redemption if such circumstances exist and the Shareholder is
eligible for this waiver. In addition, the following circumstances are not
deemed to result in a "redemption" of Class B shares for purposes of the
assessment of a Contingent Deferred Sales Charge, which is therefore waived: (i)
plans of reorganization of the Fund, such as mergers, asset acquisitions and
exchange offers to which the Fund is a party; or (ii) exchanges for Class B
shares of other funds of the Trust as described under "Exchanges."
CONVERSION FEATURE
Class B shares include all shares purchased pursuant to the Contingent Deferred
Sales Charge which have been outstanding for less than the period ending eight
years after the end of the month in which the shares were purchased. At the end
of this period, Class B shares will automatically convert to Class A shares and
will be subject to the lower distribution and Shareholder service fees charged
to Class A shares. Such conversion will be on the basis of the relative net
asset values of the two classes, without the imposition of any sales charge, fee
or other charge. The conversion is not a taxable event to a Shareholder.
For purposes of conversion to Class A shares, shares received as dividends and
other distributions paid on Class B shares in a Shareholder's Fund account will
be considered to be held in a separate sub-account. Each time any Class B shares
in a Shareholder's Fund account (other than those in the sub-account) convert to
Class A shares, a pro-rata portion of the Class B shares in the sub-account will
also convert to Class A shares.
If a Shareholder effects one or more exchanges among Class B shares of the funds
of the Trust during the eight-year period, the Trust will aggregate the holding
periods for the shares of each fund of the Trust for purposes of calculating
that eight-year period. Because the per share net asset value of the Class A
shares may be higher than that of the Class B shares at the time of conversion,
a Shareholder may receive fewer Class A shares than the number of Class B shares
converted, although the dollar value will be the same.
EXCHANGES
CLASS A AND FIDUCIARY CLASS
Fiduciary Class Shareholders of the Fund may exchange their shares for Class A
shares of the Fund or for Class A shares or Fiduciary Class shares of another
fund of the Trust.
Class A Shareholders may exchange their shares for Fiduciary Class shares of the
Fund or for Fiduciary Class shares or Class A shares of another fund of the
Trust, if the Shareholder is eligible to purchase such shares.
PROSPECTUS
11
<PAGE> 42
The exchange privilege may be exercised only in those states where the shares of
the Fund or such other fund of the Trust may be legally sold. All exchanges
discussed herein are made at the net asset value of the exchanged shares, except
as provided below. The Trust does not impose a charge for processing exchanges
of shares. If a Shareholder seeks to exchange Class A shares of a fund that does
not impose a sales charge for Class A shares of a fund that does or the fund
being exchanged into has a higher sales charge, the Shareholder will be required
to pay a sales charge in the amount equal to the difference between the sales
charge applicable to the fund into which the shares are being exchanged and any
sales charges previously paid for the exchanged shares, including any sales
charges incurred on any earlier exchanges of the shares (unless such sales
charge is otherwise waived, as provided in "Other Circumstances"). The exchange
of Fiduciary Class shares for Class A shares also will require payment of the
sales charge unless the sales charge is waived, as provided in "Other
Circumstances."
CLASS B
Class B Shareholders of the Fund may exchange their shares for Class B shares of
any other fund of the Trust on the basis of the net asset value of the exchanged
Class B shares, without the payment of any Contingent Deferred Sales Charge that
might otherwise be due upon redemption of the outstanding Class B shares. The
newly acquired Class B shares will be subject to the higher Contingent Deferred
Sales Charge of either the fund from which the shares were exchanged or the fund
into which the shares were exchanged. With respect to outstanding Class B shares
as to which previous exchanges have taken place, "higher Contingent Deferred
Sales Charge" shall mean the higher of the Contingent Deferred Sales Charge
applicable to either the fund the shares are exchanging into or any other fund
from which the shares previously have been exchanged. For purposes of computing
the Contingent Deferred Sales Charge that may be payable upon a disposition of
the newly acquired Class B shares, the holding period for outstanding Class B
shares of the fund from which the exchange was made is "tacked" to the holding
period of the newly acquired Class B shares. For purposes of calculating the
holding period applicable to the newly acquired Class B shares, the newly
acquired Class B shares shall be deemed to have been issued on the date of
receipt of the Shareholder's order to purchase the outstanding Class B shares of
the fund from which the initial exchange was made.
ADDITIONAL INFORMATION REGARDING EXCHANGES
In the case of shares held of record by a Shareholder Servicing Agent but
beneficially owned by a Shareholder, to exchange such shares the Shareholder
should contact the Shareholder Servicing Agent, who will contact the Transfer
Agent and effect the exchange on behalf of the Shareholder. If an exchange
request in good order is received by the Transfer Agent by 4:00 p.m., eastern
time, on any Business Day, the exchange usually will occur on that day. Any
Shareholder who wishes to make an exchange must receive a current prospectus of
the fund of the Trust in which he or she wishes to invest before the exchange
will be effected.
The Trust reserves the right to change the terms and conditions of the exchange
privilege discussed herein upon sixty days' written notice. An exchange between
classes of shares of the same fund is not considered a taxable event; however,
an exchange between funds of the Trust is considered a sale of shares and
usually results in a capital gain or loss for Federal income tax purposes.
Shareholders should consult their tax advisers for a more complete explanation
of the Federal income tax consequences of an exchange of shares of the Fund.
A more detailed description of the above is set forth in the Statement of
Additional Information.
REDEMPTIONS
Shareholders may redeem their shares without charge (except Class B shares, as
provided above) on any Business Day; shares may ordinarily be redeemed by mail,
by telephone or by wire. All redemption orders are effected at the net asset
value per share next determined for Class A and Fiduciary Class shares, and at
net asset value per share next determined reduced by any applicable Contingent
Deferred Sales Charge for Class B shares, after receipt of a valid request for
redemption. Payment to Shareholders for shares redeemed will be made within
seven days after receipt by the Transfer Agent of the request for redemption.
BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to constitute a valid request for redemption. All written redemption requests
should be sent to The One Group(R), c/o State Street Bank and Trust Company,
P.O. Box 8500, Boston, MA 02266-8500, or the Shareholder Servicing Agent, if
applicable. The Transfer Agent may require that the signature on the written
request be guaranteed by a commercial bank, a member firm of a domestic stock
exchange or by a member of the Securities Transfer Association Medallion Program
or the Stock Exchange Medallion Program.
The signature guarantee requirement will be waived if all of the following
conditions apply: (i) the redemption is for $5,000 worth of shares or less; (ii)
the redemption check is payable to the Shareholder(s) of record; and (iii) the
redemption check is mailed to the Shareholder(s) at the address of record. The
Shareholder may also have the proceeds mailed to a commercial bank account
previously designated on the Account Application Form or by written instruction
to the Transfer Agent or the Shareholder Servicing Agent, if applicable. There
is no charge for having redemption requests mailed to a designated bank account.
BY TELEPHONE OR BY WIRE
Shareholders may have the payment of redemption requests wired or mailed to a
domestic commercial bank account previously designated on the Account
Application Form. Wire redemption requests may be made by the Shareholder by
telephone to the Transfer Agent at 1-800-480-4111, provided that the Shareholder
has elected the telephone redemption privilege in writing to the Distributor, or
to the Shareholder Servicing Agent, if applicable. The Transfer Agent may reduce
the amount of a wire redemption payment by its then-current wire redemption
charge, which, as of the date of this Prospectus, is $7.00.
Neither the Trust nor the Transfer Agent will be responsible for the
authenticity of the redemption instructions received by telephone if it
reasonably believes those instructions to be genuine. The Trust and the Transfer
Agent will each employ reasonable procedures to confirm that telephone
instructions are genuine, and may be liable for losses resulting from
unauthorized or fraudulent telephone transactions if it does not employ those
procedures.
PROSPECTUS
12
<PAGE> 43
Such procedures may include requesting personal identification information or
recording telephone conversations.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders whose accounts have a value of at least $10,000 may elect to
receive, or may designate another person to receive, monthly, quarterly or
annual payments in a specified amount of not less than $100 each. There is no
charge for this service. Under the Systematic Withdrawal Plan, all dividends and
distributions must be reinvested in shares of the Fund. Purchases of additional
Class A shares while the Systematic Withdrawal Plan is in effect are generally
undesirable because a sales charge is incurred whenever purchases are made.
Pursuant to the Systematic Withdrawal Plan, Class B Shareholders may elect to
receive, or may designate another person to receive, distributions provided the
distributions are limited to no more than 10% of their account value annually,
determined in the first year as of the date the redemption request is received
by the Transfer Agent, and in subsequent years, as of the most recent
anniversary of that date. In addition, Shareholders who have attained the age of
70 1/2 may elect to receive distributions, to the extent that the redemption
represents a minimum required distribution from an Individual Retirement Account
or other qualifying retirement plan.
If the amount of the systematic withdrawal exceeds the income accrued since the
previous withdrawal under the Systematic Withdrawal Plan, the principal balance
invested will be reduced and shares will be redeemed.
OTHER INFORMATION REGARDING REDEMPTIONS
At various times, the Fund may be requested to redeem shares for which it has
not yet received good payment. In such circumstances, the forwarding of proceeds
may be delayed for 15 or more days until payment has been collected for the
purchase of such shares. The Fund intends to pay cash for all shares redeemed.
Due to the relatively high costs of handling small investments, the Fund
reserves the right to redeem, at net asset value, the shares of any Shareholder
if, because of redemptions of shares by or on behalf of the Shareholder, the
account of such Shareholder in the Fund has a value of less than $1,000, the
minimum initial purchase amount. Accordingly, an investor purchasing shares of
the Fund in only the minimum investment amount may be subject to such
involuntary redemption if he or she thereafter redeems any of these shares.
Before the Fund exercises its right to redeem such shares and to send the
proceeds to the Shareholder, the Shareholder will be given notice that the value
of the shares in his or her account is less than the minimum amount and will be
allowed 60 days to make an additional investment in the Fund in an amount which
will increase the value of the account to at least $1,000.
See the Statement of Additional Information for examples of when the Trust may
suspend the right of redemption or redeem shares involuntarily if it appears
appropriate to do so in light of the Trust's responsibilities under the
Investment Company Act of 1940.
FUND MANAGEMENT
THE ADVISER
The Trust and Banc One Investment Advisors Corporation (the "Adviser") have
entered into an investment advisory agreement (the "Advisory Agreement"). Under
the Advisory Agreement, the Adviser makes the investment decisions for the
assets of the Fund and continuously reviews, supervises and administers the
Fund's investment program. The Adviser discharges its responsibilities subject
to the supervision of, and policies established by, the Trustees of the Trust.
The Trust's shares are not deposits or obligations of, or endorsed or guaranteed
by BANC ONE CORPORATION or its bank or non-bank affiliates. The Trust's shares
are not insured or guaranteed by the Federal Deposit Insurance Corporation
("FDIC") or by any other governmental agency or government sponsored agency of
the Federal government or any state.
The Adviser is an indirect, wholly-owned subsidiary of BANC ONE CORPORATION, a
bank holding company incorporated in the state of Ohio. BANC ONE CORPORATION
currently has affiliate banking organizations in Arizona, Colorado, Illinois,
Indiana, Kentucky, Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin. In
addition, BANC ONE CORPORATION has several affiliates that engage in data
processing, venture capital, investment and merchant banking, and other
diversified services including trust management, investment management,
brokerage, equipment leasing, mortgage banking, consumer finance and insurance.
On a consolidated basis, BANC ONE CORPORATION had assets of over $86 billion as
of June 30, 1995.
The Adviser represents a consolidation of the investment advisory staffs of a
number of bank affiliates of BANC ONE CORPORATION, which have considerable
experience in the management of open-end management investment company
portfolios, including The One Group(R) since 1985 (then known as "The Helmsman
Fund"). Prior to January 1993, Bank One, Milwaukee, NA served as investment
adviser to the Fund. Bank One, Milwaukee, NA is an indirect, wholly-owned
subsidiary of BANC ONE CORPORATION.
Richard R. Jandrain, III, has managed the Small Company Growth Fund since
October 1994. Mr. Jandrain also managed the Fund from 1990 to 1993. Mr. Jandrain
also serves as the Senior Managing Director of Equity Securities for the Adviser
and in this capacity is responsible for the development and implementation of
the equity investment policies of the Adviser. Mr. Jandrain has over 18 years of
investment experience and has served in various investment management positions
with the Adviser and its affiliates for the past five years.
The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .74% of the average daily net assets of the Fund. The Adviser
may voluntarily agree to waive a part of its fees. (See "About the Fund --
Expense Summary.") These fee waivers would be voluntary and may be terminated at
any time. Shareholders will be notified in advance if and when these waivers are
terminated. The total compensation to the Adviser for investment advisory and
sub-administration services exceeds 0.75%, which is considered by the SEC staff
to be higher than such fees paid by most other mutual funds. However, the
Adviser believes it is comparable to compensation paid by other mutual funds
having similar investment objectives and policies. During the fiscal year
PROSPECTUS
13
<PAGE> 44
ended June 30, 1995, the Fund paid investment advisory fees to the Adviser of
.74% of the Fund's average daily net assets.
THE DISTRIBUTOR
The One Group(R) Services Company (the "Distributor"), a wholly-owned subsidiary
the BISYS Group, Inc., and the Trust are parties to a distribution agreement
(the "Distribution Agreement") under which shares of the Fund are sold on a
continuous basis.
Class A shares are subject to a distribution and Shareholder services plan (the
"Plan"). As provided in the Plan, the Trust will pay the Distributor a fee of
.35% of the average daily net assets of Class A shares of the Fund. Currently,
the Distributor has voluntarily agreed to limit payments under the Plan to .25%
of the average daily net assets of the Class A shares of the Fund. Up to .25% of
the fees payable under the Plan may be used as compensation for Shareholder
services by the Distributor and/or financial institutions and intermediaries.
All such fees that may be paid under the Plan will be paid pursuant to Rule
12b-1 of the Investment Company Act of 1940. The Distributor may apply these
fees toward: (i) compensation for its services in connection with distribution
assistance or provision of Shareholder services; or (ii) payments to financial
institutions and intermediaries such as banks (including affiliates of the
Adviser), savings and loan associations, insurance companies, investment
counselors, broker-dealers, and the Distributor's affiliates and subsidiaries,
as compensation for services or reimbursement of expenses incurred in connection
with distribution assistance or provision of Shareholder services.
Class B shares are subject to a Contingent Deferred Sales Charge if such shares
are redeemed prior to the sixth anniversary of purchase. Class B shares of the
Fund are subject to an ongoing distribution and Shareholder service fee as
provided in the Class B distribution and Shareholder services plan (the "Class B
Plan") at an annual rate of 1.00% of the Fund's average daily net assets, which
includes Shareholder servicing fees of .25% of the Fund's average daily net
assets.
Proceeds from the Contingent Deferred Sales Charge and the distribution and
Shareholder service fees under the Class B Plan are payable to the Distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
Shareholder services to the Fund in connection with the sale of Class B shares,
such as the payment of compensation to dealers and agents for selling Class B
shares. The combination of the Contingent Deferred Sales Charge and the
distribution and Shareholder service fees facilitate the ability of the Fund to
sell the Class B shares without a sales charge being deducted at the time of
purchase.
The Plan and the Class B Plan are characterized as compensation plans since the
distribution fees will be paid to the Distributor without regard to the
distribution or Shareholder service expenses incurred by the Distributor or the
amount of payments made to financial institutions and intermediaries. The Fund
also may execute brokerage or other agency transactions through an affiliate of
the Adviser or through the Distributor for which the affiliate or the
Distributor receives compensation. Pursuant to guidelines adopted by the Board
of Trustees of the Trust, any such compensation will be reasonable and fair
compared to compensation received by other brokers in connection with comparable
transactions.
During the fiscal year ended June 30, 1995, 440 Financial Distributors, Inc.,
the previous distributor to the Trust, received fees aggregating .25% of the
average daily net assets of the Class A shares of the Fund. In addition, 440
Financial Distributors, Inc. received annualized fees of 1.00%of the average
daily net assets of the Class B shares of the Fund.
Fiduciary Class shares of the Fund are offered without distribution fees to
institutional investors, including Authorized Financial Organizations. It is
possible that an institution may offer different classes of shares to its
customers and thus receive different compensation with respect to different
classes of shares. In addition, a financial institution that is the record owner
of shares for the account of its customers may impose separate fees for account
services to its customers.
THE ADMINISTRATOR
The One Group(R) Services Company (the "Administrator"), a wholly-owned
subsidiary of the BISYS Group, Inc., and the Trust are parties to an
administration agreement relating to the Fund (the "Administration Agreement").
Under the terms of the Administration Agreement, the Administrator is
responsible for providing the Trust with administrative services (other than
investment advisory services), including regulatory reporting and all necessary
office space, equipment, personnel and facilities.
The Adviser also serves as Sub-Administrator to each fund of the Trust, pursuant
to an agreement between the Administrator and the Adviser. Pursuant to this
agreement, the Adviser performs many of the Administrator's duties for which the
Adviser receives a fee paid by the Administrator.
The Administrator is entitled to a fee for administrative services, which is
calculated daily and paid monthly, at an annual rate of .20% of each fund's
average daily net assets on the first $1.5 billion in Trust assets (excluding
the Treasury Only Money Market Fund and the Government Money Market Fund), .18%
of each fund's average daily net assets to $2 billion in Trust assets (excluding
the Treasury Only Money Market Fund and the Government Money Market Fund), and
.16% of each fund's average daily net assets when Trust assets exceed $2 billion
(excluding the Treasury Only Money Market Fund and the Government Money Market
Fund). During the fiscal year ended June 30, 1995, 440 Financial, the previous
Administrator to the Trust, received annualized fees of .17% of the Fund's
average daily net assets.
THE TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500 acts
as Transfer Agent and Custodian for the Trust for which services it receives a
fee. The Custodian holds cash, securities and other assets of the Trust as
required by the Investment Company Act of 1940. Bank One Trust Company, N.A.
serves as Sub-Custodian in connection with the Trust's securities lending
activities, pursuant to an agreement between State Street Bank and Trust Company
and Bank One Trust Company. Bank One Trust Company receives a fee paid by the
Trust.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Ropes & Gray serves as counsel to the Trust. Coopers & Lybrand L.L.P. serves as
the independent accountants of the Trust.
PROSPECTUS
14
<PAGE> 45
OTHER INFORMATION
THE TRUST
The Trust was organized as a Massachusetts Business Trust under a Declaration of
Trust filed on May 23, 1985. The Declaration of Trust permits the Trust to offer
separate funds and different classes of each fund. All consideration received by
the Trust for shares of any Fund and all assets of such fund belong to that fund
and would be subject to liabilities related thereto.
The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to Shareholders, costs of custodial services and registering the
shares under Federal and state securities laws, pricing, insurance expenses,
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organizational expenses. During the fiscal year of the Trust ended
June 30, 1995, the total operating expenses of the Fund were 1.23% of the
average daily net assets of the Class A shares of the Fund, 1.98% of the average
daily net assets of the Class B shares of the Fund on an annual basis and .98%
of the average daily net assets of the Fiduciary Class shares of the Fund. These
expenses would have been 1.33% of the average daily net assets of the Class A
shares but for the voluntary reduction of the 12b-1 fees.
The Adviser and the Administrator of the Fund each bears all expenses incurred
in connection with the performance of their services as investment adviser and
administrator, respectively, other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund.
As a general matter, as set forth in the Multiple Class Plan, expenses are
allocated to each class of shares of the Fund on the basis of the net asset
value of that class in relation to the net asset value of the Fund. At present,
the only expenses that are allocated to Class A and Class B shares, other than
in accordance with the relative net asset value of the class, are the different
distribution and Shareholder services costs. See "Expense Summary." At present,
no expenses are allocated to Fiduciary Class shares as a class that are not also
borne by the other classes of shares of the Fund in proportion to the relative
net asset values of the shares of such classes.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described above, certain
companies provide essential management services to the Trust.
VOTING RIGHTS
As set forth in the Multiple Class Plan, each share held entitles the
Shareholder of record to one vote. Each fund of the Trust will vote separately
on matters relating solely to that fund. In addition, each class of a fund shall
have exclusive voting rights on any matter submitted to Shareholders that
relates solely to that class, and shall have separate voting rights on any
matter submitted to Shareholders in which the interests of one class differ from
the interests of any other class. However, all fund Shareholders will have equal
voting rights on matters that affect all fund Shareholders equally. As a
Massachusetts Business Trust, the Trust is not required to hold annual meetings
of Shareholders but approval will be sought for certain changes in the operation
of the Trust and for the election of Trustees under certain circumstances. In
addition, a Trustee may be elected or removed by the remaining Trustees or by
Shareholders at a special meeting called upon written request of Shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the Shareholders requesting the meeting.
DIVIDENDS
Substantially all of the net investment income (exclusive of capital gains) of
the Fund is declared on the last Business Day of each month as a dividend for
Shareholders of record as of the close of business on that day and is
distributed in the form of periodic dividends to such Shareholders of the Fund
on the first Business Day of each month. Capital gains of the Fund, if any, will
be distributed at least annually.
Shareholders automatically receive all income dividends and capital gain
distributions in additional Class A, Class B, or Fiduciary Class shares, as
applicable, at the net asset value next determined following the record date,
unless the Shareholder has elected to take such payment in cash. Such election,
or any revocation thereof, must be made in writing, at least 15 days prior to
distribution, to the Transfer Agent at P.O. Box 8500, Boston, MA 02266-8500, and
will become effective with respect to dividends and distributions having record
dates after its receipt by the Transfer Agent. Reinvested dividends and
distribution receive the same tax treatment as dividends and distributions paid
in cash.
Class B shares received as dividends and capital gains distributions at the net
asset value next determined following the record date shall be held in a
separate Class B sub-account. Each time any Class B shares (other than those in
the subaccount) convert to Class A shares, a pro-rata portion of the Class B
shares in the sub-account will also convert to Class A shares. (See "Conversion
Feature.") Reinvested dividends and distributions receive the same tax treatment
as dividends and distributions paid in cash.
Dividends and distributions of the Fund are paid on a per-share basis. The value
of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a dividend or the distribution of
capital gains, a Shareholder will pay the full price for the shares and receive
some portion of the price back as a taxable dividend or distribution even though
such distribution would, in effect, represent a return of the Shareholder's
investment.
The amount of dividends payable on Fiduciary Class shares will be more than the
dividends payable on Class A and Class B shares because of the distribution
expenses charged to Class A and Class B shares.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Administrator, The One Group(R)
Services Company, 3435 Stelzer Road, Columbus, OH 43219.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes proxy statements and other
reports to Shareholders of record.
PROSPECTUS
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OTHER INVESTMENT POLICIES
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes during periods when the Adviser determines that
market conditions warrant such action, the Fund may invest up to 100% of its
assets in cash equivalents (including securities issued or guaranteed as to
principal and interest by the U.S. government, its agencies or
instrumentalities, repurchase agreements, certificates of deposit and bankers'
acceptances issued by banks or savings and loan associations having net assets
of at least $1 billion as of the end of their most recent fiscal year,
commercial paper rated in one of the two highest short-term rating categories by
at least one NRSRO or, if unrated, determined by the Adviser to be of comparable
quality, variable amount master demand notes and bank money market deposit
accounts), and may hold cash for liquidity purposes.
To the extent the Fund is engaged in a temporary defensive position, the Fund
will not be pursuing its investment objective.
For a further description of the Fund's permitted investments, see "Description
of Permitted Investments" and the Statement of Additional Information, and for a
description of ratings, see "Description of Ratings."
PORTFOLIO TURNOVER
The Fund may engage in short-term trading, which involves selling securities
that have been held for a short period of time in order to increase the
potential for capital appreciation and/or income of the Fund or to take
advantage of a temporary disparity in the normal price or yield relationship
between two securities or changes in market, industry or company conditions or
outlook. Any such trading would increase a portfolio's turnover rate and its
transaction costs.
The Adviser will choose brokers by judging professional ability, quality of
service and reasonableness of commissions. Higher commissions may be paid to
those firms that provide research, superior execution and other services. The
Adviser may use any such research information in managing the assets of the
Fund.
For the fiscal year ended June 30, 1995, the portfolio turnover rate for the
Fund was 132.63%. The portfolio turnover rate for the Fund may vary greatly from
year to year, as well as within a particular year. The portfolio turnover of the
Fund was greater in the fiscal year ended June 30, 1995 due to an effort to
increase the underlying growth rate of the stocks in the portfolio. This
resulted in a complete restructuring of the technology and financial sectors and
an increased portfolio turnover rate.
Higher portfolio turnover rates will likely result in higher transaction costs
to the Fund and may result in additional tax consequences to the Fund's
Shareholders.
INVESTMENT LIMITATIONS
The investment objective and the following investment limitations are
fundamental policies of the Fund. Fundamental policies cannot be changed without
the consent of the holders of a majority of the Fund's outstanding shares. The
term "majority of the outstanding shares" means the vote of (i) 67% or more of
the Fund's shares present at a meeting, if more than 50% of the outstanding
shares of the Fund are present or represented by proxy, or (ii) more than 50% of
the Fund's outstanding shares, whichever is less.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and, if consistent with the
Fund's investment objective and policies, repurchase agreements involving such
securities) if as a result more than 5% of the total assets of the Fund would be
invested in the securities of such issuer or the Fund would own more than 10% of
the outstanding voting securities of such issuer. These restrictions apply to
75% of the Fund's assets. For purposes of these limitations, a security is
considered to be issued by the government entity whose assets and revenues
guarantee or back the security. With respect to private activity bonds or
industrial development bonds backed only by the assets and revenues of a
non-governmental user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total assets of
the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in the obligations issued or guaranteed
by the U.S. government or its agencies and instrumentalities and repurchase
agreements involving such securities. For purposes of this limitation (i)
utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents.
3. Make loans, except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described in
this Prospectus and in the Statement of Additional Information.
The foregoing percentages will apply at the time of the purchase of a security.
Additional investment limitations are set forth in the Statement of Additional
Information.
DESCRIPTION OF PERMITTED INVESTMENTS
The following is a description of certain of the permitted investments for the
Fund.
The Fund invests in common stocks (including sponsored and unsponsored American
Depository Receipts ("ADRs")) and convertible securities only if they are listed
on registered exchanges or actively traded in the over-the-counter market,
except that the Fund may invest up to 5% of its assets in restricted securities.
U.S. TREASURY OBLIGATIONS -- The Fund may invest in bills, notes and bonds
issued by the U.S. Treasury and separately traded interest and principal
component parts of such obligations that are transferable through the Federal
book-entry system, known as Separately Traded Registered Interest and Principal
Securities ("STRIPS") and Coupon Under Book Entry Safekeeping ("CUBES").
RECEIPTS -- The Fund may purchase interests in separately traded interest and
principal component parts of U.S. Treasury obligations that are issued by banks
or brokerage firms and are created by depositing U.S. Treasury notes and U.S.
Treasury bonds into a special account at a custodian bank. The custodian holds
the interest and principal payments for the benefit of the registered owners of
the certificates or receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing
PROSPECTUS
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ownership and maintains the register. Receipts include Treasury Receipts
("TRS"), Treasury Investment Growth Receipts ("TIGRS") and Certificates of
Accrual on Treasury Securities ("CATS").
STRIPS, CUBES, TRS, TIGRS and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
interest rate volatility than interest-paying U.S. Treasury obligations. The
Fund may invest up to 20% of its total assets in STRIPS, CUBES, TRS, TIGRS and
CATS. See also "Taxes."
CERTIFICATES OF DEPOSIT -- Certificates of deposit are negotiable interest
bearing instruments with a specific maturity. Certificates of deposit ("CDs")
are issued by banks and savings and loan institutions in exchange for the
deposit of funds and normally can be traded in the secondary market prior to
maturity.
TIME DEPOSITS -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, a time deposit
("TD") earns a specified rate of interest over a definite period of time;
however, it cannot be traded in the secondary market. Time deposits with a
withdrawal penalty are considered to be illiquid securities; therefore, the Fund
will not invest more than 15% of its total assets in such time deposits and
other illiquid securities.
BANKERS' ACCEPTANCES -- Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by (i.e., made an obligation of) a commercial bank.
They are used by corporations to finance the shipment and storage of goods and
to furnish dollar exchange. Maturities are generally six months or less.
COMMERCIAL PAPER -- Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations and other entities.
Maturities on these issues vary from a few days to nine months.
U.S. GOVERNMENT AGENCIES -- Certain Federal agencies have been established as
instrumentalities of the U.S. government to supervise and finance certain types
of activities. Select agencies, such as the Government National Mortgage
Association ("Ginnie Mae") and the Export-Import Bank, are supported by the full
faith and credit of the U.S. Treasury; others, such as the Federal National
Mortgage Association ("Fannie Mae"), are supported by the credit of the
instrumentality and have the right to borrow from the U.S. Treasury; others are
supported by the authority of the U.S. government to purchase the agency's
obligations; while still others, such as the Federal Farm Credit Banks and the
Federal Home Loan Mortgage Corporation ("Freddie Mac"), are supported solely by
the credit of the instrumentality itself. No assurance can be given that the
U.S. government would provide financial support to U.S. government sponsored
agencies or instrumentalities if it is not obligated to do so by law.
Obligations of U.S. government agencies include debt issues and mortgage-backed
securities issued or guaranteed by select agencies.
CONVERTIBLE SECURITIES -- Convertible securities have characteristics similar to
both fixed income and equity securities. Because of the conversion feature, the
market value of convertible securities tends to move together with the market
value of the underlying stock. As a result, the Fund's selection of convertible
securities is based, to a great extent, on the potential for capital
appreciation that may exist in the underlying stock. The value of convertible
securities is also affected by prevailing interest rates, the credit quality of
the issuer, and any call provisions.
INVESTMENT COMPANY SECURITIES -- The Fund may invest up to 5% of its total
assets in the securities of any one investment company, but may not own more
than 3% of the securities of any one investment company or invest more than 10%
of its assets in the securities of other investment companies. In accordance
with an exemptive order issued to the Trust by the SEC, such other investment
company securities may include securities of a money market fund of the Trust,
and such companies may include companies of which the Adviser or a sub-adviser
to a fund of the Trust, or an affiliate of such Adviser or sub-adviser, serves
as investment adviser, administrator or distributor. Because other investment
companies employ an investment adviser, such investment by the Fund may cause
Shareholders to bear duplicative fees. The Adviser will waive its fee
attributable to the assets of the investing fund invested in a money market fund
of the Trust; and, to the extent required by the laws of any state in which
shares of the Trust are sold, the Adviser will waive its fees attributable to
the assets of the Fund invested in any investment company.
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a person
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. The custodian or
its agent will hold the security as collateral for the repurchase agreement.
Collateral must be maintained at a value at least equal to 100% of the
repurchase price. The Fund bears a risk of loss in the event the other party
defaults on its obligations and the Fund is delayed or prevented from its right
to dispose of the collateral securities or if the Fund realizes a loss on the
sale of the collateral securities. The Adviser will enter into repurchase
agreements on behalf of the Fund only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the agreement based on
guidelines established and periodically reviewed by the Trustees. Repurchase
agreements are considered by the SEC to be loans under the Investment Company
Act of 1940.
REVERSE REPURCHASE AGREEMENTS -- The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Fund would sell portfolio securities to financial institutions
such as banks and broker-dealers, and agree to repurchase them at a mutually
agreed-upon date and price. The Fund will enter into reverse repurchase
agreements only to avoid otherwise selling securities during unfavorable market
conditions to meet redemptions. At the time the Fund enters into a reverse
repurchase agreement, it would place in a segregated custodial account assets,
such as liquid high grade debt securities, consistent with the Fund's investment
restrictions and having a value equal to the repurchase price (including accrued
interest), and would subsequently monitor the account to ensure that such
equivalent value was maintained. Reverse repurchase agreements involve the risk
that the market value of the securities sold by the Fund may decline below the
price at which the Fund is obligated to repurchase the securities. Reverse
repurchase agreements are considered by the SEC to be borrowings by a Fund under
the Investment Company Act of 1940.
PROSPECTUS
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SECURITIES LENDING -- In order to generate additional income, the Fund may lend
up to 33% of the securities in which it is invested pursuant to agreements
requiring that the loan be continuously secured by cash, securities of the U.S.
government or its agencies, shares of an investment trust or mutual fund or any
combination of cash and such securities as collateral equal at all times to at
least 100% of the market value plus accrued interest on the securities lent. The
Fund will continue to receive interest on the securities lent while
simultaneously seeking to earn interest on the investment of cash collateral in
U.S. government securities, shares of an investment trust or mutual fund, or
other short-term, highly liquid investments. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of the
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities fail
financially. However, loans will only be made to borrowers deemed by the Adviser
to be of good standing under guidelines established by the Trust's Board of
Trustees and when, in the judgment of the Adviser, the consideration which can
be earned currently from such securities loans justifies the attendant risk. The
Fund will enter into loan arrangements only with counterparties which the
Adviser has deemed to be creditworthy under guidelines established by the Board
of Trustees. Loans are subject to termination by the Fund or the borrower at any
time, and are, therefore, not considered to be illiquid investments.
RESTRICTED SECURITIES -- The Fund may invest in commercial paper issued in
reliance on the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933. Section 4(2) commercial paper is restricted as to
disposition under Federal securities law and is generally sold to institutional
investors, such as the Fund, who agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) commercial paper is
normally resold to other institutional investors like the Fund through or with
the assistance of the issuer or investment dealers who make a market in Section
4(2) commercial paper, thus providing liquidity. The Fund believes that Section
4(2) commercial paper and possibly certain other restricted securities that meet
the criteria for liquidity established by the Trustees are quite liquid. The
Fund intends, therefore, to treat the restricted securities that meet the
criteria for liquidity established by the Trustees, including Section 4(2)
commercial paper, as determined by the Adviser, as liquid and not subject to the
investment limitation applicable to illiquid securities. In addition, because
Section 4(2) commercial paper is liquid, the Fund will not subject such paper to
the limitation applicable to restricted securities.
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under an SEC staff position set forth in the adopting
release for Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule is
a nonexclusive safe-harbor for certain secondary market transactions involving
securities subject to restrictions on resale under Federal securities laws. The
Rule provides an exemption from registration for resales of otherwise restricted
securities to qualified institutional buyers. The Rule is expected to further
enhance the liquidity of the secondary market for securities eligible for resale
under Rule 144A. The Fund believes that the staff of the SEC has left the
question of determining the liquidity of all restricted securities to the
Trustees. The Trustees have directed the Adviser to consider the following
criteria in determining the liquidity of certain restricted securities:
- - the frequency of trades and quotes for the security;
- - the number of dealers willing to purchase or sell the security and the number
of other potential buyers;
- - dealer undertakings to make a market in the security; and
- - the nature of the security and the nature of the marketplace trades.
VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain of the obligations purchased
by the Fund may carry variable or floating rates of interest, may involve a
conditional or unconditional demand feature and may include variable amount
master demand notes. A demand instrument with a demand notice period exceeding
seven days may be considered illiquid if there is no secondary market for such
security; therefore, the Fund will not invest more than 15% of its total assets
in such instruments and other illiquid securities. The interest rates on these
securities may be reset daily, weekly, quarterly or some other reset period, and
may have a floor or ceiling on interest rate charges. There is a risk that the
current interest rate on such obligations may not accurately reflect existing
rates. The Fund will not invest more than 5% of its total assets in variable
rate master demand notes.
There is no limit on the extent to which the Fund may purchase variable and
floating rate instruments that are not illiquid. The Fund will purchase variable
and floating rate instruments to facilitate portfolio liquidity or to permit the
investment of the Fund's assets at a favorable rate of return.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS AND FORWARD COMMITMENTS -- The Fund
may purchase securities on a when-issued basis when deemed by the Adviser to
present attractive investment opportunities. When-issued securities are
purchased for delivery beyond the normal settlement date at a stated price and
yield, thereby involving the risk that the yield obtained will be less than that
available in the market at delivery. Although the purchase of securities on a
when-issued basis is not considered leveraging, it has the effect of leveraging.
When the Adviser purchases a when-issued security, the Custodian will set aside
cash or liquid securities to satisfy the purchase commitment. The Fund generally
will not pay for such securities or earn interest on them until received.
Commitments to purchase when-issued securities will not, under normal market
conditions, exceed 25% of the Fund's total assets, and a commitment will not
exceed 90 days. The Fund will only purchase when-issued securities for the
purpose of acquiring portfolio securities and not for speculative purposes.
In a forward commitment transaction, the Fund contracts to purchase securities
for a fixed price at a future date beyond customary settlement time. The Fund is
required to hold and maintain in a segregated account until the settlement date,
cash, U.S. government securities or liquid high-grade debt obligations in an
amount sufficient to meet the purchase price. Alternatively, the Fund may enter
into offsetting contracts for the forward sale of other securities that it owns.
The purchase of securities on a when-issued or forward commitment basis involves
a risk of loss if the value of the security to be purchased declines prior to
the settlement date. Although the Fund would generally purchase securities on a
when-issued or forward commitment basis with the intention of actually acquiring
securities for its portfolio, the Fund may
PROSPECTUS
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<PAGE> 49
dispose of a when-issued security or forward commitment prior to settlement if
the Adviser deems it appropriate to do so.
OPTIONS -- The Fund may purchase and write (i.e., sell) call options and put
options on securities and indices, which options are traded on national
securities exchanges. A call option gives the purchaser the right to buy, and
obligates the writer of the option to sell, the underlying security at the
agreed upon exercise (or "strike") price during the option period. A put option
gives the purchaser the right to sell, and obligates the writer to buy, the
underlying security at the strike price during the option period. Purchasers of
options pay an amount, known as a premium, to the option writer in exchange for
the right under the option contract. Option contracts may be written with terms
that would permit the holder of the option to purchase or sell the underlying
security only upon the expiration date of the option. The initial purchase
(sale) of an option contract is an "opening transaction." In order to close out
an option position, the Fund may enter into a "closing transaction," the sale
(purchase) of an option contract on the same security with the same exercise
price and expiration date as the option contract originally opened.
The Fund may purchase put and call options in hedging transactions to protect
against a decline in the market value of the securities in the Fund (e.g., by
the purchase of a put option) and to protect against an increase in the cost of
fixed-income securities that the Fund may seek to purchase in the future (e.g.,
by the purchase of a call option). In the event that paying premiums for put and
call options, together with price movements in the underlying securities, are
such that exercise of the options would not be profitable for the Fund, losses
of the premiums paid may be offset by an increase in the value of the Fund's
securities (in the case of a purchase of put options) or by a decrease in the
cost of acquisition of securities by the Fund (in the case of a purchase of call
options).
The Fund also may write secured put and covered call options as a means of
increasing the yield on the Fund and as a means of providing limited protection
against decreases in market value of the Fund.
There are risks associated with options transactions, including the following:
(i) the success of a hedging strategy may depend on the ability of the Adviser
to predict movements in the prices of the individual securities, fluctuations in
markets and movements in interest rates; (ii) there may be an imperfect or no
correlation between the changes in market value of the securities held by the
Fund and the prices of options; (iii) there may not be a liquid secondary market
for options; and (iv) while the Fund will receive a premium when it writes
covered call options, it may not participate fully in a rise in the market value
of the underlying security. It is expected that the Fund will only engage in
option transactions with respect to permitted investments and related indices.
Generally, the policy of the Fund, in order to avoid the exercise of an option
sold by it, will be to cancel its obligation under the option by entering into a
closing purchase transaction, if available, unless selling (in the case of a
call option) or purchasing (in the case of a put option) the underlying
securities is determined to be in the Fund's interest. A closing purchase
transaction consists of the Fund purchasing an option having the same terms as
the option sold by the Fund, and has the effect of canceling the Fund's position
as a seller. The premium which the Fund will pay in executing a closing purchase
transaction may be higher (or lower) than the premium received when the option
was sold, depending in large part upon the relative price of the underlying
security at the time of each transaction. To the extent options sold by the Fund
are exercised and the Fund either delivers securities to the holder of a call
option or liquidates securities as a source of funds to purchase securities put
to the Fund, the Fund's turnover rate will increase, which would cause the Fund
to incur additional brokerage expenses.
During the option period, the Fund, as a covered call writer, gives up the
potential appreciation above the exercise price should the underlying security
rise in value, and the Fund, as a covered put writer, retains the risk of loss
should the underlying security decline in value. For the covered call writer,
substantial appreciation in the value of the underlying security would result in
the security being "called away" at the strike price of the option which may be
substantially below the fair market value of such security. For the covered put
writer, substantial depreciation in the value of the underlying security would
result in the security being "put to" the writer at the strike price of the
option which may be substantially in excess of the fair market value of such
security. If a covered call option or a covered put option expires unexercised,
the writer realizes a gain, and the buyer a loss, in the amount of the premium.
The SEC requires that obligations of investment companies such as the Fund, in
connection with option sale positions, must comply with certain segregation or
coverage requirements, which are more fully described in the Statement of
Additional Information.
The Fund will only write covered call options on its securities and will limit
such activities to provide that the aggregate market value of such options and
the Fund's obligations under such written puts does not exceed 25% of the Fund's
total net assets as of the time such options are entered into by the Fund.
FUTURES CONTRACTS AND RELATED OPTIONS -- The Fund may enter into futures
contracts, options on futures contracts, index futures and options thereon that
are traded on an exchange regulated by the Commodities Futures Trading
Commission ("CFTC") if, to the extent that such futures and options are not for
"bona fide hedging purposes" (as defined by the CFTC), the aggregate initial
margin and premiums on such positions (excluding the amount by which options are
in the money) do not exceed 5% of the Fund's total assets at current value. The
Fund, however, may invest more than such amount for bona fide hedging purposes,
and also may invest more than such amount if it obtains authority to do so from
the appropriate regulatory agencies without rendering the Fund a commodity pool
operator or adversely affecting its status as an investment company for Federal
securities law or income tax purposes. However, the Fund may enter into futures
contracts and options on futures only to the extent that obligations under such
contracts or transactions, together with options on securities, represent not
more than 25% of the Fund's total assets.
The Fund may buy and sell futures contracts and related options to manage its
exposure to changing interest rates and security prices. Some futures
strategies, including selling futures, buying puts and writing calls, may reduce
the Fund's exposure to price fluctuations. Other strategies, including buying
futures, writing puts and buying calls, tend to increase market exposure.
Futures and options may be combined with each other in order to adjust the risk
and return characteristics of the overall portfolio. The Fund expects to enter
into these transactions to "lock in" a return or spread on a
PROSPECTUS
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particular investment or portion of its assets, to protect against any increase
in the price of securities the Fund anticipates purchasing at a later date, or
for other risk management strategies.
Options and futures can be volatile instruments, and involve certain risks. If
the Adviser applies a hedge at an inappropriate time or judges interest rates
incorrectly, options and futures strategies may lower the Fund's return. The
Fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other instruments, or if it could not
close out its positions because of an illiquid secondary market.
Typically, investment in these contracts requires the Fund to deposit with the
applicable exchange or other specified financial intermediary as a good faith
deposit for its obligations, known as "initial margin," an amount of cash or
specified debt securities which initially is 1%-15% of the face amount of the
contract and that thereafter fluctuates on a periodic basis as the value of the
contract fluctuates. Thereafter, the Fund must make additional deposits equal to
any net losses due to unfavorable price movements of the contract and will be
credited with an amount equal to any net gains due to favorable price movements.
These additional deposits or credits are calculated and required daily and are
known as "variation margin."
The SEC requires that when an investment company such as the Fund effects
transactions of the foregoing nature, it must either segregate cash or high
quality, readily marketable portfolio securities with its custodian in the
amount of its obligations under the foregoing transactions or must cover such
obligations by maintaining positions in portfolio securities, futures contracts
or options that would serve to satisfy or offset the risk of such obligations.
When effecting transactions of the foregoing nature, the Fund will comply with
such segregation or cover requirements. No limitation exists on the amount of
the Fund's assets that may be used to comply with such segregation or cover
requirements.
The Fund also may engage in straddles and spreads with respect to 5% of its
assets. In a straddle transaction, the Fund either buys a call and a put or
sells a call and a put on the same security. In a spread, the Fund purchases and
sells a call or a put. The Fund will sell a straddle when the Adviser believes
the price of a security will be stable. The Fund will receive a premium on the
sale of the put and the call. A spread permits the Fund to make a hedged
investment that the price of a security will increase or decline.
SECURITIES OF FOREIGN ISSUERS -- The Fund may invest in securities of foreign
issuers to achieve income or capital appreciation. Foreign investments involve
risks that are different from investments in securities of U.S. issuers. These
risks may include future unfavorable political and economic developments,
possible withholding taxes, seizure of foreign deposits, currency controls,
interest limitations or other governmental restrictions which might affect
payment of principal or interest. Additionally, there may be less public
information available about foreign issuers. Foreign branches of foreign banks
are not regulated by U.S. banking authorities and generally are not bound by
accounting, auditing and financial reporting standards comparable to U.S. banks.
The Fund may invest in commercial paper of foreign issuers and obligations of
foreign branches of U.S. banks, U.S. and London branches of foreign banks, and
supranational entities which are established through the joint participation of
several governments (e.g., the Asian Development Bank and the Inter-American
Development Bank). Securities of foreign issuers may include sponsored and
unsponsored ADRs, which are securities typically issued by a U.S. financial
institution that evidence ownership interests in a pool of securities issued by
a foreign issuer. There may be less information available on the foreign issuers
of unsponsored ADRs than on the issuers of sponsored ADRs. ADRs include American
Depository Shares and New York Shares.
DESCRIPTION OF RATINGS
The following descriptions are summaries of published ratings.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
The following descriptions of commercial paper ratings have been published by
Standard & Poor's Corporation ("S&P"), Moody's Investors Service ("Moody's"),
Fitch's Investors Service ("Fitch"), Duff and Phelps ("Duff") and IBCA Limited
("IBCA"), respectively.
Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1+, 1, and 2 to indicate the relative degree of safety. Issues rated
A-1+ are those with an "overwhelming degree" of credit protection. Those rated
A-1 reflect a "very strong" degree of safety regarding timely payment. Those
rated A-2 reflect a high degree of safety regarding timely payment but not as
high as A-1.
Commercial paper issues rated Prime-1 and Prime-2 by Moody's are judged by
Moody's to be of the "highest" quality and "higher" quality, respectively, on
the basis of relative repayment capacity.
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the second
highest commercial paper rating assigned by Fitch which reflects an assurance of
timely payment only slightly less in degree than the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by ample asset protection. Risk
factors are minor. Paper rated Duff-2 is regarded as having good certainty of
timely payment, good access to capital markets and sound liquidity factors and
company fundamentals. Risk factors are small.
The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. Those obligations rated A1+ are supported
by the highest capacity for timely repayment. Obligations rated A2 are supported
by a strong capacity for timely repayment, although such capacity may be
susceptible to adverse changes in business, economic or financial conditions.
DESCRIPTION OF CORPORATE BOND RATINGS
The following descriptions of S&P's and Moody's corporate bond ratings have been
published by S&P and Moody's, respectively.
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA
PROSPECTUS
20
<PAGE> 51
issues only in a small degree. Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories.
Bonds that are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by all
standards. Together with bonds rated Aaa, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.
Bonds that are rated A possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
MISCELLANEOUS
The Trust believes that as of August 4, 1995 BANC ONE CORPORATION (100 East
Broad Street, Columbus, OH 43271), through its affiliates, owned of record
substantially all the Fiduciary Class shares of the Fund. The Trust believes
that as of the same date, BANC ONE CORPORATION, through its affiliates,
possessed on behalf of its underlying accounts, voting or investment power with
respect to approximately 83.01% of the Fiduciary Class shares of the Fund. As a
consequence, BANC ONE CORPORATION may be deemed to be a controlling person of
the Fiduciary Class shares of the Fund under the Investment Company Act of 1940.
PERFORMANCE
From time to time, the Fund may advertise yield, total return and/or
distribution rate. These figures will be based on historical earnings and are
not intended to indicate future performance. The yield of the Fund refers to the
annualized income generated by an investment in the Fund over a specified 30-day
period. The yield is calculated by assuming that the income generated by the
investment during that period is generated over a one-year period and is shown
as a percentage of the investment.
Total return is the change in value of an investment in the Fund over a given
period, assuming reinvestment of any dividends and capital gains. A cumulative
total return reflects an actual rate of return over a stated period of time. An
average annual total return is a hypothetical rate of return that, if achieved
annually, would have produced the same cumulative total return if performance
had been constant over the entire period. Average annual total returns smooth
out variations in performance; they are not the same as actual year-by-year
results.
The distribution rate is computed by dividing the total amount of the dividends
per share paid out during the past period by the maximum offering price or
month-end net asset value depending on the class of the Fund. This figure is
then "annualized" (multiplied by 365 days and divided by the applicable number
of days in the period). Funds with a front-end sales charge would incorporate
the offering price into the distribution yield in place of month-end net asset
value.
Distribution rate is a measure of the level of income paid out in cash to
Shareholders over a specified period. It differs from yield and total return and
is not intended to be a complete measure of performance. Furthermore, the
distribution rate may include return of principal and/or capital gains. Total
return is the change in value of a hypothetical investment over a given period
assuming reinvestment of dividends and capital gain distributions. The yield
refers to the cumulative 30-day rolling net investment income, divided by
maximum offering price and multiplied by average shares outstanding during this
period. See the Statement of Additional Information.
The Trust will include information on all classes of the Fund in any
advertisement or information containing performance data for the Fund. The
performance of Fiduciary Class shares may be higher than for Class A shares and
Class B shares because Fiduciary Class shares are not subject to sales charges
and distribution expenses.
The performance of each class of the Fund may from time to time be compared to
that of other mutual funds tracked by mutual fund rating services, to that of
broad groups of comparable mutual funds or to that of unmanaged indices that may
assume investment of dividends but do not reflect deductions for administrative
and management costs. In addition, the performance of each class of the Fund may
be compared to other funds or to relevant indices that may calculate total
return without reflecting sales charges; in which case, the Fund may advertise
its total return in the same manner. If reflected, sales charges would reduce
these total return calculations.
Further information about the performance of each class of the Fund is contained
in the Trust's Annual Report to Shareholders for The One Group(R) Small Company
Growth Fund, which may be obtained without charge by calling 1-800-480-4111.
TAXES
The following summary of Federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial, or
administrative action. No attempt has been made to present a complete
explanation of the Federal, state, local or foreign tax treatment of the Fund or
its Shareholders. Accordingly, Shareholders are urged to consult their tax
advisers regarding specific questions as to the tax consequences of investing in
the Fund.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for Federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify as a
"regulated investment company" for Federal income tax purposes and to meet all
other requirements that are necessary for it to be relieved of Federal taxes on
that part of its net investment income and net capital gains (the excess of net
long-term capital gain over net short-term capital loss) that is distributed to
Shareholders.
PROSPECTUS
21
<PAGE> 52
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gain) to Shareholders of
each class of shares of the Fund on at least an annual basis. Generally,
dividends from net investment income will be taxable to Shareholders as ordinary
income whether received in cash or in additional shares, and any net capital
gains will be distributed at least annually and will be taxed to Shareholders as
long-term capital gains, regardless of how long the Shareholder has held shares.
Distributions by the Fund to retirement plans that qualify for tax-exempt
treatment under the Code ("qualified retirement plans") will not be taxable. The
Federal tax treatment of qualified retirement plans, as well as distributions
from such plans, is governed by specific provisions of the Code. If shares are
held by a retirement plan that ceases to qualify for tax-exempt treatment under
the Code or by an individual who has received such shares as a distribution from
a retirement plan, the Fund's distributions will be taxable to such plan or
individual as described in the preceding paragraph. Persons considering
directing the investment of their qualified retirement plan account in the Fund
and qualified retirement plan trusts considering purchasing such shares, should
consult their tax advisers for a more complete explanation of the Federal tax
consequences, and for an explanation of the state, local and (if applicable)
foreign tax consequences of making such an investment.
The Fund will make annual reports to Shareholders of the Federal income tax
status of all distributions.
Certain securities purchased by the Fund (such as STRIPS, CUBES, TRS, TIGRS and
CATS), as defined in the "Description of Permitted Investments," are sold at
original issue discount and thus do not make periodic cash interest payments.
The Fund will be required to include as part of its current income the imputed
interest on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because the Fund distributes
substantially all of its net investment income to its Shareholders (including
such imputed interest), the Fund may have to sell portfolio securities in order
to generate the cash necessary for the required distributions. Such sales may
occur at a time when the Adviser would not have chosen to sell such securities
and may result in a taxable gain or loss.
Dividends declared by the Fund in October, November or December of any year and
payable to Shareholders of record on a date in such a month will be deemed to
have been paid by the Fund and received by Shareholders on December 31 of that
year, if paid by the Fund at any time during the following January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for Federal excise tax.
Dividends received by a Shareholder that are derived from the Fund's investments
in U.S. government obligations may not be entitled to the exemptions from state
and local income taxes that would be available if the Shareholder had purchased
U.S. government obligations directly. The Fund will inform Shareholders annually
of the percentage of income and distributions derived from U.S. government
obligations. Shareholders should consult their tax advisers regarding the state
and local tax treatment of the dividends received from the Fund.
The Fund may be subject to foreign withholding taxes on income derived from
obligations of foreign issuers . The Fund will not be able to elect to treat
Shareholders as having paid their proportionate share of such foreign taxes.
Sale, exchange, or redemption of Fund shares by a Shareholder will generally be
a taxable event to such Shareholder.
PROSPECTUS
22
<PAGE> 53
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 54
Investment Adviser and Sub-Administrator
Banc One Investment Advisors Corporation
774 Park Meadow Road
Columbus, OH 43271-0211
Distributor
The One Group(R) Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group(R) Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
Suite 1200 South
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Independent Accountants
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
TOG-F-110
<PAGE> 55
THE ONE GROUP(R)
CROSS REFERENCE SHEET FOR EACH OFFERED PROSPECTUS
<TABLE>
<CAPTION>
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
<S> <C>
1. Cover Page . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . Expense Summary
3. Financial Highlights . . . . . . . . . Financial Highlights
4. General Description
of Registrant . . . . . . . . . . . . Investment Objective; Investment
Policies; Other Information; How
To Do Business with The One
Group(R); Other Investment
Policies; Description of
Permitted Investments
5. Management of the Fund . . . . . . . . Fund Management; The Adviser; The
Administrator; The Distributor;
Other Information
6. Capital Stock and Other
Securities . . . . . . . . . . . . . Investment Objective; Investment
Policies; How To Do Business with
The One Group(R); Other
Information
7. Purchase of Securities . . . . . . . . How To Do Business with The One
Being Offered . . . . . . . . . . . . Group(R)
8. Redemption or Repurchase . . . . . . . How To Do Business with The One
Group(R)
9. Pending Legal Proceedings . . . . . . Inapplicable
</TABLE>
<PAGE> 56
THE ONE GROUP(R) LOUISIANA MUNICIPAL BOND FUND PROSPECTUS
Investment Adviser: BANC ONE INVESTMENT ADVISORS CORPORATION
The One Group(R) (the "Trust") is a mutual fund seeking to provide a convenient
and economical means of investing in one or more professionally managed
portfolios of securities. This Prospectus relates to The One Group(R) Louisiana
Municipal Bond Fund Class A, Class B and Fiduciary Class shares.
THE ONE GROUP(R) LOUISIANA MUNICIPAL BOND FUND (THE "FUND") SEEKS CURRENT INCOME
BOTH CONSISTENT WITH THE PRESERVATION OF PRINCIPAL AND EXEMPT FROM FEDERAL
INCOME TAX AND LOUISIANA INCOME TAX.
Class A and Class B shares are offered to the general public.
Fiduciary Class shares are offered to institutional investors, including
affiliates of BANC ONE CORPORATION and any bank, depository institution,
insurance company, pension plan or other organization authorized to act in
fiduciary, advisory, agency, custodial or similar capacities (each an
"Authorized Financial Organization").
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY BANC ONE CORPORATION OR ITS BANK OR NON-BANK AFFILIATES. THE TRUST'S SHARES
ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY
ANY OTHER GOVERNMENTAL AGENCY OR GOVERNMENT SPONSORED AGENCY OF THE FEDERAL
GOVERNMENT OR ANY STATE. AN INVESTMENT IN MUTUAL FUND SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. BANC ONE
INVESTMENT ADVISORS CORPORATION RECEIVES FEES FROM THE FUND FOR INVESTMENT
ADVISORY AND OTHER SERVICES.
This Prospectus sets forth concisely the information about the Trust that a
prospective investor should know before investing. Investors are advised to read
this Prospectus and retain it for future reference. A Statement of Additional
Information dated February 7, 1996 has been filed with the Securities and
Exchange Commission and is available without charge through the Distributor, The
One Group Services Company, 3435 Stelzer Road, Columbus, OH 43219, or by calling
1-800-480-4111 during business hours. The Statement of Additional Information is
incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
February 7, 1996
<PAGE> 57
TABLE OF CONTENTS
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ABOUT THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expense Summary . . . . . . . . . . . . . . . . . . . . . . .
The Fund . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Objective . . . . . . . . . . . . . . . . . . . . .
Investment Policies . . . . . . . . . . . . . . . . . . . . .
HOW TO DO BUSINESS WITH THE ONE GROUP(R) . . . . . . . . . . . . . . .
How to Invest in The One Group(R) . . . . . . . . . . . . . .
Alternative Sales Arrangements . . . . . . . . . . . . . . . .
Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemptions . . . . . . . . . . . . . . . . . . . . . . . . .
FUND MANAGEMENt . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Adviser . . . . . . . . . . . . . . . . . . . . . . . . .
The Distributor . . . . . . . . . . . . . . . . . . . . . . .
The Administrator . . . . . . . . . . . . . . . . . . . . . .
The Transfer Agent and Custodian . . . . . . . . . . . . . . .
Counsel and Independent Accountants . . . . . . . . . . . . .
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Investment Policies . . . . . . . . . . . . . . . . . .
Description of Permitted Investments . . . . . . . . . . . . .
Description of Ratings . . . . . . . . . . . . . . . . . . . .
Performance . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-i-
<PAGE> 58
SUMMARY
The One Group(R) (the "Trust") is an open-end management investment company that
provides a convenient way to invest in professionally managed portfolios of
securities. The following provides basic information about Class A, Class B and
Fiduciary Class shares of The One Group(R) Louisiana Municipal Bond Fund.
WHAT IS THE INVESTMENT OBJECTIVE? The Fund seeks current income both consistent
with the preservation of principal and exempt from Federal income tax and
Louisiana income tax. See "Investment Objective."
WHAT ARE THE PERMITTED INVESTMENTS? As a matter of fundamental policy, the Fund
will invest at least 80% of its net assets in investment grade municipal
securities issued by or on behalf of the State of Louisiana and its political
subdivisions, agencies and instrumentalities, the interest on which is exempt
from both Federal income tax and Louisiana state income tax. The Fund's
investments are subject to market and interest rate fluctuations which may
affect the value of the Fund's shares. The Fund is a non-diversified mutual
fund. See "Investment Policies." The Fund may only invest in select derivatives;
their characteristics and limitations on their use are more fully described in
"Description of Permitted Investments." There are many types of derivative
securities with varying degrees of potential risk and return. Investment in the
Fund involves special risk considerations. See "Investment Policies--Risk
Factors."
WHO IS THE ADVISER? Banc One Investment Advisors Corporation, an indirect
subsidiary of BANC ONE CORPORATION, serves as the Adviser of the Trust. The
Adviser is entitled to a fee for advisory services provided to the Trust. The
Adviser may voluntarily agree to waive a part of its fees. See "The Adviser" and
"Expense Summary."
WHO IS THE ADMINISTRATOR? The One Group Services Company serves as the
Administrator of the Trust. The Administrator is entitled to a fee for services
provided to the Trust. Banc One Investment Advisors Corporation serves as the
Sub-Administrator of the Trust, pursuant to an agreement with the Administrator
for which Banc One Investment Advisors Corporation receives a fee paid by the
Administrator. See "The Administrator" and "Expense Summary."
WHO IS THE TRANSFER AGENT AND CUSTODIAN? State Street Bank and Trust Company
serves as Transfer Agent and Custodian for the Trust, for which services it
receives a fee. Bank One Trust Company, N.A. serves as Sub-Custodian for the
Trust, for which services it receives a fee. See "The Transfer Agent and
Custodian."
WHO IS THE DISTRIBUTOR? The One Group Services Company acts as Distributor of
the Trust's shares. The Distributor is entitled to fees for distribution
services for the Class A and Class B shares. No compensation is paid to the
Distributor for the distribution services for the Fiduciary Class shares of the
Fund. See "The Distributor."
<PAGE> 59
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be made
through the Distributor on any day that the New York Stock Exchange is open for
trading ("Business Days"). See "How to Invest in The One Group(R)" and
"Redemptions."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is determined and declared daily, and
is distributed in the form of periodic dividends to Shareholders of the Fund on
the first Business Day of each month. Any capital gains are distributed at least
annually. Distributions are paid in additional shares of the same class unless
the Shareholder elects to take the payment in cash. See "Dividends."
-2-
<PAGE> 60
ABOUT THE FUND
EXPENSE SUMMARY--THE ONE GROUP(R) LOUISIANA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
FIDUCIARY
CLASS A CLASS B CLASS
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) ............. 4.50% none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price
or redemption proceeds, as applicable) ......... none 5.00% none
Redemption Fees .................................. none none none
Exchange Fees .................................... none none none
ANNUAL OPERATING EXPENSES(2)
(as a percentage of average daily net assets)
Investment Advisory Fees (after fee waivers)(3) .. .40% .40% .40%
12b-1 Fees (after fee waivers)(4) ................ .25% .90% None
Other Expenses ................................... .31% .31% .31%
TOTAL OPERATING EXPENSES(3) ...................... .96% 1.61% .71%
</TABLE>
(1) A person who purchases shares through an account with a financial
institution or broker-dealer may be charged separate transaction fees
by the financial institution or broker-dealer. In addition, a wire
redemption charge, currently $7.00, is deducted from the amount of a
wire redemption payment made at the request of a Shareholder.
(2) The expense information in the table has been restated to reflect
current fees that would have been applicable had they been in effect
during the previous fiscal year.
(3) Investment Advisory Fees and Total Operating Expenses reflect fee
waivers effective as of the date of this Prospectus. The Adviser may
voluntarily agree to waive a part of its fees. Absent this voluntary
reduction, Investment Advisory Fees would be .60% for all classes of
shares, and Total Operating Expenses would be 1.26% for Class A shares,
1.91% for Class B shares and .91% for Fiduciary Class shares.
(4) Absent the voluntary waiver of fees under the Trust's Distribution and
Shareholder Services Plans, 12b-1 fees (as a percentage of average
daily net assets) would be .35% for Class A shares and 1.00% for Class
B shares. There are no 12b-1 fees charged to Fiduciary Class shares.
The 12b-1 fees include a Shareholder servicing fee of .25% of the
average daily net assets of the Fund's Class B shares and may include a
Shareholder servicing fee of .25% of the average daily net assets of
the Class A shares of the Fund. See "The Distributor."
-3-
<PAGE> 61
EXAMPLE: An investor would pay the following expenses on a $1,000 investment in
Class A and Fiduciary Class shares of the Fund, assuming: (1) imposition of the
maximum sales load for Class A shares; (2) 5% annual return; and (3) redemption
at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
Class A $54 $74
Fiduciary Class $7 $23
</TABLE>
Absent the voluntary reduction of fees, the dollar amounts in the above example
would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
Class A $57 $83
Fiduciary Class $9 $29
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment in
Class B shares of the Fund, assuming: (1) deduction of the applicable maximum
Contingent Deferred Sales Charge; and (2) 5% annual return.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
Assuming a complete redemption at
end of period $66 $81
Assuming no redemption $16 $51
</TABLE>
Absent the voluntary reduction of fees, the dollar amounts in the above example
would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
Assuming a complete redemption at
end of period $69 $90
Assuming no redemption $19 $60
</TABLE>
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
purpose of these tables is to assist the investor in understanding the various
costs and expenses that may be directly or indirectly borne by investors in the
Trust.
The rules of the Securities and Exchange Commission (the "SEC") require that the
maximum sales charge be reflected in the above tables. However, investors in the
Fund ("Shareholders") may, under certain circumstances, qualify for reduced
sales charges. See "How to Invest in The One Group(R)." Long-term Shareholders
of Class A and Class B shares may pay more than the equivalent of the maximum
front-end sales charges otherwise permitted by the National Association of
Securities Dealers' Rules.
-4-
<PAGE> 62
THE FUND
The One Group(R) Louisiana Municipal Bond Fund (the "Fund") is part of The One
Group(R) (the "Trust"), which is an open-end management investment company that
offers units of beneficial interest ("shares") in 32 separate funds and
different classes of certain of the funds. This Prospectus relates to Class A,
Class B and Fiduciary Class shares of The One Group(R) Louisiana Municipal Bond
Fund, which provide for variations in distribution costs, voting rights,
dividends and per share net asset value pursuant to a multiple class plan (the
"Multiple Class Plan") adopted by the Board of Trustees of the Trust. Except for
these differences among classes, each share of the Fund represents an undivided,
proportionate interest in the Fund. The Fund is a non-diversified mutual fund.
Information regarding the Trust's other funds and their classes is contained in
separate prospectuses which may be obtained from the Trust's Distributor, The
One Group Services Company, 3435 Stelzer Road, Columbus, OH 43219, or by calling
1-800-480-4111.
INVESTMENT OBJECTIVE
The Fund seeks current income both consistent with the preservation of principal
and exempt from Federal income tax and Louisiana income tax.
The investment objective of the Fund is fundamental and may not be changed
without a vote of the holders of a majority of the Fund's outstanding shares (as
defined in the Statement of Additional Information).
There is no assurance that the Fund will meet its investment objective.
INVESTMENT POLICIES
The investment policies of the Fund may be changed without an affirmative vote
of the holders of a majority of the Fund's outstanding shares unless a policy is
expressly deemed to be fundamental or is expressly deemed to be changeable only
by such a majority vote.
The Fund will, as a matter of fundamental policy, invest at least 80% of its net
assets in investment grade municipal securities issued by or on behalf of the
State of Louisiana and its political subdivisions, agencies and
instrumentalities, the interest on which is exempt from both Federal income tax
and Louisiana state income tax. It is anticipated that the Fund normally will
invest in long-term municipal securities and that the Fund's average weighted
maturity will, under normal conditions, range between 5 and 15 years, although
the Fund may invest in securities of any maturity. For purposes of the foregoing
policy, "municipal securities" include debt instruments issued by the U.S.
Treasury and U.S. Government agencies and municipalities and zero coupon
obligations. The municipal securities in which the Fund invests may carry fixed
rates of return or have floating or variable rates.
-5-
<PAGE> 63
Although the Fund intends to invest all of its assets in the municipal
securities described above, up to 20% of its net assets may be held in cash or
invested in municipal securities of other states, short-term taxable investments
including repurchase agreements, U.S. Government Securities or other cash
equivalents and Louisiana municipal securities such as "private activity" bonds
the interest on which may be treated as a tax preference item under the Federal
alternative minimum tax for individuals. Thus, a portion of your income from the
Fund may not be exempt from Federal alternative minimum and/or Louisiana state
income taxes. See "Tax Status of Distributions."
The Fund may invest its assets in: (i) general obligation bonds; (ii) revenue
bonds, including industrial development revenue bonds; (iii) short-term
municipal securities of all types, including tax anticipation notes, revenue
anticipation notes and bond anticipation notes; and (iv) certificates of
participation in a pool of municipal securities held by a bank or other
financial institution, the interest from which is, in the opinion of counsel to
the issuer, exempt from Federal and Louisiana income tax. As a matter of
nonfundamental policy, at least 50% of the Fund's total assets will be invested
in escrow secured bonds and bonds insured as to principal and interest.
All bonds purchased by the Fund must be investment grade, which means they must
be rated in one of the four highest rating categories by at least one nationally
recognized statistical rating organization ("NRSRO") at the time of investment
(for example, BBB or better by Standard & Poor's Corporation ("S&P") or Baa or
better by Moody's Investors Service ("Moody's")) or, if unrated, determined by
the Adviser to be of comparable quality. The Fund may also invest in short-term
tax-exempt municipal securities rated at least MIG-3 (VMIG-3) by Moody's or SP-2
by S&P, or, if unrated, determined by the Adviser to be of comparable quality.
Securities rated Baa, BBB, MIG-3 (VMIG-3) and SP-2 may have speculative elements
as well as investment grade characteristics.
In order to enhance the liquidity, stability, or quality of a municipal security
meeting the standards described above, the Fund may acquire the right to sell
the security to another party at a guaranteed price and date. These rights may
be referred to as puts, demand features, or standby commitments, depending on
their characteristics, and may involve letters of credit issued by domestic or
foreign banks supporting the other party's ability to purchase the security from
the Fund. The right to sell may be exercisable on demand or at specified
intervals, and may form part of a security or be acquired separately by the
Fund. In considering whether a security meets the Fund's quality standards, the
Fund will look to the creditworthiness of the party providing the Fund with the
right to sell as well as the quality of the security itself.
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<PAGE> 64
PERMISSIBLE INVESTMENTS
In addition to the permissible investments described above, the Fund also may
invest in securities purchased on a when-issued basis and forward commitments,
variable and floating rate notes, commercial paper, time deposits, certificates
of deposit, receipts, which may include Treasury Receipts ("TRS"), Treasury
Investment Growth Receipts ("TIGRS") and Certificates of Accrual on Treasury
Securities ("CATS"), U.S. Treasury obligations, which may include Separately
Traded Registered Interest and Principal Securities ("STRIPS") and Coupon Under
Book Entry Safekeeping ("CUBES"), bankers' acceptances, repurchase agreements,
reverse repurchase agreements and securities of other investment companies. The
Fund also may invest in options, futures contracts, options on futures
contracts, securities subject to demand features, zero coupon obligations, swap
transactions, structured instruments, municipal leases and participation
interests. The Fund also may engage in securities lending transactions.
In addition to those instruments and techniques listed above, the Fund may
invest in new options, futures contracts and other financial products that may
be developed to the extent that these products are consistent with the Fund's
investment objective and policies.
This list of permissible investments includes select securities that may be
commonly considered to be derivatives, including: options, futures contracts,
options on futures contracts, swap, cap and floor transactions, new financial
products and structured instruments. These securities and limitations on their
use are more fully described in the "Description of Permitted Investments."
For a description of the Fund's permitted investments and ratings, see
"Description of Permitted Investments," "Description of Ratings" and the
Statement of Additional Information. For a description of permitted investments
for temporary defensive purposes, see "Temporary Defensive Position." In the
event a security owned by the Fund is downgraded below the rating categories
described above, the Adviser will review the reclassification and take
appropriate action with regard to the security.
DIVERSIFICATION AND CONCENTRATION
The Fund is a "non-diversified" investment company and, accordingly, is not
limited in the proportion of its assets that may be invested in securities of a
single issuer. However, the Fund intends to conduct its operations so as to
qualify as a "regulated investment company" for purposes of the Internal Revenue
Code of 1986, as amended (the "Code"). To so qualify, the Fund, along with
satisfying other requirements, will limit its investments so that, at the close
of each quarter of the taxable year, (i) at least 50% of the market value of the
Fund's total assets will be invested in cash, cash items, U.S. government
securities and other securities that are, for purposes of this requirement,
limited in respect of a single issuer to an amount not greater in market value
than 5% of the market value of its total assets and to not
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<PAGE> 65
more than 10% of the outstanding voting securities of a single issuer; and (ii)
not more than 25% of the market value of the Fund's total assets will be
invested in the securities (other than U.S. government securities or the
securities of other regulated investment companies) of a single issuer. Because
of the relatively small number of issuers of Louisiana municipal securities, the
Fund may invest a higher percentage of its assets in the securities of a single
issuer than an investment company that invests in a broad range of tax-exempt
securities. This concentration involves an increased risk of loss to the Fund if
the issuer were unable to make interest or principal payments or if the market
value of such securities were to decline and, consequently, may cause greater
fluctuation in the net asset value of the Fund's shares.
As a matter of nonfundamental policy, the Fund will not concentrate in any
industry. However, the Fund may invest up to 25% of its total assets in revenue
securities that are based, directly or indirectly, on the credit of private
entities in any one industry.
RISK FACTORS
The market value of the Fund's fixed income investments will change in response
to interest rate changes and other factors. During periods of falling interest
rates, the values of outstanding fixed income securities generally rise.
Conversely, during periods of rising interest rates, the values of such
securities generally decline. Moreover, while securities with longer maturities
tend to produce higher yields, the prices of longer maturity securities are also
subject to greater market fluctuations as a result of changes in interest rates.
Changes by recognized agencies in the rating of any fixed income security and in
the ability of an issuer to make payments of interest and principal also affect
the value of these investments. Except under condition of default, changes in
the value of fixed income securities will not affect cash income derived from
these securities but will affect the Fund's net asset value.
Certain investment techniques that the Fund may use may expose the Fund to
special risks. These include, but are not limited to, engaging in hedging
transactions (including interest rate swaps, caps and floors), purchasing and
selling futures and options, making forward commitments, purchasing structured
instruments and lending portfolio securities. These practices could expose the
Fund to potentially greater risk of loss than more traditional fixed income
investments.
For additional information on each of the Fund's permitted investments and
associated risks, see "Description of Permitted Investments."
SPECIAL CONSIDERATIONS RELATED TO LOUISIANA MUNICIPAL SECURITIES.
The Fund is more susceptible to factors adversely affecting issuers of Louisiana
municipal securities than is a comparable municipal bond fund that is not
concentrated in these issuers to this degree. Although it has recovered in
recent years, Louisiana experienced severe financial difficulties in the late
nineteen-eighties and continues to face the risks associated with a non-
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<PAGE> 66
diversified economy. In particular, the significance of the oil and gas industry
in Louisiana's economy has resulted in financial difficulties during unfavorable
markets for oil and gas products and in financial benefits during favorable
markets. Louisiana's general obligation bonds were rated as high as Aa by
Moody's and AA by S&P, respectively, in 1984. The decline in oil prices affected
the state through a loss of severance taxes and royalties, which together peaked
at 26% of state governmental revenues in fiscal year 1982-1983 compared with
4.3% in fiscal year 1993-1994. Indirectly the decline in economic activity also
affected the state's collection of various excise taxes. As a result, during the
period from fiscal year 1987-1988 through fiscal year 1993- 1994, Louisiana
experienced operating budget deficits in three of the seven fiscal years, and
its bonds were downgraded to Baa1/BBB+. After eliminating its deficit through
the issuance of long-term bonds in 1988, the state has maintained positive
ending General Fund balances through fiscal year 1993-1994. The State forecasts
for fiscal year 1995-1996 indicate a potential revenue shortfall of $192 million
in order to continue State operations in fiscal year 1995-1996 at current
levels. The State's budget projections may also be impacted by certain matters
relating to the Medicaid program. However, the State is presently negotiating
with the U.S. Secretary of Health and Human Services for a waiver proposal
providing for a phase-in of a managed care program which utilizes a capitated
payment system. S&P upgraded the state's bond rating to A in 1990. If either
Louisiana or any of its local governmental entities is unable to meet its
financial obligations, the income derived by the Fund, the Fund's net asset
value, the ability to preserve or realize appreciation of the Fund's capital or
the Fund's liquidity could be adversely affected. As a result of potential
budget problems in fiscal year 1995-1996, S&P lowered Louisiana's rating to A
minus from A.
HOW TO DO BUSINESS WITH THE ONE GROUP(R)
HOW TO INVEST IN THE ONE GROUP(R)
Shares of the Fund are sold on a continuous basis and may be purchased directly
from the Trust's Distributor, The One Group Services Company, by mail, by
telephone, or by wire. Shares also may be purchased through a financial
institution, such as a bank, savings and loan association or insurance company
(each a "Shareholder Servicing Agent"), that has established a Shareholder
servicing agreement with the Distributor, or through a broker-dealer that has
established a dealer agreement with the Distributor.
Purchases and redemptions of shares of the Fund may be made on any day that the
New York Stock Exchange is open for trading ("Business Days"). The minimum
initial and subsequent investments in the Fund are $1,000 and $100, respectively
($100 and $25, respectively, for employees of BANC ONE CORPORATION and its
affiliates). Initial and subsequent investment minimums may be waived at the
Distributor's discretion. Investors may purchase up to a maximum of $250,000 of
Class B shares per individual purchase order.
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Class A and Class B shares are offered to the general public. Fiduciary Class
shares are offered to institutional investors, including affiliates of BANC ONE
CORPORATION and any bank, depository institution, insurance company, pension
plan or other organization authorized to act in fiduciary, advisory, agency,
custodial or similar capacities (each an "Authorized Financial Organization").
For additional details regarding eligibility, call the Distributor at
1-800-480-4111.
BY MAIL
Investors may purchase Class A and Class B shares of the Fund by completing and
signing an Account Application Form and mailing it, along with a check (or other
negotiable bank instrument or money order) payable to "The One Group(R)," to
State Street Bank and Trust Company (the Trust's Transfer Agent and Custodian),
P.O. Box 8500, Boston, MA 02266-8500. Subsequent purchases of shares may be made
at any time by mailing a check to the Transfer Agent. Account Application Forms
are available through the Distributor by calling 1-800-480-4111.
Purchases of Fiduciary Class shares are made by an institutional investor and/or
other intermediary on behalf of an investor (each also a "Shareholder Servicing
Agent"). The Shareholder Servicing Agent may require an investor to complete
forms in addition to the Account Application Form and to follow procedures
established by the Shareholder Servicing Agent. Such Shareholders should contact
their Shareholder Servicing Agents regarding purchases, exchanges and
redemptions of shares. See "Additional Information Regarding Purchases."
BY TELEPHONE OR BY WIRE
Once an Account Application Form has been received, Shareholders are eligible to
make purchases by telephone or wire (if that option has been selected by a
Shareholder) by calling the Transfer Agent at 1-800-480-4111 or the Shareholder
Servicing Agents, if applicable.
Shareholders may revoke their automatic eligibility to make purchases and/or
redemptions by telephone or by wire, by sending a letter so stating to the
Transfer Agent, State Street Bank and Trust Company, P.O. Box 8500, Boston, MA
02266-8500.
SYSTEMATIC INVESTMENT PLAN
Class A and Class B investors may make automatic monthly investments in the Fund
from their bank, savings and loan or other depository institution accounts. The
minimum initial and subsequent investments must be $25 under the Systematic
Investment Plan, which minimum may be waived at the discretion of the
Distributor. The Trust pays the costs associated with these transfers, but
reserves the right, upon thirty days' written notice, to impose reasonable
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<PAGE> 68
charges for this service. A depository institution may impose a charge for
debiting an investor's account which would reduce the investor's return from an
investment in the Fund.
ADDITIONAL INFORMATION REGARDING PURCHASES
A purchase order will be effective as of the day received by the Distributor if
the Distributor receives the order before 4:00 p.m., eastern time. However, an
order may be cancelled if the Transfer Agent does not receive Federal funds
before close of business on the next Business Day for Fiduciary Class shares,
and before the close of business on the third Business Day for Class A and Class
B shares, and the investor could be liable for any fees or expenses incurred by
the Trust. Federal funds are monies credited to a bank's account with a Federal
Reserve Bank. The purchase price of shares of the Fund is the net asset value
next determined after a purchase order is effected, plus any applicable sales
charge (the "offering price"). The net asset value per share of the Fund is
determined by dividing the total market value of the Fund's investments and
other assets allocable to a class, less any liabilities allocable to that class,
by the total number of outstanding shares of such class. Net asset value per
share is determined daily as of 4:00 p.m., eastern time, on each Business Day.
For a further discussion of the calculation of net asset value, see the
Statement of Additional Information. Shares also may be issued in transactions
involving the acquisition by the Fund of securities held by collective
investment funds sponsored and administered by affiliates of the Adviser.
Purchases will be made in full and fractional shares of the Fund calculated to
three decimal places. Although the methodology and procedures are identical, the
net asset value per share of classes within the Fund may differ because the
distribution expenses charged to Class A shares and Class B shares are not
charged to Fiduciary Class shares.
The Trust reserves the right to reject a purchase order when the Distributor
determines that it is not in the best interest of the Trust and/or its
Shareholders to accept such order. Except as provided below, neither the Trust's
Transfer Agent, the Distributor, the Adviser nor the Trust will be responsible
for any loss, liability, cost or expense for acting upon telephone or wire
instructions, and the investor will bear all risk of loss. The Trust will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine, including requiring a form of personal identification prior to acting
upon instructions received by telephone and recording telephone instructions. If
such procedures are not employed, the Trust may be liable for any losses due to
unauthorized or fraudulent instructions.
Fiduciary Class shares offered to institutional investors will normally be held
in the name of the Shareholder Servicing Agent effecting the purchase on the
Shareholder's behalf, and it is the Shareholder Servicing Agent's responsibility
to transmit purchase orders to the Distributor. A Shareholder Servicing Agent
may impose an earlier cut-off time for receipt of purchase orders directed
through it to allow for processing and transmittal of these orders to the
Distributor for effectiveness the same day. The Shareholder should contact his
or her Shareholder Servicing Agent for information as to the Shareholder
Servicing Agent's procedures for transmitting purchase, exchange or redemption
orders to the Trust. A
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Shareholder who desires to transfer the registration of shares beneficially
owned by him or her, but held of record by a Shareholder Servicing Agent, should
contact the Shareholder Servicing Agent to accomplish such change. Other
Shareholders who desire to transfer the registration of their shares should
contact the Transfer Agent.
No certificates representing shares of the Fund will be issued. In
communications to Shareholders, the Fund will not duplicate mailings of Fund
material to Shareholders who reside at the same address.
SALES CHARGE
The following table shows the initial sales charge on Class A shares to a
"single purchaser" (defined below) together with the sales charge reallowed to
financial institutions and intermediaries (the "commission"):
<TABLE>
<CAPTION> Sales Charge as Appropriate
Sales Charge as a Percentage of Net Commission as a Percentage
Amount of Purchase Percentage of Offering Price Amount Invested of Offering Price
- ------------------ ---------------------------- ---------------------------- --------------------------
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.05%
$100,000 but less
than $250,000 3.50% 3.63% 3.05%
$250,000 but less
than $500,000 2.50% 2.56% 2.05%
$500,000 but
less than $1,000,000 2.00% 2.04% 1.60%
1,000,000 or more 0.00% 0.00% 0.00%
</TABLE>
The commissions shown in the table apply to sales through financial institutions
and intermediaries. Under certain circumstances, the Distributor will use its
own funds to compensate financial institutions and intermediaries in amounts
that are additional to the commissions shown above. The maximum cash
compensation payable by the Distributor as a sales charge is 4.50% of the
offering price (including the commission shown above and additional cash
compensation described below). In addition, the Distributor will, from time to
time and at its own expense, provide promotional incentives to financial
institutions and intermediaries, whose registered representatives have sold or
are expected to sell significant amounts of the shares of the Fund, in the form
of payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives to places within or outside
the United States, and additional compensation in an amount up to 1.00% of the
offering price of Class A shares of the Fund for sales of $1 million to $5
million, and 0.50% for sales over $5 million. However, the Distributor will be
reimbursed by the person receiving such additional compensation for sales of
the Fund of $1 million or more, if a Shareholder redeems any or all of the
shares for which such additional compensation was paid by the Distributor
prior to the
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<PAGE> 70
first year anniversary of purchase. Under certain circumstances, commissions up
to the amount of the entire sales charge will be reallowed to financial
institutions and intermediaries, which might then be deemed to be "underwriters"
under the Securities Act of 1933.
RIGHT OF ACCUMULATION
In calculating the sales charge rates applicable to current purchases of Class A
shares, a "single purchaser" is entitled to cumulate current purchases with the
current value at the offering price of previously purchased Class A and Class B
shares of the Fund and other eligible funds of the Trust, other than the Trust's
money market funds, that are sold subject to a comparable sales charge.
The term "single purchaser" refers to (i) an individual, (ii) an individual and
spouse purchasing shares of the Fund for their own account or for trust or
custodial accounts for their minor children, or (iii) a fiduciary purchasing for
any one trust, estate or fiduciary account, including employee benefit plans
created under Sections 401 or 457 of the Code, and including related plans of
the same employer. To be entitled to a reduced sales charge based upon shares
already owned, the investor must ask the Distributor for such reduction at the
time of purchase and provide the account number(s) of the investor, the investor
and spouse, and their minor children, and give the age(s) of such children. The
Fund may amend or terminate this right of accumulation at any time as to
subsequent purchases.
LETTER OF INTENT
By initially investing at least $2,000 in Class A shares of one or more funds
that impose a comparable sales charge over the next 13 months, an investor may
reduce the sales charge by completing the Letter of Intent section of the
Account Application Form. The Letter of Intent includes a provision for a sales
charge adjustment depending on the amount actually purchased within the 13-month
period. In addition, pursuant to a Letter of Intent, the Custodian will hold in
escrow the difference between the sales charge applicable to the amount
initially purchased and the sales charge paid at the time of investment, which
is based on the amount covered by the Letter of Intent.
For example, assume an investor signs a Letter of Intent to purchase $250,000 in
Class A shares of one (or more) of the funds of the Trust that impose a
comparable sales charge and, at the time of signing the Letter of Intent,
purchases $100,000 of Class A shares of one of these funds. The investor would
pay an initial sales charge of 1.50% (the sales charge applicable to purchases
of $250,000) and 1.00% of the investment (representing the difference between
the 2.50% sales charge applicable to purchases of $100,000 and the 1.50% sales
charge already paid) would be held in escrow until the investor has purchased
the remaining $150,000 or more in Class A shares under the investor's Letter of
Intent.
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<PAGE> 71
The amount held in escrow will be applied to the investor's account at the end
of the 13-month period unless the amount specified in the Letter of Intent is
not purchased. In order to qualify for a Letter of Intent, the investor will be
required to make a minimum purchase of at least $2,000.
The Letter of Intent will not obligate the investor to purchase Class A shares,
but if he or she does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. The Letter of
Intent may be dated as of a prior date to include any purchases made within the
past 90 days.
OTHER CIRCUMSTANCES
No sales charge is imposed on Class A shares of the Fund: (i) issued through
reinvestment of dividends and capital gains distributions; (ii) acquired through
the exercise of exchange privileges where a comparable sales charge has been
paid for exchanged shares; (iii) purchased by officers, directors or trustees,
retirees and employees (and their spouses and immediate family members) of the
Trust, of BANC ONE CORPORATION and its subsidiaries and affiliates, of the
Distributor and its subsidiaries and affiliates, or of an investment sub-adviser
of a fund of the Trust and such sub-adviser's subsidiaries and affiliates; (iv)
sold to affiliates of BANC ONE CORPORATION and certain accounts (other than
Individual Retirement Accounts) for which Authorized Financial Organizations act
in fiduciary, advisory, agency, custodial or similar capacities, or purchased by
investment advisers, financial planners or other intermediaries who have a
dealer arrangement with the Distributor, who place trades for their own accounts
or for the accounts of their clients and who charge a management, consulting or
other fee for their services, as well as clients of such investment advisers,
financial planners or other intermediaries who place trades for their own
accounts if the accounts are linked to the master account of such investment
adviser, financial planner or other intermediary; (v) purchased with proceeds
from the recent redemption of Fiduciary Class shares of a fund of the Trust or
acquired in an exchange of Fiduciary Class shares of a fund for Class A shares
of the same fund; (vi) purchased with proceeds from the recent redemption of
shares of a mutual fund (other than a fund of the Trust) for which a sales
charge was paid; (vii) purchased in an Individual Retirement Account with the
proceeds of a distribution from an employee benefit plan, provided that, at the
time of distribution, the employee benefit plan had plan assets invested in a
fund of the Trust; (viii) purchased with Trust assets; (ix) purchased in
accounts as to which a bank or broker-dealer charges an asset allocation fee,
provided the bank or broker-dealer has an agreement with the Distributor; or (x)
directly purchased with the proceeds of a distribution on a bond for which a
Banc One Corporation affiliate bank or trust company is the Trustee or Paying
Agent.
An investor relying upon any of the categories of waivers of the sales charge
must qualify for such waiver in advance of the purchase with the Distributor or
the financial institution or intermediary through which shares are purchased by
the investor.
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<PAGE> 72
The waiver of the sales charge under circumstances (v), (vi) and (vii) above
applies only if the purchase is made within 60 days of the redemption or
distribution and if conditions imposed by the Distributor are met. The waiver
policy with respect to the purchase of shares through the use of proceeds from a
recent redemption or distribution as described in clauses (v), (vi) and (vii)
above will not be continued indefinitely and may be discontinued at any time
without notice. Investors should call the Distributor at 1-800-480-4111 to
determine whether they are eligible to purchase shares without paying a sales
charge through the use of proceeds from a recent redemption or distribution as
described above, and to confirm continued availability of these waiver policies
prior to initiating the procedures described in clauses (v), (vi) and (vii).
ALTERNATIVE SALES ARRANGEMENTS
CLASS B SHARES
Class B shares are not subject to a sales charge when they are purchased, but
are subject to a sales charge (the "Contingent Deferred Sales Charge") if a
Shareholder redeems them prior to the sixth anniversary of purchase. When a
Shareholder purchases Class B shares, the full purchase amount is invested
directly in the Fund. Class B shares of the Fund are subject to an ongoing
distribution and Shareholder service fee at an annual rate of 1.00% of the
Fund's average daily net assets as provided in the Class B Plan (described below
under "The Distributor"). The Distributor has voluntarily agreed to reduce the
amount of this fee to .90% of the Fund's average daily net assets attributable
to the Class B shares, for the indefinite future. This ongoing fee will cause
Class B shares to have a higher expense ratio and to pay lower dividends than
Class A shares. Class B shares convert automatically to Class A shares after
eight years, commencing from the end of the calendar month in which the purchase
order was accepted under the circumstances and subject to the qualifications
described in this Prospectus.
Proceeds from the Contingent Deferred Sales Charge and the distribution and
Shareholder service fees under the Class B Plan are payable to the Distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
Shareholder services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to dealers and agents for selling
Class B shares. A dealer reallowance of 4.00% of the original purchase price of
the Class B shares will be paid to financial institutions and intermediaries.
CONTINGENT DEFERRED SALES CHARGE
If the Shareholder redeems Class B shares prior to the sixth anniversary of
purchase, the Shareholder will pay a Contingent Deferred Sales Charge at the
rates set forth below. The Contingent Deferred Sales Charge is assessed on an
amount equal to the lesser of the then-current market value or the cost of the
shares being redeemed. Accordingly, no sales
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<PAGE> 73
charge is imposed on increases in net asset value above the initial purchase
price. In addition, no charge is assessed on shares derived from reinvestment of
dividends or capital gain distributions.
The amount of the Contingent Deferred Sales Charge, if any, varies depending on
the number of years from the time of payment for the purchase of Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of shares, all
payments during a month are aggregated and deemed to have been made on the first
day of the month.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
YEAR(S) PERCENTAGE OF
SINCE DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
- -------- -------------------
<C> <C>
0-1 . . . . . . . . . . . . . . . . . . . . . . . . 5.00%
1-2 . . . . . . . . . . . . . . . . . . . . . . . . . 4.00%
2-3 . . . . . . . . . . . . . . . . . . . . . . . . 3.00%
3-4 . . . . . . . . . . . . . . . . . . . . . . . . 3.00%
4-5 . . . . . . . . . . . . . . . . . . . . . . . . 2.00%
5-6 . . . . . . . . . . . . . . . . . . . . . . . . 1.00%
6-7 . . . . . . . . . . . . . . . . . . . . . . . . None
7-8 . . . . . . . . . . . . . . . . . . . . . . . . . None
</TABLE>
In determining whether a particular redemption is subject to a Contingent
Deferred Sales Charge, it is assumed that the redemption is first of any Class A
shares in the Shareholder's Fund account (unless the Shareholder elects to have
Class B shares redeemed first) or shares representing capital appreciation, next
of shares acquired pursuant to reinvestment of dividends and capital gain
distributions, and finally of other shares held by the Shareholder for the
longest period of time. This method should result in the lowest possible sales
charge.
To provide an example, assume you purchased 100 shares at $10 per share (a total
cost of $1,000) and prior to the second anniversary after purchase, the net
asset value per share is $12 and during such time you have acquired 10
additional shares through dividends paid in shares. If you then make your first
redemption of 50 shares (proceeds of $600), 10 shares will not be subject to
charge because you received them as dividends. With respect to the remaining 40
shares, the charge is applied only to the original cost of $10 per share and not
to the increase in net asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds is subject to a Contingent Deferred Sales Charge at a rate
of 4.00% (the applicable rate prior to the second anniversary after purchase).
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<PAGE> 74
The Contingent Deferred Sales Charge is waived on redemption of shares: (i) for
distributions that are made under a Systematic Withdrawal Plan of the Trust and
that are limited to no more than 10% of the account value annually, determined
in the first year as of the date the redemption request is received by the
Transfer Agent, and in subsequent years, as of the most recent anniversary of
that date; (ii) following the death or disability (as defined in the Code) of a
Shareholder or a participant or beneficiary of a qualifying retirement plan if
redemption is made within one year of such death or disability; or (iii) to the
extent that the redemption represents a minimum required distribution from an
Individual Retirement Account or other qualifying retirement plan to a
Shareholder who has attained the age of 70 1/2. A Shareholder or his or her
representative should contact the Transfer Agent to determine whether a
retirement plan qualifies for a waiver and must notify the Transfer Agent prior
to the time of redemption if such circumstances exist and the Shareholder is
eligible for this waiver. In addition, the following circumstances are not
deemed to result in a "redemption" of Class B shares for purposes of the
assessment of a Contingent Deferred Sales Charge, which is therefore waived: (i)
plans of reorganization of the Fund, such as mergers, asset acquisitions and
exchange offers to which the Fund is a party; or (ii) exchanges for Class B
shares of other funds of the Trust as described under "Exchanges."
CONVERSION FEATURE
Class B shares include all shares purchased pursuant to the Contingent Deferred
Sales Charge which have been outstanding for less than the period ending eight
years after the end of the month in which the shares were purchased. At the end
of this period, Class B shares will automatically convert to Class A shares and
will be subject to the lower distribution and Shareholder service fees charged
to Class A shares. Such conversion will be on the basis of the relative net
asset values of the two classes, without the imposition of any sales charge, fee
or other charge. The conversion is not a taxable event to a Shareholder.
For purposes of conversion to Class A shares, shares received as dividends and
other distributions paid on Class B shares in a Shareholder's Fund account will
be considered to be held in a separate sub-account. Each time any Class B shares
in a Shareholder's Fund account (other than those in the sub-account) convert to
Class A shares, a pro-rata portion of the Class B shares in the sub-account will
also convert to Class A shares.
If a Shareholder effects one or more exchanges among Class B shares of the funds
of the Trust during the eight-year period, the Trust will aggregate the holding
periods for the shares of each fund of the Trust for purposes of calculating
that eight-year period. Because the per share net asset value of the Class A
shares may be higher than that of the Class B shares at the time of conversion,
a Shareholder may receive fewer Class A shares than the number of Class B shares
converted, although the dollar value will be the same.
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EXCHANGES
CLASS A AND FIDUCIARY CLASS
Fiduciary Class Shareholders of the Fund may exchange their shares for Class A
shares of the Fund or for Class A shares or Fiduciary Class shares of another
fund of the Trust.
Class A Shareholders may exchange their shares for Fiduciary Class shares of the
Fund or for Fiduciary Class shares or Class A shares of another fund of the
Trust, if the Shareholder is eligible to purchase such shares.
The exchange privilege may be exercised only in those states where the shares of
the Fund or such other fund of the Trust may be legally sold. All exchanges
discussed herein are made at the net asset value of the exchanged shares, except
as provided below. The Trust does not impose a charge for processing exchanges
of shares. If a Shareholder seeks to exchange Class A shares of a fund that does
not impose a sales charge for Class A shares of a fund that does or the fund
being exchanged into has a higher sales charge, the Shareholder will be required
to pay a sales charge in the amount equal to the difference between the sales
charge applicable to the fund into which the shares are being exchanged and any
sales charges previously paid for the exchanged shares, including any sales
charges incurred on any earlier exchanges of the shares (unless such sales
charge is otherwise waived, as provided in "Other Circumstances"). The exchange
of Fiduciary Class shares for Class A shares also will require payment of the
sales charge unless the sales charge is waived, as provided in "Other
Circumstances."
CLASS B
Class B Shareholders of the Fund may exchange their shares for Class B shares of
any other fund of the Trust on the basis of the net asset value of the exchanged
Class B shares, without the payment of any Contingent Deferred Sales Charge that
might otherwise be due upon redemption of the outstanding Class B shares. The
newly acquired Class B shares will be subject to the higher Contingent Deferred
Sales Charge of either the fund from which the shares were exchanged or the fund
into which the shares were exchanged. With respect to outstanding Class B shares
as to which previous exchanges have taken place, "higher Contingent Deferred
Sales Charge" shall mean the higher of the Contingent Deferred Sales Charge
applicable to either the fund the shares are exchanging into or any other fund
from which the shares previously have been exchanged. For purposes of computing
the Contingent Deferred Sales Charge that may be payable upon a disposition of
the newly acquired Class B shares, the holding period for outstanding Class B
shares of the fund from which the exchange was made is "tacked" to the holding
period of the newly acquired Class B shares. For purposes of calculating the
holding period applicable to the newly acquired Class B shares, the newly
acquired Class B shares shall be deemed to have been issued on the date of
receipt of
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the Shareholder's order to purchase the outstanding Class B shares of the fund
from which the initial exchange was made.
ADDITIONAL INFORMATION REGARDING EXCHANGES
In the case of shares held of record by a Shareholder Servicing Agent but
beneficially owned by a Shareholder, to exchange such shares the Shareholder
should contact the Shareholder Servicing Agent, who will contact the Transfer
Agent and effect the exchange on behalf of the Shareholder. If an exchange
request in good order is received by the Transfer Agent by 4:00 p.m., eastern
time, on any Business Day, the exchange usually will occur on that day. Any
Shareholder who wishes to make an exchange must receive a current prospectus of
the fund of the Trust in which he or she wishes to invest before the exchange
will be effected.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon sixty days' written notice. An exchange between
classes of shares of the same fund is not considered a taxable event; however,
an exchange between funds of the Trust is considered a sale of shares and
usually results in a capital gain or loss for Federal income tax purposes.
Shareholders should consult their tax advisers for a more complete explanation
of the Federal income tax consequences of an exchange of shares of the Fund.
A more detailed description of the above is set forth in the Statement of
Additional Information.
REDEMPTIONS
Shareholders may redeem their shares without charge (except Class B shares, as
provided above) on any Business Day; shares may ordinarily be redeemed by mail,
by telephone or by wire. All redemption orders are effected at the net asset
value per share next determined for Class A shares and Fiduciary Class shares,
and at net asset value per share next determined reduced by any applicable
Contingent Deferred Sales Charge for Class B shares, after receipt of a valid
request for redemption. Payment to Shareholders for shares redeemed will be made
within seven days after receipt by the Transfer Agent of the request for
redemption.
BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to constitute a valid request for redemption. All written redemption requests
should be sent to The One Group(R), c/o State Street Bank and Trust Company,
P.O. Box 8500, Boston, MA 02266-8500, or the Shareholder Servicing Agent, if
applicable. The Transfer Agent may require that the signature on the written
request be guaranteed by a commercial bank, a member firm of a domestic stock
exchange, or by a member of the Securities Transfer Association Medallion
Program or the Stock Exchange Medallion Program.
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The signature guarantee requirement will be waived if all of the following
conditions apply: (i) the redemption is for $5,000 worth of shares or less; (ii)
the redemption check is payable to the Shareholder(s) of record; and (iii) the
redemption check is mailed to the Shareholder(s) at the address of record. The
Shareholder may also have the proceeds mailed to a commercial bank account
previously designated on the Account Application Form or by written instruction
to the Transfer Agent or the Shareholder Servicing Agent, if applicable. There
is no charge for having redemption requests mailed to a designated bank account.
BY TELEPHONE OR BY WIRE
Shareholders may have the payment of redemption requests wired or mailed to a
domestic commercial bank account previously designated on the Account
Application Form. Wire redemption requests may be made by the Shareholder by
telephone to the Transfer Agent at 1-800-480-4111, provided that the Shareholder
has elected the telephone redemption privilege in writing to the Distributor, or
to the Shareholder Servicing Agent, if applicable. The Transfer Agent may reduce
the amount of a wire redemption payment by its then-current wire redemption
charge, which, as of the date of this Prospectus, is $7.00.
Neither the Trust nor the Transfer Agent will be responsible for the
authenticity of the redemption instructions received by telephone if it
reasonably believes those instructions to be genuine. The Trust and the Transfer
Agent will each employ reasonable procedures to confirm that telephone
instructions are genuine, and may be liable for losses resulting from
unauthorized or fraudulent telephone transactions if it does not employ those
procedures. Such procedures may include requesting personal identification
information or recording telephone conversations.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders whose accounts have a value of at least $10,000 may elect to
receive, or may designate another person to receive, monthly, quarterly or
annual payments in a specified amount of not less than $100 each. There is no
charge for this service. Under the Systematic Withdrawal Plan, all dividends and
distributions must be reinvested in shares of the Fund. Purchases of additional
Class A shares while the Systematic Withdrawal Plan is in effect are generally
undesirable because a sales charge is incurred whenever purchases are made.
Pursuant to the Systematic Withdrawal Plan, Class B Shareholders may elect to
receive, or may designate another person to receive, distributions provided the
distributions are limited to no more than 10% of their account value annually,
determined in the first year as of the date the redemption request is received
by the Transfer Agent, and in subsequent years, as of the most recent
anniversary of that date.
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If the amount of the systematic withdrawal exceeds the income accrued since the
previous withdrawal under the Systematic Withdrawal Plan, the principal balance
invested will be reduced and shares will be redeemed.
OTHER INFORMATION REGARDING REDEMPTIONS
At various times, the Fund may be requested to redeem shares for which it has
not yet received good payment. In such circumstances, the forwarding of proceeds
may be delayed for 15 or more days until payment has been collected for the
purchase of such shares. The Fund intends to pay cash for all shares redeemed.
Due to the relatively high costs of handling small investments, the Fund
reserves the right to redeem, at net asset value, the shares of any Shareholder
if, because of redemptions of shares by or on behalf of the Shareholder, the
account of such Shareholder in the Fund has a value of less than $1,000, the
minimum initial purchase amount. Accordingly, an investor purchasing shares of
the Fund in only the minimum investment amount may be subject to such
involuntary redemption if he or she thereafter redeems any of these shares.
Before the Fund exercises its right to redeem such shares and to send the
proceeds to the Shareholder, the Shareholder will be given notice that the value
of the shares in his or her account is less than the minimum amount and will be
allowed 60 days to make an additional investment in the Fund in an amount which
will increase the value of the account to at least $1,000.
See the Statement of Additional Information for examples of when the Trust may
suspend the right of redemption or redeem shares involuntarily if it appears
appropriate to do so in light of the Trust's responsibilities under the
Investment Company Act of 1940.
FUND MANAGEMENT
THE ADVISER
The Trust and Banc One Investment Advisors Corporation (the "Adviser") have
entered into an investment advisory agreement (the "Advisory Agreement"). Under
the Advisory Agreement, the Adviser makes the investment decisions for the
assets of the Fund and continuously reviews, supervises and administers the
Fund's investment program. The Adviser discharges its responsibilities subject
to the supervision of, and policies established by, the Trustees of the Trust.
The Trust's shares are not deposits or obligations of, or endorsed or guaranteed
by BANC ONE CORPORATION or its bank or non-bank affiliates. The Trust's shares
are not insured or guaranteed by the Federal Deposit Insurance Corporation
("FDIC") or by any other governmental agency or government sponsored agency of
the Federal government or any state.
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The Adviser is an indirect, wholly-owned subsidiary of BANC ONE CORPORATION, a
bank holding company incorporated in the state of Ohio. BANC ONE CORPORATION
currently has affiliate banking organizations in Arizona, Colorado, Illinois,
Indiana, Kentucky, Louisiana, Ohio, Oklahoma, Texas, Utah, West Virginia and
Wisconsin. In addition, BANC ONE CORPORATION has several affiliates that engage
in data processing, venture capital, investment and merchant banking, and other
diversified services including trust management, investment management,
brokerage, equipment leasing, mortgage banking, consumer finance and insurance.
On a consolidated basis, BANC ONE CORPORATION had assets of over $88 billion as
of September 30, 1995.
The Adviser represents a consolidation of the investment advisory staffs of a
number of bank affiliates of BANC ONE CORPORATION, which have considerable
experience in the management of open-end management investment company
portfolios, including The One Group(R) since 1985 (then known as "The Helmsman
Fund").
Gary J. Madich, CFA, is Senior Managing Director of Fixed Income Securities. Mr.
Madich joined the Adviser in February 1995. Prior to joining the Adviser, Mr.
Madich was a Senior Vice President and Portfolio Manager with Federated
Investors. Mr. Madich has seventeen years of investment management experience.
David M. Sivinski, CFA, will be the Manager of the Fund. Mr. Sivinski has been
with the Adviser or its affiliates since 1975, working primarily in fixed-income
portfolio management and mortgage/asset-backed research. Mr. Sivinski also
serves as the Manager of The One Group(R) Kentucky Municipal Bond Fund and The
One Group(R) Ohio Municipal Bond Fund.
The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .60% of the average daily net assets of the Fund. The Adviser
may voluntarily agree to waive a part of its fees. (See "About the Fund --
Expense Summary") These waivers are voluntary and may be terminated at any time.
Shareholders will be notified in advance if and when these waivers are
terminated.
THE DISTRIBUTOR
The One Group Services Company (the "Distributor"), a wholly-owned subsidiary of
the BISYS Group, Inc., and the Trust are parties to a distribution agreement
(the "Distribution Agreement") under which shares of the Fund are sold on a
continuous basis.
Class A shares are subject to a distribution and Shareholder services plan (the
"Plan"). As provided in the Plan, the Trust will pay the Distributor a fee of
.35% of the average daily net assets of Class A shares of the Fund. Currently,
the Distributor has voluntarily agreed to limit
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payments under the Plan to .25% of the average daily net assets of Class A
shares of the Fund. Up to .25% of the fees payable under the Plan may be used as
compensation for Shareholder services by the Distributor and/or financial
institutions and intermediaries. All such fees that may be paid under the Plan
will be paid pursuant to Rule 12b-1 of the Investment Company Act of 1940. The
Distributor may apply these fees toward: (i) compensation for its services in
connection with distribution assistance or provision of Shareholder services; or
(ii) payments to financial institutions and intermediaries such as banks
(including affiliates of the Adviser), savings and loan associations, insurance
companies, investment counselors, broker-dealers, and the Distributor's
affiliates and subsidiaries, as compensation for services or reimbursement of
expenses incurred in connection with distribution assistance or provision of
Shareholder services.
Class B shares are subject to a Contingent Deferred Sales Charge if such shares
are redeemed prior to the sixth anniversary of purchase. Class B shares of the
Fund are subject to an ongoing distribution and Shareholder service fee as
provided in the Class B distribution and Shareholder services plan (the "Class B
Plan") at an annual rate of 1.00% of the Fund's average daily net assets, which
includes Shareholder service fees of .25% of the Fund's average daily net
assets. Currently, the Distributor has voluntarily agreed to limit payments
under the Class B Plan to .90% of the average daily net assets of the Class B
shares of the Fund.
Proceeds from the Contingent Deferred Sales Charge and the distribution and the
Shareholder service fees under the Class B Plan are payable to the Distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
Shareholder services to the Fund in connection with the sale of Class B shares,
such as the payment of compensation to dealers and agents for selling Class B
shares. The combination of the Contingent Deferred Sales Charge and the
distribution and Shareholder service fees facilitate the ability of the Fund to
sell the Class B shares without a sales charge being deducted at the time of
purchase.
The Plan and the Class B Plan are characterized as compensation plans since the
distribution fees will be paid to the Distributor without regard to the
distribution or Shareholder service expenses incurred by the Distributor or the
amount of payments made to financial institutions and intermediaries. The Fund
also may execute brokerage or other agency transactions through an affiliate of
the Adviser, or through the Distributor for which the affiliate or the
Distributor receives compensation. Pursuant to guidelines adopted by the Board
of Trustees of the Trust, any such compensation will be reasonable and fair
compared to compensation received by other brokers in connection with comparable
transactions.
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Fiduciary Class shares of the Fund are offered without distribution fees to
institutional investors, including Authorized Financial Organizations. It is
possible that an institution may offer different classes of shares to its
customers and thus receive different compensation with respect to different
classes of shares. In addition, a financial institution that is the record owner
of shares for the account(s) of its customers may impose separate fees for
account services to its customers.
THE ADMINISTRATOR
The One Group Services Company (the "Administrator"), a wholly-owned subsidiary
of the BISYS Group, Inc., and the Trust are parties to an administration
agreement relating to the Fund (the "Administration Agreement"). Under the terms
of the Administration Agreement, the Administrator is responsible for providing
the Trust with administrative services (other than investment advisory
services), including regulatory reporting and all necessary office space,
equipment, personnel and facilities.
The Adviser also serves as Sub-Administrator to each fund of the Trust, pursuant
to an agreement between the Administrator and the Adviser. Pursuant to this
agreement, the Adviser performs many of the Administrator's duties, for which
the Adviser receives a fee paid by the Administrator.
The Administrator is entitled to a fee for administrative services, which is
calculated daily and paid monthly, at an annual rate of .20% of each fund's
average daily net assets on the first $1.5 billion in Trust assets (excluding
the Treasury Only Money Market Fund and the Government Money Market Fund), .18%
of each fund's average daily net assets to $2 billion in Trust assets (excluding
the Treasury Only Money Market Fund and the Government Money Market Fund), and
.16% of each fund's average daily net assets when Trust assets exceed $2 billion
(excluding the Treasury Only Money Market Fund and the Government Money Market
Fund).
THE TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500 acts
as Transfer Agent and Custodian for the Trust for which services it receives a
fee. The Custodian holds cash, securities and other assets of the Trust as
required by the Investment Company Act of 1940. Bank One Trust Company, N.A.
serves as Sub-Custodian in connection with the Trust's securities lending
activities, pursuant to an agreement between State Street Bank and Trust Company
and Bank One Trust Company. Bank One Trust Company receives a fee paid by the
Trust.
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COUNSEL AND INDEPENDENT ACCOUNTANTS
Ropes & Gray serves as counsel to the Trust. Coopers & Lybrand L.L.P. serves as
the independent accountants of the Trust.
OTHER INFORMATION
THE TRUST
The Trust was organized as a Massachusetts Business Trust under a Declaration of
Trust filed on May 23, 1985. The Declaration of Trust permits the Trust to offer
separate funds and different classes of each fund. All consideration received by
the Trust for shares of any fund and all assets of such fund belong to that fund
and would be subject to liabilities related thereto.
The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to Shareholders, costs of custodial services and registering the
shares under Federal and state securities laws, pricing, insurance expenses,
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organizational expenses.
The Adviser and the Administrator of the Fund each bears all expenses incurred
in connection with the performance of their services as investment adviser and
administrator, respectively, other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund.
As a general matter, as set forth in the Multiple Class Plan, expenses are
allocated to each class of shares of the Fund on the basis of the net asset
value of that class in relation to the net asset value of the Fund. At present,
the only expenses that are allocated to Class A and Class B shares, other than
in accordance with the relative net asset value of the class, are the different
distribution and Shareholders services costs. See "Expense Summary." At present,
no expenses are allocated to Fiduciary Class shares as a class that are not also
borne by the other classes of shares of the Fund in proportion to the relative
net asset values of the shares of such classes.
The organizational expenses of the Fund have been capitalized and are being
amortized in the first five years of the Fund's operations. Such amortization
will reduce the amount of income available for payment as dividends.
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TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described above, certain
companies provide essential management services to the Trust.
VOTING RIGHTS
As set forth in the Multiple Class Plan, each share held entitles the
Shareholder of record to one vote. Each fund of the Trust will vote separately
on matters relating solely to that fund. In addition, each class of a fund shall
have exclusive voting rights on any matter submitted to Shareholders that
relates solely to that class, and shall have separate voting rights on any
matter submitted to Shareholders in which the interests of one class differ from
the interests of any other class. However, all fund Shareholders will have equal
voting rights on matters that affect all fund Shareholders equally. As a
Massachusetts Business Trust, the Trust is not required to hold annual meetings
of Shareholders but approval will be sought for certain changes in the operation
of the Trust and for the election of Trustees under certain circumstances. In
addition, a Trustee may be elected or removed by the remaining Trustees or by
Shareholders at a special meeting called upon written request of Shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the Shareholders requesting the meeting.
DIVIDENDS
Net investment income (exclusive of capital gains) is determined and declared
daily, and is distributed in the form of periodic dividends to Shareholders of
the Fund on the first Business Day of each month. Capital gains of the Fund, if
any, will be distributed at least annually.
To maintain a relatively even rate of distributions from the Fund rather than
having substantial fluctuations from period to period, the monthly distributions
level from the Fund may be fixed from time to time at rates consistent with the
Adviser's long-term earnings expectations.
Shareholders automatically receive all income dividends and capital gain
distributions in additional Class A, Class B or Fiduciary Class shares, as
applicable, at the net asset value next determined following the record date,
unless the Shareholder has elected to take such payment in cash. Such election,
or any revocation thereof, must be made in writing, at least 15 days prior to
distribution, to the Transfer Agent at P.O. Box 8500, Boston, MA 02266-8500, and
will become effective with respect to dividends and distributions having record
dates after its receipt by the Transfer Agent. Reinvested dividends and
distributions receive the same tax treatment as dividends and distributions paid
in cash.
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Class B shares received as dividends and capital gains distributions at the net
asset value next determined following the record date shall be held in a
separate Class B sub-account. Each time any Class B shares (other than those in
the sub-account) convert to Class A shares, a pro-rata portion of the Class B
shares in the sub-account will also convert to Class A shares. (See "Conversion
Feature.")
Dividends and distributions of the Fund are paid on a per-share basis. The value
of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a dividend or the distribution of
capital gains, a Shareholder will pay the full price for the shares and receive
some portion of the price back as a taxable dividend or distribution even though
such distribution would, in effect, represent a return of the Shareholder's
investment.
The amount of dividends payable on Fiduciary Class shares will be more than the
dividends payable on Class A and Class B shares because of the distribution
expenses charged to Class A and Class B shares.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Administrator, The One Group
Services Company, 3435 Stelzer Road, Columbus, OH 43219.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes proxy statements and other
reports to Shareholders of record.
OTHER INVESTMENT POLICIES
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes during periods when the Adviser determines that
market conditions warrant such action, the Fund may invest up to 100% of its
assets in money market instruments and may hold a portion of its assets in cash
for liquidity purposes.
The Fund may also invest more than 20% of its net assets in municipal securities
other than Louisiana municipal securities if deemed appropriate for temporary
defensive purposes.
To the extent the Fund is engaged in a temporary defensive position, the Fund
will not be pursuing its investment objective.
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PORTFOLIO TURNOVER
Portfolio turnover may vary greatly from year to year, as well as within a
particular year. It is presently estimated that the annual portfolio turnover
rate of the Fund will not exceed 100%.
INVESTMENT LIMITATIONS
The investment objective and the following investment limitations are
fundamental policies of the Fund. Fundamental policies cannot be changed without
the consent of the holders of a majority of the Fund's outstanding shares. The
term "majority of the outstanding shares" means the vote of (i) 67% or more of
the Fund's shares present at a meeting, if more than 50% of the outstanding
shares of the Fund are present or represented by proxy, or (ii) more than 50% of
the Fund's outstanding shares, whichever is less.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities, and if consistent with the
Fund's investment objective and policies, repurchase agreements involving such
securities) if as a result more than 25% of the total assets of the Fund would
be invested in the securities of such issuer. This restriction applies to 50% of
the Fund's total assets. For purposes of this limitation, a security is
considered to be issued by the government entity whose assets and revenues
guarantee or back the security. With respect to private activity bonds or
industrial development bonds backed only by the assets and revenues of a
non-governmental user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total assets of
the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that (i) this
limitation does not apply to investments in obligations issued or guaranteed by
the U.S. government or its agencies and instrumentalities and repurchase
agreements involving such securities; and (ii) this limitation shall not apply
to municipal securities or governmental guarantees of municipal securities. In
addition, for purposes of this limitation only, private activity bonds that are
backed only by the assets and revenues of a non-governmental issuer shall not be
deemed to be municipal securities. For purposes of this limitation (i) utilities
will be divided according to their services (for example, gas, gas transmission,
electric and telephone will each be considered a separate industry); and (ii)
wholly-owned finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of their parents.
3. Make loans except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and
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(iii) engage in securities lending as described in this Prospectus and in the
Statement of Additional Information.
The foregoing percentages will apply at the time of the purchase of a security.
Additional investment limitations are set forth in the Statement of Additional
Information.
DESCRIPTION OF PERMITTED INVESTMENTS
The following is a description of certain of the permitted investments for the
Fund.
U.S. TREASURY OBLIGATIONS--The Fund may invest in bills, notes and bonds issued
by the U.S. Treasury and separately traded interest and principal component
parts of such obligations that are transferable through the Federal book-entry
system known as Separately Traded Registered Interest and Principal Securities
("STRIPS") and Coupon Under Book Entry Safekeeping ("CUBES").
RECEIPTS--The Fund may purchase interests in separately traded interest and
principal component parts of U.S. Treasury obligations that are issued by banks
or brokerage firms and are created by depositing U.S. Treasury notes and U.S.
Treasury bonds into a special account at a custodian bank. The custodian holds
the interest and principal payments for the benefit of the registered owners of
the certificates or receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains the register.
Receipts include Treasury Receipts ("TRS"), Treasury Investment Growth Receipts
("TIGRS"), and Certificates of Accrual on Treasury Securities ("CATS").
STRIPS, CUBES, TRS, TIGRS and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
interest rate volatility than interest-paying U.S. Treasury obligations. The
Fund may invest up to 20% of its total assets in STRIPS, CUBES, TRS, TIGRS, and
CATS. See also "Taxes."
CERTIFICATES OF DEPOSIT--Certificates of deposit are negotiable interest bearing
instruments with a specific maturity. Certificates of deposit ("CDs") are issued
by banks and savings and loan institutions in exchange for the deposit of funds
and normally can be traded in the secondary market prior to maturity.
TIME DEPOSITS--Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, a time deposit
("TD") earns a specified rate of interest over a definite period of time;
however, it cannot be traded in the secondary
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market. Time deposits with a withdrawal penalty are considered to be illiquid
securities; therefore, the Fund will not invest more than 15% of its net assets
in such time deposits and other illiquid securities.
BANKERS' ACCEPTANCES--Bankers' acceptances are bills of exchange or time drafts
drawn on and accepted by (i.e., made an obligation of) a commercial bank. They
are used by corporations to finance the shipment and storage of goods and to
furnish dollar exchange. Maturities are generally six months or less.
COMMERCIAL PAPER--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations and other entities.
Maturities on these issues vary from a few days to nine months.
U.S. GOVERNMENT AGENCIES--Certain Federal agencies have been established as
instrumentalities of the U.S. government to supervise and finance specific types
of activities. Select agencies, such as the Government National Mortgage
Association ("Ginnie Mae") and the Export-Import Bank, are supported by the full
faith and credit of the U.S. Treasury; others, such as the Federal National
Mortgage Association ("Fannie Mae"), are supported by the credit of the
instrumentality and have the right to borrow from the U.S. Treasury; others are
supported by the authority of the U.S. government to purchase the agency's
obligations; while still others, such as the Federal Farm Credit Banks and the
Federal Home Loan Mortgage Corporation ("Freddie Mac"), are supported solely by
the credit of the instrumentality itself. No assurance can be given that the
U.S. government would provide financial support to U.S. government sponsored
agencies or instrumentalities if it is not obligated to do so by law.
Obligations of U.S. government agencies include debt issues and mortgage-backed
securities issued or guaranteed by select agencies.
INVESTMENT COMPANY SECURITIES--The Fund may invest up to 5% of its total assets
in the securities of any one investment company, but may not own more than 3% of
the securities of any one investment company or invest more than 10% of its
total assets in the securities of other investment companies. In accordance with
an exemptive order issued to the trust by the SEC, such other investment company
securities may include securities of a money market fund of the Trust, and such
companies may include companies of which the Adviser or a sub-adviser to a fund
of the Trust, or an affiliate of such Adviser or sub-adviser, serves as
investment adviser, administrator or distributor. Because other investment
companies employ an investment adviser, such investment by the Fund may cause
Shareholders to bear duplicate fees. The Adviser will waive its fee attributable
to the assets of the investing fund invested in a money market fund of the
Trust; and, to the extent required by the laws of any state in which shares of
the Trust are sold, the Adviser will waive its fees attributable to assets of
the Fund invested in any investment company.
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which a person
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price
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(including principal and interest) on an agreed upon date within a number of
days from the date of purchase. The custodian or its agent will hold the
security as collateral for the repurchase agreement. Collateral must be
maintained at a value at least equal to 100% of the repurchase price. The Fund
bears a risk of loss in the event the other party defaults on its obligations
and the Fund is delayed or prevented from its right to dispose of the collateral
securities or if the Fund realizes a loss on the sale of the collateral
securities. The Adviser will enter into repurchase agreements on behalf of the
Fund only with financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on guidelines established and
periodically reviewed by the Trustees. Repurchase agreements are considered by
the SEC to be loans under the Investment Company Act of 1940.
REVERSE REPURCHASE AGREEMENTS--The Fund may borrow funds for temporary purposes
by entering into reverse repurchase agreements. Pursuant to such agreements, the
Fund would sell Fund securities to financial institutions such as banks and
broker-dealers and agree to repurchase them at a mutually agreed-upon date and
price. The Fund will enter into reverse repurchase agreements only to avoid
otherwise selling securities during unfavorable market conditions to meet
redemptions. At the time the Fund enters into a reverse repurchase agreement, it
would place in a segregated custodial account assets, such as liquid high grade
debt securities, consistent with the Fund's investment restrictions and having a
value equal to the repurchase price (including accrued interest), and would
subsequently monitor the account to ensure that such equivalent value was
maintained. Reverse repurchase agreements involve the risk that the market value
of securities sold by the Fund may decline below the price at which the Fund is
obligated to repurchase the securities. Reverse repurchase agreements are
considered by the SEC to be borrowings by the Fund under the Investment Company
Act of 1940.
SECURITIES LENDING--In order to generate additional income, the Fund may lend up
to 33% of the securities in which it is invested pursuant to agreements
requiring that the loan be continuously secured by cash, securities of the U.S.
government or its agencies, shares of an investment trust or mutual fund or any
combination of cash and such securities as collateral equal at all times to at
least 100% of the market value plus accrued interest on the securities lent. The
Fund will continue to receive interest on the securities lent while
simultaneously seeking to earn interest on the investment of cash collateral in
U.S. government securities, shares of an investment trust or mutual fund, or
other short-term, highly liquid investments. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of the
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities fail
financially. However, loans will only be made to borrowers deemed by the Adviser
to be of good standing under guidelines established by the Trust's Board of
Trustees and when, in the judgment of the Adviser, the consideration which can
be earned currently from such securities loans justifies the attendant risk. The
Fund will enter into loan arrangements only with counterparties which the
Adviser has deemed to be creditworthy under guidelines established by the Board
of
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Trustees. Loans are subject to termination by the Fund or the borrower at any
time, and therefore, are not considered to be illiquid investments.
VARIABLE AND FLOATING RATE INSTRUMENTS--Certain of the obligations purchased by
the Fund may carry variable or floating rates of interest, may involve a
conditional or unconditional demand feature and may include variable amount
master demand notes. A demand instrument with a demand notice period exceeding
seven days may be considered illiquid if there is no secondary market for such
security; therefore, the Fund will not invest more than 15% of its net assets in
such instruments and other illiquid securities. The interest rates on these
securities may be reset daily, weekly, quarterly or some other reset period, and
may have a floor or ceiling on interest rate changes. There is a risk that the
current interest rate on such obligations may not accurately reflect existing
market interest rates.
There is no limit on the extent to which the Fund may purchase variable and
floating rate instruments that are not illiquid. The Fund will purchase variable
and floating rate instruments to facilitate portfolio liquidity or to permit the
investment of the Fund's assets at a favorable rate of return.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS AND FORWARD COMMITMENTS--The Fund
may purchase securities on a when-issued basis when deemed by the Adviser to
present attractive investment opportunities. When-issued securities are
purchased for delivery beyond the normal settlement date at a stated price and
yield, thereby involving the risk that the yield obtained will be less than that
available in the market at delivery. Although the purchase of securities on a
when-issued basis is not considered leveraging, it has the effect of leveraging.
When the Adviser purchases a when-issued security, the Custodian will set aside
cash or liquid securities to satisfy the purchase commitment. The Fund generally
will not pay for such securities or earn interest on them until received.
Commitments to purchase when-issued securities will not, under normal market
conditions, exceed 40% of the Fund's total assets, and a commitment will not
exceed 180 days. The Fund will only purchase when-issued securities for the
purpose of acquiring portfolio securities and not for speculative purposes.
In a forward commitment transaction, the Fund contracts to purchase securities
for a fixed price at a future date beyond customary settlement time. The Fund is
required to hold and maintain in a segregated account until the settlement date,
cash, U.S. government securities or liquid high-grade debt obligations in an
amount sufficient to meet the purchase price. Alternatively, the Fund may enter
into offsetting contracts for the forward sale of other securities that it owns.
The purchase of securities on a when-issued or forward commitment basis involves
a risk of loss if the value of the security to be purchased declines prior to
the settlement date. Although the Fund would generally purchase securities on a
when-issued or forward commitment basis with the intention of actually acquiring
securities for its portfolio, the Fund may dispose of a when-issued security or
forward commitment prior to settlement if the Adviser deems it appropriate to do
so.
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OPTIONS--The Fund may purchase and write (i.e., sell) call options and put
options on securities and indices, which options are traded on national
securities exchanges. A call option gives the purchaser the right to buy, and
obligates the writer of the option to sell, the underlying security at the
agreed upon exercise (or "strike") price during the option period. A put option
gives the purchaser the right to sell, and obligates the writer to buy, the
underlying security at the strike price during the option period. Purchasers of
options pay an amount, known as a premium, to the option writer in exchange for
the right under the option contract. Option contracts may be written with terms
that would permit the holder of the option to purchase or sell the underlying
security only upon the expiration date of the option. The initial purchase
(sale) of an option contract is an "opening transaction." In order to close out
an option position, the Fund may enter into a "closing transaction," the sale
(purchase) of an option contract on the same security with the same exercise
price and expiration date as the option contract originally opened.
The Fund may purchase put and call options in hedging transactions to protect
against a decline in the market value of the securities in the Fund (e.g., by
the purchase of a put option) and to protect against an increase in the cost of
fixed-income securities that the Fund may seek to purchase in the future (e.g.,
by the purchase of a call option). In the event that paying premiums for put and
call options, together with price movements in the underlying securities, are
such that exercise of the options would not be profitable for the Fund, losses
of the premiums paid may be offset by an increase in the value of the Fund's
securities (in the case of a purchase of put options) or by a decrease in the
cost of acquisition of securities by the Fund (in the case of a purchase of call
options).
The Fund also may write secured put and covered call options as a means of
increasing the yield on the Fund and as a means of providing limited protection
against decreases in market value of the Fund.
There are risks associated with options transactions, including the following:
(i) the success of a hedging strategy may depend on the ability of the Adviser
to predict movements in the prices of the individual securities, fluctuations in
markets and movements in interest rates; (ii) there may be an imperfect or no
correlation between the changes in market value of the securities held by the
Fund and the prices of options; (iii) there may not be a liquid secondary market
for options; and (iv) while the Fund will receive a premium when it writes
covered call options, it may not participate fully in a rise in the market value
of the underlying security. It is expected that the Fund will only engage in
option transactions with respect to permitted investments and related indices.
Generally, the policy of the Fund, in order to avoid the exercise of an option
sold by it, will be to cancel its obligation under the option by entering into a
closing purchase transaction, if available, unless selling (in the case of a
call option) or purchasing (in the case of a put option) the underlying
securities is determined to be in the Fund's interest. A closing purchase
transaction consists of the Fund purchasing an option having the same terms as
the option sold
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by the Fund, and has the effect of cancelling the Fund's position as a seller.
The premium which the Fund will pay in executing a closing purchase transaction
may be higher (or lower) than the premium received when the option was sold,
depending in large part upon the relative price of the underlying security at
the time of each transaction. To the extent options sold by the Fund are
exercised and the Fund either delivers securities to the holder of a call option
or liquidates securities as a source of funds to purchase securities put to the
Fund, the Fund's turnover rate will increase, which would cause the Fund to
incur additional brokerage expenses.
During the option period, the Fund, as a covered call writer, gives up the
potential appreciation above the exercise price should the underlying security
rise in value, and the Fund, as a covered put writer, retains the risk of loss
should the underlying security decline in value. For the covered call writer,
substantial appreciation in the value of the underlying security would result in
the security being "called away" at the strike price of the option which may be
substantially below the fair market value of such security. For the covered put
writer, substantial depreciation in the value of the underlying security would
result in the security being "put to" the writer at the strike price of the
option which may be substantially in excess of the fair market value of such
security. If a covered call option or a covered put option expires unexercised,
the writer realizes a gain, and the buyer a loss, in the amount of the premium.
The SEC requires that obligations of investment companies such as the Fund, in
connection with option sale positions, must comply with certain segregation or
coverage requirements, which are more fully described in the Statement of
Additional Information.
The Fund will only write covered call options on its securities and will limit
such activities to provide that the aggregate market value of such options and
the Fund's obligations under such written puts does not exceed 25% of the Fund's
net assets as of the time such options are entered into by the Fund.
FUTURES CONTRACTS AND RELATED OPTIONS--The Fund may enter into futures
contracts, options on futures contracts, index futures and options thereon that
are traded on an exchange regulated by the Commodities Futures Trading
Commission ("CFTC") if, to the extent that such futures and options are not for
"bona fide hedging purposes" (as defined by the CFTC), the aggregate initial
margin and premiums on such positions (excluding the amount by which options are
in the money) do not exceed 5% of the Fund's total assets at current value. The
Fund, however, may invest more than such amount for bona fide hedging purposes,
and also may invest more than such amount if it obtains authority to do so from
the appropriate regulatory agencies without rendering the Fund a commodity pool
operator or adversely affecting its status as an investment company for Federal
securities law or income tax purposes.
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The Fund may buy and sell futures contracts and related options to manage its
exposure to changing interest rates and security prices. Some futures
strategies, including selling futures, buying puts and writing calls, may reduce
the Fund's exposure to price fluctuations. Other strategies, including buying
futures, writing puts and buying calls, tend to increase market exposure.
Futures and options may be combined with each other in order to adjust the risk
and return characteristics of the overall portfolio. The Fund expects to enter
into these transactions to "lock in" a return or spread on a particular
investment or portion of its assets, to protect against any increase in the
price of securities the Fund anticipates purchasing at a later date, or for
other risk management strategies.
Options and futures can be volatile instruments, and involve certain risks. If
the Adviser applies a hedge at an inappropriate time or judges interest rates
incorrectly, options and futures strategies may lower the Fund's return. The
Fund also could experience losses if the prices of its options and futures
positions were poorly correlated with its other instruments, or if it could not
close out its positions because of an illiquid secondary market.
Typically, investment in these contracts requires the Fund to deposit with the
applicable exchange or other specified financial intermediary as a good faith
deposit for its obligations, known as "initial margin," an amount of cash or
specified debt securities that initially is 1%-15% of the face amount of the
contract and that thereafter fluctuates on a periodic basis as the value of the
contract fluctuates. Thereafter, the Fund must make additional deposits equal to
any net losses due to unfavorable price movements of the contract and will be
credited with an amount equal to any net gains due to favorable price movements.
These additional deposits or credits are calculated and required daily and are
known as "variation margin."
The SEC requires that when an investment company such as the Fund effects
transactions of the foregoing nature, it must either segregate cash or high
quality, readily marketable Fund securities with its custodian in the amount of
its obligations under the foregoing transactions or must cover such obligations
by maintaining positions in portfolio securities, futures contracts or options
that would serve to satisfy or offset the risk of such obligations. When
effecting transactions of the foregoing nature, the Fund will comply with such
segregation or cover requirements. No limitation exists on the amount of the
Fund's assets that may be used to comply with such segregation or cover
requirements.
The Fund also may engage in straddles and spreads with respect to 15% of its
total assets. In a straddle transaction, the Fund either buys a call and a put
or sells a call and a put on the same security. In a spread, the Fund purchases
and sells a call or a put. The Fund will sell a straddle when the Adviser
believes the price of a security will be stable. The Fund will receive a premium
on the sale of the put and the call. A spread permits the Fund to make a hedged
investment that the price of a security will increase or decline.
STRUCTURED INSTRUMENTS--The Fund may invest, from time to time, in one or more
structured instruments. Structured instruments are debt securities issued by
agencies of the
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U.S. government (such as the Student Loan Marketing Association ("Sallie Mae"),
Ginnie Mae, Fannie Mae, and Freddie Mac), banks, corporations, municipalities
and other business entities whose interest and/or principal payments are indexed
to certain specific foreign currency exchange rates, interest rates, or one or
more other reference indexes. Structured instruments frequently are assembled in
the form of medium-term notes, but a variety of forms are available and may be
used in particular circumstances.
The terms of such structured instruments provide that their principal and/or
interest payments are adjusted upwards or downwards to reflect changes in the
reference index while the structured instruments are outstanding. In addition,
the reference index may be used in determining when the principal is redeemed.
As a result, the interest and/or principal payments that may be made on a
structured product may vary widely, depending on a variety of factors, including
the volatility of the reference index and the effect of changes in the reference
index on principal and/or interest payments.
While structured instruments may offer the potential for a favorable rate of
return, from time to time, they also entail certain risks. Structured
instruments may be less liquid than other debt securities, and the price of
structured instruments may be more volatile. If the value of the reference index
changes in a manner other than that expected by the Adviser, principal and/or
interest payments on the structured instrument may be substantially less than
expected. The Fund will only invest in structured securities that are consistent
with the Fund's investment objective, policies and restrictions and the
Adviser's outlook on market conditions. In some cases, depending on the terms of
the reference index, a structured instrument may provide that the principal
and/or interest payments may be adjusted below zero; however, the Fund will not
invest in structured instruments if the terms of the structured instrument
provide that the Fund may be obligated to pay more than its initial investment
in the structured instrument, or to repay any interest or principal that has
already been collected or paid back. In addition, many structured instruments
may not be registered under the Federal securities laws. In that event, the
Fund's ability to resell such a structured instrument may be more limited than
its ability to resell other portfolio securities. The Fund will treat such
instruments as illiquid, and will limit its investments in such instruments to
no more than 15% of its total assets, when combined with all other illiquid
investments of the Fund. Structured instruments that are registered under
Federal securities laws may be treated as liquid. In addition, although
structured instruments may be sold in the form of a corporate debt obligation,
they may not have some of the protection against counterparty default that may
be available with respect to publicly traded debt securities (i.e., the
existence of a trust indenture). In that respect, the risks of default
associated with structured instruments may be similar to those associated with
swap contracts. See "Swaps, Caps and Floors."
SWAPS, CAPS AND FLOORS--In order to protect the value of the Fund from interest
rate fluctuations and to hedge against fluctuations in the floating rate market
in which the Fund's investments are traded, the Fund may enter into swaps, caps,
and floors on various securities (such as U.S. government securities),
securities indexes, interest rates, prepayment rates,
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foreign currencies or other financial instruments or indexes, for both hedging
and non-hedging purposes. While swaps, caps, and floors (sometimes hereinafter
collectively referred to as "swap contracts") are different from futures
contracts (and options on futures contracts) in that swap contracts are
individually negotiated with specific counterparties, the Fund will use swap
contracts for purposes similar to the purposes for which it uses options,
futures, and options on futures. Those uses of swap contracts (i.e., risk
management and hedging) present the Fund with risks and opportunities similar to
those associated with options contracts, futures contracts, and options on
futures. See "Futures Contracts and Related Options" and "Options."
The Fund may enter into these transactions to manage its exposure to changing
interest rates and other market factors. Some transactions may reduce the Fund's
exposure to market fluctuations while others may tend to increase market
exposure.
Swap contracts typically involve an exchange of obligations by two sophisticated
parties. For example, in an interest rate swap, the Fund may exchange with
another party their respective rights to receive interest, such as an exchange
of fixed rate payments for floating rate payments. Currency swaps involve the
exchange of respective rights to make or receive payments in specified
currencies. Mortgage swaps are similar to interest rate swaps in that they
represent commitments to pay and receive interest. The notional principal
amount, however, is tied to a reference pool or pools of mortgages.
Caps and floors are variations on swaps. The purchase of a cap entitles the
purchaser to receive a principal amount from the party selling the cap to the
extent that a specified index exceeds a predetermined interest rate or amount.
The purchase of an interest rate floor entitles the purchaser to receive
payments on a notional principal amount from the party selling the floor to the
extent that a specified index falls below a predetermined interest rate or
amount. Caps and floors are similar in many respects to over-the-counter options
transactions, and may involve investment risks that are similar to those
associated with options transactions and options on futures contracts.
Because swap contracts are individually negotiated, they remain the obligation
of the respective counterparties, and there is a risk that a counterparty will
be unable to meet its obligations under a particular swap contract. If a
counterparty defaults on a swap contract with the Fund, the Fund may suffer a
loss. To address this risk, the Fund will usually enter into interest rate swaps
on a net basis, which means that the two payment streams (one from the Fund to
the counterparty, one to the Fund from the counterparty) are netted out, with
the Fund receiving or paying, as the case may be, only the net amount of the two
payments. Interest rate swaps do not involve the delivery of securities, other
underlying assets, or principal, except for purposes of collateralization, as
discussed below. Accordingly, the risk of loss with respect to interest rate
swaps entered into on a net basis would be limited to the net amount of the
interest payments that the Fund is contractually obligated to make. If the other
party to an interest rate swap defaults, the Fund's risk of loss consists of the
net amount
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of interest payments that the Fund is contractually entitled to receive. To
protect against losses related to counterparty default, the Fund may enter into
swaps that require transfers of collateral for changes in market value. In
contrast, currency swaps and other types of swaps may involve the delivery of
the entire principal value of one designated currency or financial instrument in
exchange for the other designated currency or financial instrument. Therefore,
the entire principal value of such swaps may be subject to the risk that the
other party will default on its contractual delivery obligations.
In addition, because swap contracts are individually negotiated and ordinarily
non-transferable, there also may be circumstances in which it would be
impossible for the Fund to close out its obligations under the swap contract
prior to its maturity. Under such circumstances, the Fund might be able to
negotiate another swap contract with a different counterparty to offset the risk
associated with the first swap contract. Unless the Fund is able to negotiate
such an offsetting swap contract, however, the Fund could be subject to
continued adverse developments, even after the Adviser has determined that it
would be prudent to close out or offset the first swap contract.
The Fund will not enter into any mortgage swap, interest rate swap, cap or floor
transaction unless the unsecured commercial paper, senior debt, or the claims
paying ability of the other party thereto is rated in the highest or second
highest rating category by at least one NRSRO at the time of investment, or, if
unrated, determined by the Adviser to be of comparable quality.
The use of swaps involves investment techniques and risks different from and
potentially greater than those associated with ordinary portfolio securities
transactions. If the Adviser is incorrect in its expectations of market values,
interest rates, or currency exchange rates, the investment performance of the
Fund would be less favorable than it would have been if this investment
technique were not used.
The staff of the SEC is presently considering its position with respect to
swaps, caps and floors as senior securities. Pending a determination by the
staff, the Fund will either treat swaps, caps and floors as being subject to its
senior securities restrictions or will refrain from engaging in swaps, caps and
floors. Once the staff has expressed a position with respect to swaps, caps and
floors, the Fund intends to engage in swaps, caps and floors, if at all, in a
manner consistent with such position. To the extent the net amount of an
interest rate or mortgage swap is held in a segregated account, consisting of
cash or liquid, high grade debt securities, the Adviser believes that swaps do
not constitute senior securities under the Investment Company Act of 1940 and,
accordingly, will not treat them as being subject to the Fund's borrowing
restrictions. The net amount of the excess, if any, of the Fund's obligations
over its entitlements with respect to each interest rate swap will be accrued on
a daily basis and an amount of cash or liquid securities having an aggregate net
asset value at least equal to the accrued excess will be maintained in a
segregated account by the Fund's Custodian.
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The Fund will generally limit its investments in swaps, caps and floors to 25%
of its total assets.
NEW FINANCIAL PRODUCTS--New options and futures contracts and other financial
products, and various combinations thereof, continue to be developed and the
Fund may invest in any such options, contracts and products as may be developed
to the extent consistent with its investment objective, policies and
restrictions and the regulatory requirements applicable to investment companies.
These various products may be used to adjust the risk and return characteristics
of the Fund's portfolio of investments. These various products may increase or
decrease exposure to security prices, interest rates, commodity prices, or other
factors that affect security values, regardless of the issuer's credit risk. If
market conditions do not perform consistent with expectations, the performance
of the Fund will be less favorable than it would have been if these products
were not used. In addition, losses may occur if counterparties involved in
transactions do not perform as promised. These products may expose the Fund to
potentially greater return as well as potentially greater risk of loss than more
traditional fixed income investments.
The Fund will generally limit its investments in new financial products to 25%
of its total assets.
MUNICIPAL SECURITIES--The Fund may invest in municipal securities. Municipal
securities consist of (i) debt obligations issued by or on behalf of public
authorities to obtain funds to be used for various public facilities, for
refunding outstanding obligations, for general operating expenses, and for
lending such funds to other public institutions and facilities; and (ii) certain
private activity and industrial development bonds issued by or on behalf of
public authorities to obtain funds to provide for the construction, equipment,
repair, or improvement of privately operated facilities. Municipal notes include
general obligation notes, tax anticipation notes, revenue anticipation notes,
bond anticipation notes, certificates of indebtedness, demand notes and
construction loan notes and participation interests in municipal notes.
Municipal bonds include general obligation bonds, revenue or special obligation
bonds, private activity and industrial development bonds, and participation
interests in municipal bonds. General obligation bonds are backed by the taxing
power of the issuing municipality. Revenue bonds are backed by the revenues of a
project or facility, tolls from a toll bridge for example. The payment of
principal and interest on private activity and industrial development bonds
generally is dependent solely on the ability of the facility's user to meet its
financial obligations and the pledge, if any, of real and personal property so
financed as security for such payment.
Municipal securities may include obligations of municipal housing authorities
and single-family mortgage revenue bonds. Weaknesses in Federal housing subsidy
programs and their administration may result in a decrease of subsidies
available for payment of principal
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and interest on housing authority bonds. Economic developments, including
fluctuations in interest rates and increasing construction and operating costs,
may also adversely impact revenues of housing authorities. In the case of some
housing authorities, inability to obtain additional financing could also reduce
revenues available to pay existing obligations. Single-family mortgage revenue
bonds are subject to extraordinary mandatory redemption at par in whole or in
part from the proceeds derived from prepayments of underlying mortgage loans and
also from the unused proceeds of the issue within a stated period which may be
within a year from the date of issue.
Municipal leases are obligations issued by state and local governments or
authorities to finance the acquisition of equipment and facilities and may be
considered to be illiquid. They may take the form of a lease, an installment
purchase contract, a conditional sales contract, or a participation interest in
any of the above. The Fund will limit its investment in municipal leases to no
more than 5% of its total assets. The Board of Trustees is responsible for
determining the credit quality of unrated municipal leases, on an ongoing basis,
including an assessment of likelihood that the lease will not be cancelled.
The exclusion from gross income for Federal income tax purposes for certain
housing authority bonds depends on qualification under relevant provisions of
the Code and on other provisions of Federal law. These provisions of Federal law
contain certain ongoing requirements relating to the cost and location of the
residences financed with the proceeds of the single-family mortgage bonds and
the income levels of tenants of the rental projects financed with the proceeds
of the multi-family housing bonds. While the issuers of the bonds, and other
parties, including the originators and servicers of the single-family mortgages
and the owners of the rental projects financed with the multi-family housing
bonds, covenant to meet these ongoing requirements and generally agree to
institute procedures designed to insure that these requirements are met, there
can be no assurance that these ongoing requirements will be consistently met.
The failure to meet these requirements could cause the interest on the bonds to
become taxable, possibly retroactively from the date of issuance, thereby
reducing the value of the bonds and subjecting Shareholders to unanticipated tax
liabilities. Furthermore, any failure to meet these ongoing requirements might
constitute an event of default under the applicable mortgage or permit the
holder to accelerate payment of the bond or require the issuer to redeem the
bond. In any event, where the mortgage is insured by the Federal Housing
Administration ("FHA"), the consent of the FHA may be required before insurance
proceeds would become payable to redeem the mortgage subsidy bonds.
PARTICIPATION INTERESTS--The Fund may purchase interests in municipal securities
from financial institutions such as commercial and investment banks, savings and
loan associations and insurance companies. These interests may take the form of
participations, beneficial interests in a trust, partnership interests, or any
other form of indirect ownership that allows the Fund to treat the income from
the investment as exempt from Federal income tax. The Fund invests in these
participation interests in order to obtain credit enhancement or demand
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features that would not be available through direct ownership of the underlying
municipal securities.
DEMAND FEATURES--The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities or by
another third party, and may not be transferred separately from the underlying
security.
The underlying municipal securities subject to a put may be sold at any time at
the market rates. However, unless the put was an integral part of the security
as originally issued, it may not be marketable or assignable; therefore, the put
would only have value to the Fund. The Fund expects that it will generally
acquire puts only where the puts are available without the payment of any direct
or indirect consideration. However, if advisable or necessary, in certain cases
a premium may be paid for put features. A premium paid will have the effect of
reducing the yield otherwise payable on the underlying security. The purpose of
engaging in transactions involving puts is to maintain flexibility and liquidity
to permit the Fund to meet redemption requests and remain as fully invested as
possible in municipal securities. The Fund will limit its put transactions to
institutions that the Adviser believes present minimal credit risk.
There is no limit to the percentage of portfolio securities that may be
purchased subject to a put. However, the Fund will not acquire a put which was
not an integral part of the security as originally issued if such acquisition
would cause the aggregate value of all such puts held in the Fund to exceed 1/2
of 1% of the value of the Fund's total assets.
Under a "stand-by commitment," a dealer would agree to purchase, at the Fund's
option, specified municipal securities at a specified price. When entering into
stand-by commitments, the Fund will set aside sufficient assets invested in cash
equivalent securities to pay for all stand-by commitments on their scheduled
delivery dates. The Fund will acquire these commitments solely to facilitate
portfolio liquidity and does not intend to exercise its rights thereunder for
trading purposes. Stand-by commitments may also be referred to as put options.
The Fund will limit its investment in stand-by commitments to 25% of total
assets.
ZERO COUPON OBLIGATIONS--The Fund may acquire zero coupon obligations, which
have greater price volatility than coupon obligations and which will not result
in the payment of interest until maturity. The Fund will purchase these
obligations to permit investment of assets at a more favorable rate of return.
-41-
<PAGE> 99
DESCRIPTION OF RATINGS
The following descriptions are summaries of published ratings.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
The following descriptions of commercial paper ratings have been published by
Standard & Poor's Corporation ("S&P"), Moody's Investors Service ("Moody's"),
Fitch's Investors Service ("Fitch"), Duff and Phelps ("Duff") and IBCA Limited
("IBCA"), respectively.
Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1+, 1 and 2 to indicate the relative degree of safety. Issues rated A-1+
are those with an "overwhelming degree" of credit protection. Those rated A-1
reflect a "very strong" degree of safety regarding timely payment. Those rated
A-2 reflect a high degree of safety regarding timely payment but not as high as
A-1.
Commercial paper issues rated Prime-1 and Prime-2 by Moody's are judged by
Moody's to be of the "highest" quality and "higher" quality, respectively, on
the basis of relative repayment capacity.
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the second
highest commercial paper rating assigned by Fitch which reflects an assurance of
timely payment only slightly less in degree than the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by ample asset protection. Risk
factors are minor. Paper rated Duff-2 is regarded as having good certainty of
timely payment, good access to capital markets and sound liquidity factors and
company fundamentals. Risk factors are small.
The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. Those obligations rated A1 + are supported
by the highest capacity for timely repayment. Obligations rated A2 are supported
by a strong capacity for timely repayment, although such capacity may be
susceptible to adverse changes in business, economic or financial conditions.
-42-
<PAGE> 100
SHORT-TERM DEBT RATINGS
Thomson BankWatch, Inc. ("TBW") ratings are based upon a qualitative and
quantitative analysis of all segments of the organization including, where
applicable, holding company and operating subsidiaries.
BankWatch(TM) Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper, other senior short-term
obligations and deposit obligations of the entities to which the rating has been
assigned.
The TBW Short-Term Ratings apply only to unsecured instruments that have a
maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an untimely
payment of principal or interest.
TBW-1 The highest category; indicates a very high degree of
likelihood that principal and interest will be paid on a
timely basis.
TBW-2 The second highest category; while the degree of safety
regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for
issues rated "TBW-1."
TBW-3 The lowest investment grade category; indicates that while
more susceptible to adverse developments (both internal and
external) than obligations with higher ratings, capacity to
service principal and interest in a timely fashion is
considered adequate.
TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
DESCRIPTION OF CORPORATE/MUNICIPAL BOND RATINGS
The following descriptions of S&P's and Moody's corporate and municipal bond
ratings have been published by S&P and Moody's, respectively.
-43-
<PAGE> 101
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong and, in the majority of instances they
differ from AAA issues only in a small degree. Debt rated A has a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories. Debt rated BBB is regarded as
having an adequate capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.
Bonds that are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by all
standards. Together with bonds rated Aaa, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.
Bonds that are rated A possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
Bonds which are rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
Moody's highest rating for state, municipal and other short-term notes is MIG-1
and VMIG-1. Short-term municipal securities rated MIG-1 or VMIG-1 are of the
best quality. They have strong protection from established cash flows of funds
for their servicing or from established and broad-based access to the market for
refinancing or both. Short-term municipal securities
-44-
<PAGE> 102
rated MIG-2 and VMIG-2 are of high quality. Margins of protection are ample
although not so large as in the preceding group.
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating. The following criteria will be used in making that assessment:
- --Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
- --Source of Payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
Note rating symbols are as follows:
SP-1 Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
PERFORMANCE
From time to time, the Fund may advertise yield, total return and/or
distribution rate. These figures will be based on historical earnings and are
not intended to indicate future performance. The yield of the Fund refers to the
annualized income generated by an investment in the Fund over a specified 30-day
period. The yield is calculated by assuming that the income generated by the
investment during that period is generated over a one-year period and is shown
as a percentage of the investment.
Total return is the change in value of an investment in the Fund over a given
period, assuming reinvestment of any dividends and capital gains. A cumulative
total return reflects an actual rate of return over a stated period of time. An
average annual total return is a hypothetical rate of return that, if achieved
annually, would have produced the same cumulative total return if performance
had been constant over the entire period. Average annual total returns smooth
out variations in performance; they are not the same as actual year-by-year
results.
The distribution rate is computed by dividing the total amount of the dividends
per share paid out during the past period by the maximum offering price or
month-end net asset value depending on the class of the Fund. This figure is
then "annualized" (multiplied by 365 days and divided by the applicable number
of days in the period). Funds with a front-end sales
-45-
<PAGE> 103
charge would incorporate the offering price into the distribution yield in place
of month-end net asset value.
Distribution rate is a measure of the level of income paid out in cash to
Shareholders over a specified period. It differs from yield and total return and
is not intended to be a complete measure of performance. Furthermore, the
distribution rate may include return of principal and/or capital gains. Total
return is the change in value of a hypothetical investment over a given period
assuming reinvestment of dividends and capital gain distributions. The yield
refers to the cumulative 30-day rolling net investment income, divided by
maximum offering price and multiplied by average shares outstanding during this
period. See the Statement of Additional Information.
The Fund also may advertise a "taxable equivalent yield" which is calculated by
taking into account the investor's current tax bracket. This is the yield the
investor would need to earn from a taxable investment in order to realize an
"after-tax" benefit equal to the tax-free yield provided by the Fund. See the
Statement of Additional Information.
The Trust will include information on all classes of shares of the Fund in any
advertisement or information including performance data for the Fund. The
performance for Fiduciary Class shares may be higher than for Class A shares and
Class B shares because Fiduciary Class shares are not subject to sales charges
and distribution expenses.
The performance of each class of the Fund may from time to time be compared to
that of other mutual funds tracked by mutual fund rating services, to that of
broad groups of comparable mutual funds or to that of unmanaged indices that may
assume investment of dividends but do not reflect deductions for administrative
and management costs. In addition, the performance of each class of the Fund may
be compared to other funds or to relevant indices that may calculate total
return without reflecting sales charges; in which case, the Fund may advertise
its total return in the same manner. If reflected, sales charges would reduce
these total return calculations.
TAXES
The following summary of Federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial, or
administrative action. No attempt has been made to present a complete
explanation of the Federal, state, local or foreign tax treatment of the Fund or
its Shareholders. Accordingly, Shareholders are urged to consult their tax
advisers regarding specific questions as to the tax consequences of investing in
the Fund.
-46-
<PAGE> 104
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for Federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify as a
"regulated investment company" for Federal income tax purposes and to meet all
other requirements that are necessary for it to be relieved of Federal taxes on
that part of its net investment income and net capital gains (the excess of net
long-term capital gain over net short-term capital loss) that is distributed to
Shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute substantially all of its net investment income
(including net short-term capital gain) to Shareholders of each class of shares
of the Fund on at least an annual basis. If, at the close of each quarter of its
taxable year, at least 50% of the value of the Fund's assets consists of
obligations the interest on which is excludable from gross income, the Fund may
pay "exempt-interest dividends" to Shareholders. Those dividends constitute the
portion of the aggregate dividends as designated by the Fund, equal to the
excess of the excludable interest over certain amounts disallowed as deductions.
Exempt-interest dividends are generally excludable from a Shareholder's gross
income for regular Federal income tax purposes. However, the receipt of
exempt-interest dividends may cause persons receiving Social Security or
Railroad Retirement benefits to be taxed on a portion of such benefits. In
addition, the receipt of exempt-interest dividends may result in liability for
Federal alternative minimum tax and for state and local taxes, both for
individual and corporate Shareholders. See the Statement of Additional
Information.
Current Federal law limits the types and volume of bonds qualifying for Federal
income tax exemption of interest, which may have an effect on the ability of the
Fund to purchase sufficient amounts of tax-exempt securities to satisfy the
Code's requirements for the payment of "exempt-interest dividends."
Any dividends attributable to the Fund's taxable investment income (if any) will
be taxable to Shareholders as ordinary income (whether received in cash or
additional shares) to the extent of the Fund's earnings and profits and will not
qualify for the corporate dividends-received deduction. Any distributions of net
long-term capital gains will be taxable to Shareholders as such regardless of
how long the Shareholder has held shares.
Interest on indebtedness incurred or continued by a Shareholder in order to
purchase shares is not deductible. Furthermore, entities or persons who are
"substantial users" (or persons related to "substantial users") of facilities
financed by "private activity bonds" or certain industrial development bonds
should consult their tax advisers before purchasing shares.
The Fund will make annual reports to Shareholders of the Federal income tax
status of distributions.
-47-
<PAGE> 105
Certain securities purchased by the Fund (such as STRIPS, CUBES, TRS, TIGRS and
CATS), as defined in the "Description of Permitted Investments," are sold at
original issue discount and thus do not make periodic cash interest payments.
The Fund will be required to include as part of its current income the imputed
interest on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because the Fund distributes
substantially all of its net investment income to its Shareholders (including
such imputed interest), the Fund may have to sell portfolio securities in order
to generate the cash necessary for the required distributions. Such sales may
occur at a time when the Adviser would not have chosen to sell such securities
and may result in a taxable gain or loss.
Dividends declared by the Fund in October, November or December of any year and
payable to Shareholders of record on a date in such a month will be deemed to
have been paid by the Fund and received by Shareholders on December 31 of that
year, if paid by the Fund at any time during the following January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for Federal excise tax.
Dividends received by a Shareholder that are derived from the Fund's investments
in U.S. government obligations may not be entitled to the exemptions from state
and local income taxes that would be available if the Shareholder had purchased
U.S. government obligations directly. The Fund will inform Shareholders annually
of the percentage of income and distributions derived from U.S. government
obligations. Shareholders should consult their tax advisers regarding the state
and local tax treatment of the dividends received from the Fund.
Sale, exchange, or redemption of Fund shares by a Shareholder will generally be
a taxable event to such Shareholder.
LOUISIANA TAXES
The Trust has obtained a ruling from the Louisiana Department of Revenue and
Taxation to the effect that distributions to shareholders of The One Group(R)
Louisiana Municipal Bond Fund who are Louisiana residents, which are derived
from interest on tax-exempt obligations of the State of Louisiana or its
political subdivisions and certain obligations of the United States or its
territories, will not be subject to Louisiana income tax.
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<PAGE> 106
Investment Adviser and Sub-Administrator
Banc One Investment Advisors Corporation
774 Park Meadow Road
Columbus, OH 43271-0211
Distributor
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
TOG-F-063
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<PAGE> 107
THE ONE GROUP(R) VALUE GROWTH FUND PROSPECTUS
Investment Adviser: BANC ONE INVESTMENT ADVISORS CORPORATION
The One Group(R) (the "Trust") is a mutual fund seeking to provide a convenient
and economical means of investing in one or more professionally managed
portfolios of securities. This Prospectus relates to The One Group(R) Value
Growth Fund Class A, Class B and Fiduciary Class shares.
THE ONE GROUP(R) VALUE GROWTH FUND (THE "FUND") SEEKS LONG-TERM CAPITAL GROWTH
AND GROWTH OF INCOME WHILE, AS A SECONDARY OBJECTIVE, PROVIDING A MODERATE LEVEL
OF CURRENT INCOME.
Class A and Class B shares are offered to the general public.
Fiduciary Class shares are offered to institutional investors, including
affiliates of BANC ONE CORPORATION and any bank, depository institution,
insurance company, pension plan or other organization authorized to act in
fiduciary, advisory, agency, custodial or similar capacities (each an
"Authorized Financial Organization").
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY BANC ONE CORPORATION OR ITS BANK OR NON-BANK AFFILIATES. THE TRUST'S SHARES
ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY
ANY OTHER GOVERNMENTAL AGENCY OR GOVERNMENT SPONSORED AGENCY OF THE FEDERAL
GOVERNMENT OR ANY STATE. AN INVESTMENT IN MUTUAL FUND SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. BANC ONE
INVESTMENT ADVISORS CORPORATION RECEIVES FEES FROM THE FUND FOR INVESTMENT
ADVISORY AND OTHER SERVICES.
This Prospectus sets forth concisely the information about the Trust that a
prospective investor should know before investing. Investors are advised to read
this Prospectus and retain it for future reference. A Statement of Additional
Information dated February 7, 1996 has been filed with the Securities and
Exchange Commission and is available without charge through the Distributor, The
One Group Services Company, 3435 Stelzer Road, Columbus, OH 43219 or by calling
1-800-480-4111 during business hours. The Statement of Additional Information is
incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR
<PAGE> 108
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
February 7, 1996
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<PAGE> 109
TABLE OF CONTENTS
SUMMARY.........................................................
ABOUT THE FUND..................................................
Expense Summary...............................................
Financial Highlights..........................................
The Fund......................................................
Investment Objective..........................................
Investment Policies...........................................
HOW TO DO BUSINESS WITH THE ONE GROUP(R)........................
How to Invest in The One Group(R).............................
Alternative Sales Arrangements................................
Exchanges.....................................................
Redemptions...................................................
FUND MANAGEMENT.................................................
The Adviser...................................................
The Distributor...............................................
The Administrator.............................................
The Transfer Agent and Custodian..............................
Counsel and Independent Accountants...........................
OTHER INFORMATION...............................................
The Trust.....................................................
Other Investment Policies.....................................
Description of Permitted Investments..........................
Description of Ratings........................................
Performance...................................................
Taxes.........................................................
-i-
<PAGE> 110
SUMMARY
The One Group(R) (the "Trust") is an open-end management investment company that
provides a convenient way to invest in professionally managed portfolios of
securities. The following provides basic information about the Class A, Class B
and Fiduciary Class shares of The One Group(R) Value Growth Fund.
WHAT IS THE INVESTMENT OBJECTIVE? The Fund seeks long-term capital growth and
growth of income while, as a secondary objective, providing a moderate level of
current income.
WHAT ARE THE PERMITTED INVESTMENTS? The Fund will invest primarily in a
portfolio of common stocks, debt securities, preferred stocks, convertible
securities, warrants and other equity securities of companies that show the
potential for growth of earnings over time. Equity securities such as those in
which the Fund may invest are more volatile and carry more risk than some other
forms of investment. Accordingly, the net asset value per share of the Fund may
decrease over time. The Fund may only invest in a select few derivatives; their
characteristics and limitations on their use are more fully described in
"Description of Permitted Investments." There are many different types of
derivative securities with varying degrees of potential risk and return. See
"Investment Policies."
WHO IS THE ADVISER? Banc One Investment Advisors Corporation, an indirect
subsidiary of BANC ONE CORPORATION, serves as the Adviser of the Trust. The
Adviser is entitled to a fee for advisory services provided to the Trust. The
Adviser may voluntarily agree to waive a part of its fees. See "The Adviser" and
"Expense Summary."
WHO IS THE ADMINISTRATOR? The One Group Services Company serves as the
Administrator of the Trust. The Administrator is entitled to a fee for services
provided to the Trust. Banc One Investment Advisors Corporation serves as the
Sub-Administrator of the Trust, pursuant to an agreement with the Administrator
for which Banc One Investment Advisors Corporation receives a fee paid by the
Administrator. See "The Administrator" and "Expense Summary."
WHO IS THE TRANSFER AGENT AND CUSTODIAN? State Street Bank and Trust Company
serves as Transfer Agent and Custodian for the Trust for which services it
receives a fee. Bank One Trust Company, N.A. serves as Sub-Custodian for the
Trust, for which services it receives a fee. See "The Transfer Agent and
Custodian."
WHO IS THE DISTRIBUTOR? The One Group Services Company acts as Distributor of
the Trust's shares. The Distributor is entitled to fees for distribution
services for the Class A and Class B shares of the Fund. No compensation is paid
to the Distributor for distribution services for the Fiduciary Class shares of
the Fund. See "The Distributor."
<PAGE> 111
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions of shares of the
Fund may be made through the Distributor on any day that the New York Stock
Exchange is open for trading ("Business Days"). See "How to Invest in The One
Group(R)" and "Redemptions."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is declared on the last Business Day of
each month as a dividend for Shareholders of record as of the close of business
on that day and is distributed in the form of periodic dividends to such
Shareholders of the Fund on the first Business Day of each month. Any capital
gains are distributed at least annually. Distributions are paid in additional
shares of the same class unless the Shareholder elects to take the payment in
cash. See "Dividends."
-2-
<PAGE> 112
ABOUT THE FUND
EXPENSE SUMMARY--THE ONE GROUP(R) VALUE GROWTH FUND
<TABLE>
<CAPTION>
FIDUCIARY
CLASS A CLASS B CLASS
------- ------- ---------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none 5.00% none
Redemption Fees none none none
Exchange Fees none none none
ANNUAL OPERATING EXPENSES(2)
(as a percentage of average daily
net assets)
Investment Advisory Fees(4) .65% .65% .65%
12b-1 Fees (after fee waiver)(3) .25% 1.00% none
Other Expenses .31% .31% .31%
TOTAL OPERATING EXPENSES(4) 1.21% 1.96% .96%
</TABLE>
(1) A person who purchases shares through an account with a financial
institution or broker-dealer may be charged separate transaction fees
by the financial institution or broker-dealer. In addition, a wire
redemption charge, currently $7.00, is deducted from the amount of a
wire redemption payment made at the request of a Shareholder.
(2) The expense information in the table has been restated to reflect
current fees that would have been applicable had they been in effect
during the previous fiscal year.
(3) Absent the voluntary waiver of fees under the Trust's Distribution and
Shareholder Services Plans, 12b-1 fees (as a percentage of average
daily net assets) would be .35% for Class A shares. There are no 12b-1
fees charged to Fiduciary Class shares. See "The Distributor." The
12b-1 fees include a Shareholder servicing fee of .25% of the average
daily net assets of the Fund's Class B shares and may include a
Shareholder servicing fee of .25% of the average daily net assets of
the Fund's Class A shares.
-3-
<PAGE> 113
(4) Investment Advisory Fees and Total Operating Expenses have been revised
to reflect fee waivers effective as of the date of this Prospectus. The
Adviser may voluntarily agree to waive a part of its fees. Absent this
voluntary reduction, Investment Advisory Fees would be .74% for all
classes of shares, and Total Operating Expenses would be 1.40% for
Class A shares, 2.05% for Class B shares and 1.05% for Fiduciary Class
shares.
-4-
<PAGE> 114
EXAMPLE: An investor would pay the following expenses on a $1,000 investment in
Class A and Fiduciary Class shares of the Fund, assuming: (1) imposition of the
maximum sales charge for Class A shares; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class A $57 $82
Fiduciary Class $10 $31
</TABLE>
Absent the voluntary reduction of 12b-1 fees, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class A $59 $87
Fiduciary Class $11 $33
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment in
Class B shares, assuming: (1) deduction of the applicable maximum Contingent
Deferred Sales Charge; and (2) 5% annual return.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Assuming a complete redemption at end
of period $70 $92
Assuming no redemption $20 $62
</TABLE>
Absent the voluntary reduction of fees, the dollar amounts in the above
example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Assuming a complete redemption at end
of period $71 $94
Assuming no redemption $21 $64
</TABLE>
-5-
<PAGE> 115
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
purpose of these tables is to assist the investor in understanding the various
costs and expenses that may be directly or indirectly borne by investors in the
Trust.
The rules of the Securities and Exchange Commission (the "SEC") require that the
maximum sales charge be reflected in the above table. However, investors in the
Fund ("Shareholders") may, under certain circumstances, qualify for reduced
sales charges. See "How to Invest in The One Group(R)." Long-term Shareholders
of Class A shares and Class B shares may pay more than the equivalent of the
maximum front-end sales charges otherwise permitted by the National Association
of Securities Dealers' Rules.
-6-
<PAGE> 116
THE FUND
The One Group(R) Value Growth Fund (the "Fund") is part of The One Group(R) (the
"Trust"), which is an open-end management investment company that offers units
of beneficial interest ("shares") in 32 separate funds and different classes of
certain of the funds. This Prospectus relates to the Class A, Class B and
Fiduciary Class shares of The One Group(R) Value Growth Fund which provide for
variations in distribution costs, voting rights, dividends and per share net
asset value pursuant to a multiple class plan (the "Multiple Class Plan")
adopted by the Board of Trustees of the Trust. Except for these differences
among classes, each share of the Fund represents an undivided, proportionate
interest in the Fund. The Fund is a diversified mutual fund. Information
regarding the Trust's other funds and their classes is contained in separate
prospectuses which may be obtained from the Trust's Distributor, The One Group
Services Company, 3435 Stelzer Road, Columbus, OH 43219 or by calling
1-800-480-4111.
INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth and growth of income while, as a
secondary objective providing a moderate level of current income.
The investment objective of the Fund is fundamental and may not be changed
without a vote of the holders of a majority of the Fund's outstanding shares (as
defined in the Statement of Additional Information).
There is no assurance that the Fund will meet its investment objective.
INVESTMENT POLICIES
The investment policies of the Fund may be changed without an affirmative vote
of the holders of a majority of the Fund's outstanding shares unless a policy is
expressly deemed to be fundamental or is expressly deemed to be changeable only
by such a majority vote.
PERMISSIBLE INVESTMENTS
The Fund pursues its objectives by investing primarily in a portfolio of common
stocks, debt securities, preferred stocks, convertible securities, warrants and
other equity securities of companies that show the potential for growth of
earnings over time. Stock selection is guided by current valuation relative to a
stock's historical valuation and relative to the Adviser's estimates of future
growth of earnings and dividends. Over the long term, continued earnings growth
tends to lead to both higher dividends and capital appreciation. The Fund
expects to invest in securities currently paying a moderate level of income,
although it may invest in non-income producing securities when the Adviser
considers their potential for growth of capital or future income to be
promising. The Fund diversifies its investments among different
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industries and companies and changes its portfolio securities for investment
considerations and not for trading purposes.
In selecting portfolio securities for the Fund, the Adviser analyzes its outlook
for the economy and each economic sector over a 12 to 18 month period and the
relative attractiveness of the various securities markets and individual market
sectors. The Adviser then selects securities within these sectors and markets
when it believes that a company's fundamental outlook as well as the company's
ability to achieve earnings growth are not sufficiently reflected in the market
values of the company's securities. Accordingly, the Fund may emphasize
securities of companies that the Adviser believes are overlooked or undervalued
by investors, which fact should contribute to an increase in the market value of
the security over time. Portfolio securities are generally sold when there is a
substantial reduction in the Adviser's forecast of the company's future earnings
potential or when the price of a security appreciates to such an extent that it
is believed to have realized the Adviser's appreciation goal. No effort is made
by the Fund to time the market.
The Fund will ordinarily invest at least 65% of the value of its total assets in
securities with the characteristics described above. Although the Fund intends
to invest all of its assets in such securities, up to 35% of its total assets
may be held in cash or invested in U.S. Government Securities, other investment
grade fixed-income securities and cash equivalents. The Fund may also enter into
futures contracts, provided that the value of these contracts does not exceed
25% of the Fund's total assets. In addition, the Fund may write covered call
options on securities it owns and enter into related closing purchase
transactions when such activity will further the Fund's investment objective,
and may also engage in other options transactions in furtherance of its
investment objective. The balance of the Fund's assets will be held in cash
equivalents rated within one of the highest two rating categories assigned by at
least one nationally recognized statistical rating organization ("NRSRO"), which
categories are described below in "Description of Ratings," at the time of
investment or, if unrated, to be of comparable quality.
In addition to the permissible investments described above, the Fund may invest
in U.S. Treasury obligations, including Separately Traded Registered Interest
and Principal Securities ("STRIPS") and Coupon Under Book Entry Safekeeping
("CUBES"), receipts, including Treasury Receipts ("TRS"), Treasury Investment
Growth Receipts ("TIGRS"), and Certificates of Accrual on Treasury Securities
("CATS"), certificates of deposit, time deposits, U.S. government agency
securities, repurchase agreements, reverse repurchase agreements, securities of
other investment companies, when-issued securities, forward commitments,
options, futures contracts, and options on futures contracts. The Fund may also
invest in variable and floating rate notes, bankers' acceptances, commercial
paper and securities of foreign issuers, including sponsored and unsponsored
American Depository Receipts ("ADRs"). The Fund may also engage in securities
lending transactions. All of the Fund's investments, where applicable, must
possess one of the ratings described below in the "Description of Ratings" at
the time of investment or, if unrated, to be of comparable quality.
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This list of permissible investments includes select securities that may be
commonly considered to be derivatives, including: options, futures contracts and
options on futures contracts. These securities and limitations on their use are
more fully described in the "Description of Permitted Investments."
For a description of the Fund's permitted investments, see "Description of
Permitted Investments." For a description of permitted investments for temporary
defensive purposes, see "Temporary Defensive Position."
RISK FACTORS
Changes in the value of portfolio securities will not affect cash income, if
any, derived from these securities but will affect the Fund's net asset value.
Because the Fund invests primarily in equity securities, which fluctuate in
value, the Fund's shares will fluctuate in value.
Certain investment management techniques that the Fund may use, such as the
purchase and sale of futures, options and forward commitments, could expose the
Fund to potentially greater risk of loss than more traditional equity
investments.
Investments in securities of foreign issuers may involve greater risks than are
present in U.S. investments. In general, issuers in many foreign countries are
not subject to accounting, auditing and financial reporting standards, practices
and requirements comparable to those applicable to U.S. companies. There is
generally less information publicly available about, and less regulation of,
foreign issuers than U.S. companies. Transaction costs are generally higher for
investments in foreign issuers. Securities of some foreign companies are less
liquid, and their prices are more volatile, than securities of comparable U.S.
companies. Settlement of transactions in some foreign markets may be delayed or
may be less frequent than in the United States, which could adversely affect the
liquidity of the Fund. In addition, with respect to some foreign countries,
there are the possibilities of expropriation or confiscatory taxation, the
imposition of additional taxes or tax withholding, limitations on the removal of
securities, property or other assets of the Fund, political or social
instability, and diplomatic developments, which could affect the value of
investments in those countries.
For additional information on each of the Fund's permitted investments and
associated risks, see "Description of Permitted Investments."
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HOW TO DO BUSINESS WITH THE ONE GROUP(R)
HOW TO INVEST IN THE ONE GROUP(R)
Shares of the Fund are sold on a continuous basis and may be purchased directly
from the Trust's Distributor, The One Group Services Company by mail, by
telephone, or by wire. Shares may also be purchased through a financial
institution, such as a bank, savings and loan association or insurance company
(each a "Shareholder Servicing Agent"), that has established a Shareholder
servicing agreement with the Distributor or through a broker-dealer that has
established a dealer agreement with the Distributor.
Purchases and redemptions of shares of the Fund may be made on any day that the
New York Stock Exchange is open for trading ("Business Days"). The minimum
initial and subsequent investments in the Fund are $1,000 and $100, respectively
($100 and $25, respectively, for employees of BANC ONE CORPORATION and its
affiliates). Initial and subsequent investment minimums may be waived at the
Distributor's discretion. Investors may purchase up to a maximum of $250,000 of
Class B shares per individual purchase order.
Class A and Class B shares are offered to the general public. Fiduciary Class
shares are offered to institutional investors, including affiliates of BANC ONE
CORPORATION and any bank, depository institution, insurance company, pension
plan or other organization authorized to act in fiduciary, advisory, agency,
custodial or similar capacities (each an "Authorized Financial Organization").
For additional details regarding eligibility, call the Distributor at
1-800-480-4111.
BY MAIL
Investors may purchase Class A and Class B shares of the Fund by completing and
signing an Account Application Form and mailing it, along with a check (or other
negotiable bank instrument or money order) payable to "The One Group(R)," to
State Street Bank and Trust Company (the Trust's Transfer Agent and Custodian),
P.O. Box 8500, Boston, MA 02266-8500. Subsequent purchases of shares may be made
at any time by mailing a check to the Transfer Agent. Account Application Forms
are available through the Distributor by calling 1-800-480-4111.
Purchases of Fiduciary Class shares and Class A shares that are being offered to
investors in certain retirement plans such as 401(k) and similar plans, other
than Individual Retirement Accounts, are made by an institutional investor
and/or other intermediary on behalf of an investor (each also a "Shareholder
Servicing Agent"). The Shareholder Servicing Agent may require an investor to
complete forms in addition to the Account Application Form and to follow
procedures established by the Shareholder Servicing Agent. Such Shareholders
should contact their Shareholder Servicing Agents regarding purchases, exchanges
and redemptions of shares. See "Additional Information Regarding Purchases."
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<PAGE> 120
BY TELEPHONE OR BY WIRE
Once an Account Application Form has been received, Shareholders are eligible to
make purchases by telephone or wire (if that option has been selected by a
Shareholder) by calling the Transfer Agent at 1-800-480-4111 or their
Shareholder Servicing Agents, if applicable.
Shareholders may revoke their automatic eligibility to make purchases and/or
redemptions by telephone or by wire, by sending a letter so stating to the
Transfer Agent, State Street Bank and Trust Company, P.O. Box 8500, Boston, MA
02266-8500.
SYSTEMATIC INVESTMENT PLAN
Class A and Class B investors may make automatic monthly investments in the Fund
from their bank, savings and loan or other depository institution accounts. The
minimum initial and subsequent investments must be $25 under the Systematic
Investment Plan, which minimum may be waived at the discretion of the
Distributor. The Trust pays the costs associated with these transfers, but
reserves the right, upon thirty days' written notice, to impose reasonable
charges for this service. A depository institution may impose a charge for
debiting an investor's account, which would reduce the investor's return from an
investment in the Fund.
FUND-DIRECT IRA
The Trust offers a tax-advantaged retirement plan for which shares of the Fund
may be an appropriate investment. The Trust's retirement plan allows
participants to defer taxes while helping them build their retirement savings.
The One Group(R)'s Fund-Direct IRA is a retirement plan with a wide choice of
investments, offering people with earned income the opportunity to compound
earnings on a tax-deferred basis. An IRA Adoption Agreement may be obtained by
calling the Distributor at 1-800-480-4111.
ADDITIONAL INFORMATION REGARDING PURCHASES
A purchase order will be effective as of the day received by the Distributor if
the Distributor receives the order before 4:00 p.m., eastern time. However, an
order may be canceled if the Transfer Agent does not receive Federal funds
before close of business on the next Business Day for Fiduciary Class shares,
and before the close of business on the third Business Day for Class A and Class
B shares, and the investor could be liable for any fees or expenses incurred by
the Trust. Federal funds are monies credited to a bank's account with a Federal
Reserve Bank. The purchase price of shares of the Fund is the net asset value
next determined after a purchase order is effected plus any applicable sales
charge (the "offering price"). The net asset value per share of the Fund is
determined by dividing the total market value of the
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Fund's investments and other assets allocable to a class, less any liabilities
allocable to that class, by the total number of outstanding shares of such
class. Net asset value per share is determined daily as of 4:00 p.m., eastern
time, on each Business Day. For a further discussion of the calculation of net
asset value, see the Statement of Additional Information. Shares may also be
issued in transactions involving the acquisition by the Fund of securities held
by collective investment funds sponsored and administered by affiliates of the
Adviser. Purchases will be made in full and fractional shares of the Fund
calculated to three decimal places. Although the methodology and procedures are
identical, the net asset value per share of classes within the Fund may differ
because the distribution fees and expenses charged to Class A shares and Class B
shares are not charged to Fiduciary Class shares.
The Trust reserves the right to reject a purchase order when the Distributor
determines that it is not in the best interest of the Trust and/or its
Shareholders to accept such order. Except as provided below, neither the Trust's
Transfer Agent, the Distributor, the Adviser nor the Trust will be responsible
for any loss, liability, cost or expense for acting upon telephone or wire
instructions, and the investor will bear all risk of loss. The Trust will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine, including requiring a form of personal identification prior to acting
upon instructions received by telephone and recording telephone instructions. If
such procedures are not employed, the Trust may be liable for any losses due to
unauthorized or fraudulent instructions.
Fiduciary Class shares offered to institutional investors and investors in
certain retirement plans, and Class A shares that are being offered to investors
in certain retirement plans such as 401(k) and similar plans, other than
Individual Retirement Accounts, will normally be held in the name of the
Shareholder Servicing Agent effecting the purchase on the Shareholder's behalf,
and it is the Shareholder Servicing Agent's responsibility to transmit purchase
orders to the Distributor. A Shareholder Servicing Agent may impose an earlier
cut-off time for receipt of purchase orders directed through it to allow for
processing and transmittal of these orders to the Distributor for effectiveness
the same day. The Shareholder should contact his or her Shareholder Servicing
Agent for information as to the Shareholder Servicing Agent's procedures for
transmitting purchase, exchange or redemption orders to the Trust. A Shareholder
who desires to transfer the registration of shares beneficially owned by him or
her, but held of record by a Shareholder Servicing Agent, should contact the
Shareholder Servicing Agent to accomplish such change. Other Shareholders who
desire to transfer the registration of their shares should contact the Transfer
Agent.
No certificates representing the shares of the Fund will be issued. In
communications to Shareholders, the Fund will not duplicate mailings of Fund
material to Shareholders who reside at the same address.
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SALES CHARGE
The following table shows the initial sales charge on Class A shares to a
"single purchaser" (defined below) together with the sales charge reallowed to
financial institutions and intermediaries (the "commission"):
<TABLE>
<CAPTION> Sales Charge as Appropriate
Sales Charge as a Percentage of Net Commission as a Percentage
Amount of Purchase Percentage of Offering Price Amount Invested of Offering Price
- ------------------ ---------------------------- ---------------------------- --------------------------
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.05%
$100,000 but less
than $250,000 3.50% 3.63% 3.05%
$250,000 but less
than $500,000 2.50% 2.56% 2.05%
$500,000 but
less than $1,000,000 2.00% 2.04% 1.60%
1,000,000 or more 0.00% 0.00% 0.00%
</TABLE>
The commissions shown in the table apply to sales through financial institutions
and intermediaries. Under certain circumstances, the Distributor will use its
own funds to compensate financial institutions and intermediaries in amounts
that are additional to the commission shown above. The maximum cash compensation
payable by the Distributor as a sales charge is 4.50% of the offering price
(including the commission shown above and additional cash compensation described
below). In addition, the Distributor will, from time to time and at its own
expense, provide promotional incentives to financial institutions and
intermediaries, whose registered representatives have sold or are expected to
sell significant amounts of shares of the Fund, in the form of payment for
travel expenses, including lodging, incurred in connection with trips taken by
qualifying registered representatives to places within or outside the United
States, and additional compensation in an amount up to 1.00% of the offering
price of Class A shares of the Fund for sales of $1 million to $5 million,
and 0.50% for sales over $5 million. However, the Distributor will be
reimbursed by the person receiving such additional compensation for sales of
the Fund of $1 million or more, if a Shareholder redeems any or all of the
shares for which such additional compensation was paid by the Distributor
prior to the first year anniversary of purchase. Under certain circumstances,
commissions up to the amount of the entire sales charge will be reallowed to
financial institutions and intermediaries, which might then be deemed to be
"underwriters" under the Securities Act of 1933.
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<PAGE> 123
RIGHT OF ACCUMULATION
In calculating the sales charge rates applicable to current purchases of Class A
shares, a "single purchaser" is entitled to cumulate current purchases with the
current value at the offering price of previously purchased Class A and Class B
shares of the Fund and other eligible funds of the Trust, other than the Trust's
money market funds, that are sold subject to a comparable sales charge.
The term "single purchaser" refers to (i) an individual, (ii) an individual and
spouse purchasing shares of the Fund for their own account or for trust or
custodial accounts for their minor children, or (iii) a fiduciary purchasing for
any one trust, estate or fiduciary account, including employee benefit plans
created under Sections 401 or 457 of the Internal Revenue Code of 1986, as
amended (the "Code"), and including related plans of the same employer. To be
entitled to a reduced sales charge based upon shares already owned, the investor
must ask the Distributor for such reduction at the time of purchase and provide
the account number(s) of the investor, the investor and spouse, and their minor
children, and give the age of such children. The Fund may amend or terminate
this right of accumulation at any time as to subsequent purchases.
LETTER OF INTENT
By initially investing at least $2,000 in Class A shares of one or more funds of
the Trust that impose a comparable sales charge over the next 13 months, the
sales charge may be reduced by completing the Letter of Intent section of the
Account Application Form. The Letter of Intent includes a provision for a sales
charge adjustment depending on the amount actually purchased within the 13-month
period. In addition, pursuant to a Letter of Intent, the Custodian will hold in
escrow the difference between the sales charge applicable to the amount
initially purchased and the sales charge paid at the time of the investment,
which is based on the amount covered by the Letter of Intent.
For example, assume an investor signs a Letter of Intent to purchase $250,000 in
Class A shares of one (or more) of the funds of the Trust that impose a
comparable sales charge and, at the time of signing the Letter of Intent,
purchases $100,000 of Class A shares of one of these funds. The investor would
pay an initial sales charge of 1.50% (the sales charge applicable to purchases
of $250,000) and 1.00% of the investment (representing the difference between
the 2.50% sales charge applicable to purchases of $100,000 and the 1.50% sales
charge already paid) would be held in escrow until the investor has purchased
the remaining $150,000 or more in Class A shares under the investor's Letter of
Intent.
The amount held in escrow will be applied to the investor's account at the end
of the 13-month period unless the amount specified in the Letter of Intent is
not purchased. In order to qualify
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for a Letter of Intent, the investor will be required to make a minimum purchase
of at least $2,000.
The Letter of Intent will not obligate the investor to purchase Class A shares,
but if he or she does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. The Letter of
Intent may be dated as of a prior date to include any purchases made within the
past 90 days.
OTHER CIRCUMSTANCES
No sales charge is imposed on Class A shares of the Fund: (i) issued through
reinvestment of dividends and capital gains distributions; (ii) acquired through
the exercise of exchange privileges where a comparable sales charge has been
paid for exchanged shares; (iii) purchased by officers, directors or trustees,
retirees and employees (and their spouses and immediate family members) of the
Trust, of BANC ONE CORPORATION and its subsidiaries and affiliates, of the
Distributor and its subsidiaries and affiliates, or of an investment sub-adviser
of a fund of the Trust and such sub-adviser's subsidiaries and affiliates; (iv)
sold to affiliates of BANC ONE CORPORATION and to certain accounts (other than
Individual Retirement Accounts) for which Authorized Financial Organizations act
in fiduciary, advisory, agency, custodial or similar capacities, or purchased by
investment advisers, financial planners or other intermediaries who have a
dealer arrangement with the Distributor, who place trades for their own accounts
or for the accounts of their clients and who charge a management, consulting or
other fee for their services, as well as clients of such investment advisers,
financial planners or other intermediaries who place trades for their own
accounts if the accounts are linked to the master account of such investment
adviser, financial planner or other intermediary; (v) purchased with proceeds
from the recent redemption of Fiduciary Class shares of a fund of the Trust or
acquired in an exchange of Fiduciary Class shares of a fund for Class A shares
of the same fund; (vi) purchased with proceeds from the recent redemption of
shares of a mutual fund (other than a fund of the Trust) for which a sales
charge was paid; (vii) purchased in an Individual Retirement Account with the
proceeds of a distribution from an employee benefit plan, provided that, at the
time of distribution, the employee benefit plan had plan assets invested in a
fund of the Trust; (viii) purchased with Trust assets; (ix) purchased in
accounts as to which a bank or broker-dealer charges an asset allocation fee,
provided the bank or broker-dealer has an agreement with the Distributor; or (x)
directly purchased with the proceeds of a distribution on a bond for which a
Banc One Corporation affiliate bank or trust company is the Trustee or Paying
Agent.
An investor relying upon any of the categories of waivers of the sales charge
must qualify for such waiver in advance of the purchase with the Distributor or
the financial institution or intermediary through which shares are purchased by
the investor.
The waiver of the sales charge under circumstances (v), (vi) and (vii) above
applies only if the purchase is made within 60 days of the redemption or
distribution and if conditions imposed
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by the Distributor are met. The waiver policy with respect to the purchase of
shares through the use of proceeds from a recent redemption or distribution as
described in clauses (v), (vi) and (vii) above will not be continued
indefinitely and may be discontinued at any time without notice. Investors
should call the Distributor at 1-800-480-4111 to determine whether they are
eligible to purchase shares without paying a sales charge through the use of
proceeds from a recent redemption or distribution as described above, and to
confirm continued availability of these waiver policies prior to initiating the
procedures described in clauses (v), (vi) and (vii).
ALTERNATIVE SALES ARRANGEMENTS
CLASS B SHARES
Class B shares are not subject to a sales charge when they are purchased, but
are subject to a sales charge (the "Contingent Deferred Sales Charge") if a
Shareholder redeems them prior to the sixth anniversary of purchase. When a
Shareholder purchases Class B shares, the full purchase amount is invested
directly in the Fund. Class B shares of the Fund are subject to an ongoing
distribution and Shareholder service fee at an annual rate of 1.00% of the
Fund's average daily net assets as provided in the Class B Plan (described below
under "The Distributor"). This ongoing fee will cause Class B shares to have a
higher expense ratio and to pay lower dividends than Class A shares. Class B
shares convert automatically to Class A shares after eight years, commencing
from the end of the calendar month in which the purchase order was accepted
under the circumstances and subject to the qualifications described in this
Prospectus.
Proceeds from the Contingent Deferred Sales Charge and the distribution and
Shareholder service fees under the Class B Plan are payable to the Distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
Shareholder services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to dealers and agents for selling
Class B shares. A dealer reallowance of 4.00% of the original purchase price of
the Class B shares will be paid to financial institutions and intermediaries.
CONTINGENT DEFERRED SALES CHARGE
If the Shareholder redeems Class B shares prior to the sixth anniversary of
purchase, the Shareholder will pay a Contingent Deferred Sales Charge at the
rates set forth below. The Contingent Deferred Sales Charge is assessed on an
amount equal to the lesser of the then-current market value or the cost of the
shares being redeemed. Accordingly, no sales charge is imposed on increases in
net asset value above the initial purchase price. In addition, no charge is
assessed on shares derived from reinvestment of dividends or capital gain
distributions.
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<PAGE> 126
The amount of the Contingent Deferred Sales Charge, if any, varies depending on
the number of years from the time of payment for the purchase of Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of shares, all
payments during a month are aggregated and deemed to have been made on the first
day of the month.
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED
SALES CHARGE AS A
YEAR(S) PERCENTAGE OF
SINCE DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
- -------- -----------------
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
6-7 None
7-8 None
</TABLE>
In determining whether a particular redemption is subject to a Contingent
Deferred Sales Charge, it is assumed that the redemption is first of any Class A
shares in the Shareholder's Fund account (unless the Shareholder elects to have
Class B shares redeemed first) or shares representing capital appreciation, next
of shares acquired pursuant to reinvestment of dividends and capital gain
distributions, and finally of other shares held by the Shareholder for the
longest period of time. This method should result in the lowest possible sales
charge.
To provide an example, assume you purchased 100 shares at $10 per share (a total
cost of $1,000) and prior to the second anniversary after purchase, the net
asset value per share is $12 and during such time you have acquired 10
additional shares through dividends paid in shares. If you then make your first
redemption of 50 shares (proceeds of $600), 10 shares will not be subject to
charge because you received them as dividends. With respect to the remaining 40
shares, the charge is applied only to the original cost of $10 per share and not
to the increase in net asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds is subject to a Contingent Deferred Sales Charge at a rate
of 4.00% (the applicable rate prior to the second anniversary after purchase).
The Contingent Deferred Sales Charge is waived on redemption of shares: (i) for
distributions that are made under a Systematic Withdrawal Plan of the Trust and
that are limited to no more than 10% of the account value annually, determined
in the first year as of the date the redemption request is received by the
Transfer Agent, and in subsequent years, as of the most
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<PAGE> 127
recent anniversary of that date; (ii) following the death or disability (as
defined in the Code) of a Shareholder or a participant or beneficiary of a
qualifying retirement plan if redemption is made within one year of such death
or disability; or (iii) to the extent that the redemption represents a minimum
required distribution from an Individual Retirement Account or other qualifying
retirement plan to a Shareholder who has attained the age of 70 1/2. A
Shareholder or his or her representative should contact the Transfer Agent to
determine whether a retirement plan qualifies for a waiver and must notify the
Transfer Agent prior to the time of redemption if such circumstances exist and
the Shareholder is eligible for this waiver. In addition, the following
circumstances are not deemed to result in a "redemption" of Class B shares for
purposes of the assessment of a Contingent Deferred Sales Charge, which is
therefore waived: (i) plans of reorganization of the Fund, such as mergers,
asset acquisitions and exchange offers to which the Fund is a party; or (ii)
exchanges for Class B shares of other funds of the Trust as described under
"Exchanges."
CONVERSION FEATURE
Class B shares include all shares purchased pursuant to the Contingent Deferred
Sales Charge which have been outstanding for less than the period ending eight
years after the end of the month in which the shares were purchased. At the end
of this period, Class B shares will automatically convert to Class A shares and
will be subject to the lower distribution and Shareholder service fees charged
to Class A shares. Such conversion will be on the basis of the relative net
asset values of the two classes, without the imposition of any sales charge, fee
or other charge. The conversion is not a taxable event to a Shareholder.
For purposes of conversion to Class A shares, shares received as dividends and
other distributions paid on Class B shares in a Shareholder's Fund account will
be considered to be held in a separate sub-account. Each time any Class B shares
in a Shareholder's Fund account (other than those in the sub-account) convert to
Class A shares, a pro-rata portion of the Class B shares in the sub-account will
also convert to Class A shares.
If a Shareholder effects one or more exchanges among Class B shares of the funds
of the Trust during the eight-year period, the Trust will aggregate the holding
periods for the shares of each fund of the Trust for purposes of calculating
that eight-year period. Because the per share net asset value of the Class A
shares may be higher than that of the Class B shares at the time of conversion,
a Shareholder may receive fewer Class A shares than the number of Class B shares
converted, although the dollar value will be the same.
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<PAGE> 128
EXCHANGES
CLASS A AND FIDUCIARY CLASS
Fiduciary Class Shareholders of the Fund may exchange their shares for Class A
shares of the Fund or for Class A shares or Fiduciary Class shares of another
fund of the Trust.
Class A Shareholders may exchange their shares for Fiduciary Class shares of the
Fund or for Fiduciary Class shares or Class A shares of another fund of the
Trust, if the Shareholder is eligible to purchase such shares.
The exchange privilege may be exercised only in those states where the shares of
the Fund or such other fund of the Trust may be legally sold. All exchanges
discussed herein are made at the net asset value of the exchanged shares, except
as provided below. The Trust does not impose a charge for processing exchanges
of shares. If a Shareholder seeks to exchange Class A shares of a fund that does
not impose a sales charge for Class A shares of a fund that does or the fund
being exchanged into has a higher sales charge, the Shareholder will be required
to pay a sales charge in the amount equal to the difference between the sales
charge applicable to the fund into which the shares are being exchanged and any
sales charges previously paid for the exchanged shares, including any sales
charges incurred on any earlier exchanges of the shares (unless such sales
charge is otherwise waived, as provided in "Other Circumstances"). The exchange
of Fiduciary Class shares for Class A shares also will require payment of the
sales charge unless the sales charge is waived, as provided in "Other
Circumstances."
CLASS B
Class B Shareholders of the Fund may exchange their shares for Class B shares of
any other fund of the Trust on the basis of the net asset value of the exchanged
Class B shares, without the payment of any Contingent Deferred Sales Charge that
might otherwise be due upon redemption of the outstanding Class B shares. The
newly acquired Class B shares will be subject to the higher Contingent Deferred
Sales Charge of either the fund from which the shares were exchanged or the fund
into which the shares were exchanged. With respect to outstanding Class B shares
as to which previous exchanges have taken place, "higher Contingent Deferred
Sales Charge" shall mean the higher of the Contingent Deferred Sales Charge
applicable to either the fund the shares are exchanging into or any other fund
from which the shares previously have been exchanged. For purposes of computing
the Contingent Deferred Sales Charge that may be payable upon a disposition of
the newly acquired Class B shares, the holding period for outstanding Class B
shares of the fund from which the exchange was made is "tacked" to the holding
period of the newly acquired Class B shares. For purposes of calculating the
holding period applicable to the newly acquired Class B shares, the newly
acquired Class B shares shall be deemed to have been issued on the date of
receipt of
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the Shareholder's order to purchase the outstanding Class B shares of the fund
from which the initial exchange was made.
ADDITIONAL INFORMATION REGARDING EXCHANGES
In the case of shares held of record by a Shareholder Servicing Agent but
beneficially owned by a Shareholder, to exchange such shares the Shareholder
should contact the Shareholder Servicing Agent, who will contact the Transfer
Agent and effect the exchange on behalf of the Shareholder. If an exchange
request in good order is received by the Transfer Agent by 4:00 p.m., eastern
time, on any Business Day, the exchange usually will occur on that day. Any
Shareholder who wishes to make an exchange must receive a current prospectus of
the fund of the Trust in which he or she wishes to invest before the exchange
will be effected.
The Trust reserves the right to change the terms and conditions of the exchange
privilege discussed herein upon sixty days' written notice. An exchange between
classes of shares of the same fund is not considered a taxable event; however,
an exchange between funds of the Trust is considered a sale of shares and
usually results in a capital gain or loss for Federal income tax purposes.
Shareholders should consult their tax advisers for a more complete explanation
of the Federal income tax consequences of an exchange of shares of the Fund.
A more detailed description of the above is set forth in the Statement of
Additional Information.
REDEMPTIONS
Shareholders may redeem their shares without charge (except Class B shares, as
provided above) on any Business Day; shares may ordinarily be redeemed by mail,
by telephone or by wire. All redemption orders are effected at the net asset
value per share next determined for Class A and Fiduciary Class shares, and at
net asset value per share next determined reduced by any applicable Contingent
Deferred Sales Charge for Class B shares, after receipt of a valid request for
redemption. Payment to Shareholders for shares redeemed will be made within
seven days after receipt by the Transfer Agent of the request for redemption.
BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to constitute a valid request for redemption. All written redemption requests
should be sent to The One Group(R), c/o State Street Bank and Trust Company,
P.O. Box 8500, Boston, MA 02266-8500, or the Shareholder Servicing Agent, if
applicable. The Transfer Agent may require that the signature on the written
request be guaranteed by a commercial bank, a member firm of a domestic stock
exchange or by a member of the Securities Transfer Association Medallion Program
or the Stock Exchange Medallion Program.
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The signature guarantee requirement will be waived if all of the following
conditions apply: (i) the redemption is for $5,000 worth of shares or less; (ii)
the redemption check is payable to the Shareholder(s) of record; and (iii) the
redemption check is mailed to the Shareholder(s) at the address of record. The
Shareholder may also have the proceeds mailed to a commercial bank account
previously designated on the Account Application Form or by written instruction
to the Transfer Agent or the Shareholder Servicing Agent, if applicable. There
is no charge for having redemption requests mailed to a designated bank account.
BY TELEPHONE OR BY WIRE
Shareholders may have the payment of redemption requests wired or mailed to a
domestic commercial bank account previously designated on the Account
Application Form. Wire redemption requests may be made by the Shareholder by
telephone to the Transfer Agent at 1-800-480-4111, provided that the Shareholder
has elected the telephone redemption privilege in writing to the Distributor, or
to the Shareholder Servicing Agent, if applicable. The Transfer Agent may reduce
the amount of a wire redemption payment by its then-current wire redemption
charge, which, as of the date of this Prospectus, is $7.00.
Neither the Trust nor the Transfer Agent will be responsible for the
authenticity of the redemption instructions received by telephone if it
reasonably believes those instructions to be genuine. The Trust and the Transfer
Agent will each employ reasonable procedures to confirm that telephone
instructions are genuine, and may be liable for losses resulting from
unauthorized or fraudulent telephone transactions if it does not employ those
procedures. Such procedures may include requesting personal identification
information or recording telephone conversations.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders whose accounts have a value of at least $10,000 may elect to
receive, or may designate another person to receive, monthly, quarterly or
annual payments in a specified amount of not less than $100 each. There is no
charge for this service. Under the Systematic Withdrawal Plan, all dividends and
distributions must be reinvested in shares of the Fund. Purchases of additional
Class A shares while the Systematic Withdrawal Plan is in effect are generally
undesirable because a sales charge is incurred whenever purchases are made.
Pursuant to the Systematic Withdrawal Plan, Class B Shareholders may elect to
receive, or may designate another person to receive, distributions provided the
distributions are limited to no more than 10% of their account value annually,
determined in the first year as of the date the redemption request is received
by the Transfer Agent, and in subsequent years, as of the most recent
anniversary of that date. In addition, Shareholders who have attained the age of
70 1/2 may elect to receive distributions, to the extent that the redemption
represents a minimum required distribution from an Individual Retirement Account
or other qualifying retirement plan.
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If the amount of the systematic withdrawal exceeds the income accrued since the
previous withdrawal under the Systematic Withdrawal Plan, the principal balance
invested will be reduced and shares will be redeemed.
OTHER INFORMATION REGARDING REDEMPTIONS
At various times, the Fund may be requested to redeem shares for which it has
not yet received good payment. In such circumstances, the forwarding of proceeds
may be delayed for 15 or more days until payment has been collected for the
purchase of such shares. The Fund intends to pay cash for all shares redeemed.
Due to the relatively high costs of handling small investments, the Fund
reserves the right to redeem, at net asset value, the shares of any Shareholder
if, because of redemptions of shares by or on behalf of the Shareholder, the
account of such Shareholder in the Fund has a value of less than $1,000, the
minimum initial purchase amount. Accordingly, an investor purchasing shares of
the Fund in only the minimum investment amount may be subject to such
involuntary redemption if he or she thereafter redeems any of these shares.
Before the Fund exercises its right to redeem such shares and to send the
proceeds to the Shareholder, the Shareholder will be given notice that the value
of the shares in his or her account is less than the minimum amount and will be
allowed 60 days to make an additional investment in the Fund in an amount which
will increase the value of the account to at least $1,000.
See the Statement of Additional Information for examples of when the Trust may
suspend the right of redemption or redeem shares involuntarily if it appears
appropriate to do so in light of the Trust's responsibilities under the
Investment Company Act of 1940.
FUND MANAGEMENT
THE ADVISER
The Trust and Banc One Investment Advisors Corporation (the "Adviser") have
entered into an investment advisory agreement (the "Advisory Agreement"). Under
the Advisory Agreement, the Adviser makes the investment decisions for the
assets of the Fund and continuously reviews, supervises and administers the
Fund's investment program. The Adviser discharges its responsibilities subject
to the supervision of, and policies established by, the Trustees of the Trust.
The Trust's shares are not deposits or obligations of, or endorsed or guaranteed
by BANC ONE CORPORATION or its bank or non-bank affiliates. The Trust's shares
are not insured or guaranteed by the Federal Deposit Insurance Corporation
("FDIC") or by any other governmental agency or government sponsored agency of
the Federal government or any state.
The Adviser is an indirect, wholly-owned subsidiary of BANC ONE CORPORATION, a
bank holding company incorporated in the state of Ohio. BANC ONE CORPORATION
currently
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has affiliate banking organizations in Arizona, Colorado, Illinois, Indiana,
Kentucky, Louisiana, Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin.
In addition, BANC ONE CORPORATION has several affiliates that engage in data
processing, venture capital, investment and merchant banking, and other
diversified services including trust management, investment management,
brokerage, equipment leasing, mortgage banking, consumer finance and insurance.
On a consolidated basis, BANC ONE CORPORATION had assets of over $88 billion as
of September 30, 1995.
The Adviser represents a consolidation of the investment advisory staffs of a
number of bank affiliates of BANC ONE CORPORATION, which have considerable
experience in the management of open-end management investment company
portfolios, including The One Group(R) since 1985 (then known as "The Helmsman
Fund").
Richard R. Jandrain, III, serves as the Senior Managing Director of Equity
Securities for the Adviser and in this capacity is responsible for the
development and implementation of the equity investment policies of the Adviser.
Mr. Jandrain has over 18 years of investment experience and has served in
various investment management positions with the Adviser and its affiliates for
the past five years.
Michael D. Weiner will serve as the Manager of the Fund. Mr. Weiner has served
as Director of Equity Research with the Adviser since June 1994. Mr. Weiner
currently serves as the Manager of The One Group Equity Index Fund and the
Manager of the equity portion of The One Group Asset Allocation Fund. Prior to
joining the Adviser, Mr. Weiner served as Director of Research and Head of U.S.
Equities for the Dupont Pension Fund Investment Company of Wilmington, Delaware
from 1986 to 1994.
The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .74% of the average daily net assets of the Fund. The Adviser
may voluntarily agree to waive a part of its fees. (See "About the Fund --
Expense Summary.") These fee waivers would be voluntary and may be terminated at
any time. Shareholders will be notified in advance if and when these waivers are
terminated. The total compensation to the Adviser for investment advisory and
sub-administration services exceeds 0.75%, which is considered by the SEC staff
to be higher than such fees paid by most other mutual funds. However, the
Adviser believes it is comparable to compensation paid by other mutual funds
having similar investment objectives and policies.
THE DISTRIBUTOR
The One Group Services Company (the "Distributor"), a wholly-owned subsidiary of
the BISYS Group, Inc., and the Trust are parties to a distribution agreement
(the "Distribution Agreement") under which shares of the Fund are sold on a
continuous basis.
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Class A shares are subject to a distribution and Shareholder services plan (the
"Plan"). As provided in the Plan, the Trust will pay the Distributor a fee of
.35% of the average daily net assets of Class A shares of the Fund. Currently,
the Distributor has voluntarily agreed to limit payments under the Plan to .25%
of the average daily net assets of the Class A shares of the Fund. Up to .25% of
the fees payable under the Plan may be used as compensation for Shareholder
services by the Distributor and/or financial institutions and intermediaries.
All such fees that may be paid under the Plan will be paid pursuant to Rule
12b-1 of the Investment Company Act of 1940. The Distributor may apply these
fees toward: (i) compensation for its services in connection with distribution
assistance or provision of Shareholder services; or (ii) payments to financial
institutions and intermediaries such as banks (including affiliates of the
Adviser), savings and loan associations, insurance companies, investment
counselors, broker-dealers, and the Distributor's affiliates and subsidiaries,
as compensation for services or reimbursement of expenses incurred in connection
with distribution assistance or provision of Shareholder services.
Class B shares are subject to a Contingent Deferred Sales Charge if such shares
are redeemed prior to the sixth anniversary of purchase. Class B shares of the
Fund are subject to an ongoing distribution and Shareholder service fee as
provided in the Class B distribution and Shareholder services plan (the "Class B
Plan") at an annual rate of 1.00% of the Fund's average daily net assets, which
includes Shareholder servicing fees of .25% of the Fund's average daily net
assets.
Proceeds from the Contingent Deferred Sales Charge and the distribution and
Shareholder service fees under the Class B Plan are payable to the Distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
Shareholder services to the Fund in connection with the sale of Class B shares,
such as the payment of compensation to dealers and agents for selling Class B
shares. The combination of the Contingent Deferred Sales Charge and the
distribution and Shareholder service fees facilitate the ability of the Fund to
sell the Class B shares without a sales charge being deducted at the time of
purchase.
The Plan and the Class B Plan are characterized as compensation plans since the
distribution fees will be paid to the Distributor without regard to the
distribution or Shareholder service expenses incurred by the Distributor or the
amount of payments made to financial institutions and intermediaries. The Fund
also may execute brokerage or other agency transactions through an affiliate of
the Adviser or through the Distributor for which the affiliate or the
Distributor receives compensation. Pursuant to guidelines adopted by the Board
of Trustees of the Trust, any such compensation will be reasonable and fair
compared to compensation received by other brokers in connection with comparable
transactions.
Fiduciary Class shares of the Fund are offered without distribution fees to
institutional investors, including Authorized Financial Organizations. It is
possible that an institution may offer different classes of shares to its
customers and thus receive different compensation with
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respect to different classes of shares. In addition, a financial institution
that is the record owner of shares for the account of its customers may impose
separate fees for account services to its customers.
THE ADMINISTRATOR
The One Group Services Company (the "Administrator"), a wholly-owned subsidiary
of the BISYS Group, Inc., and the Trust are parties to an administration
agreement relating to the Fund (the "Administration Agreement"). Under the terms
of the Administration Agreement, the Administrator is responsible for providing
the Trust with administrative services (other than investment advisory
services), including regulatory reporting and all necessary office space,
equipment, personnel and facilities.
The Adviser also serves as Sub-Administrator to each fund of the Trust, pursuant
to an agreement between the Administrator and the Adviser. Pursuant to this
agreement, the Adviser performs many of the Administrator's duties for which the
Adviser receives a fee paid by the Administrator.
The Administrator is entitled to a fee for administrative services, which is
calculated daily and paid monthly, at an annual rate of .20% of each fund's
average daily net assets on the first $1.5 billion in Trust assets (excluding
the Treasury Only Money Market Fund and the Government Money Market Fund), .18%
of each fund's average daily net assets to $2 billion in Trust assets (excluding
the Treasury Only Money Market Fund and the Government Money Market Fund), and
.16% of each fund's average daily net assets when Trust assets exceed $2 billion
(excluding the Treasury Only Money Market Fund and the Government Money Market
Fund).
THE TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500 acts
as Transfer Agent and Custodian for the Trust for which services it receives a
fee. The Custodian holds cash, securities and other assets of the Trust as
required by the Investment Company Act of 1940. Bank One Trust Company, N.A.
serves as Sub-Custodian in connection with the Trust's securities lending
activities, pursuant to an agreement between State Street Bank and Trust Company
and Bank One Trust Company. Bank One Trust Company receives a fee paid by the
Trust.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Ropes & Gray serves as counsel to the Trust. Coopers & Lybrand L.L.P. serves as
the independent accountants of the Trust.
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OTHER INFORMATION
THE TRUST
The Trust was organized as a Massachusetts Business Trust under a Declaration of
Trust filed on May 23, 1985. The Declaration of Trust permits the Trust to offer
separate funds and different classes of each fund. All consideration received by
the Trust for shares of any Fund and all assets of such fund belong to that fund
and would be subject to liabilities related thereto.
The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to Shareholders, costs of custodial services and registering the
shares under Federal and state securities laws, pricing, insurance expenses,
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organizational expenses.
The Adviser and the Administrator of the Fund each bears all expenses incurred
in connection with the performance of their services as investment adviser and
administrator, respectively, other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund.
As a general matter, as set forth in the Multiple Class Plan, expenses are
allocated to each class of shares of the Fund on the basis of the net asset
value of that class in relation to the net asset value of the Fund. At present,
the only expenses that are allocated to Class A and Class B shares, other than
in accordance with the relative net asset value of the class, are the different
distribution and Shareholder services costs. See "Expense Summary." At present,
no expenses are allocated to Fiduciary Class shares as a class that are not also
borne by the other classes of shares of the Fund in proportion to the relative
net asset values of the shares of such classes.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described above, certain
companies provide essential management services to the Trust.
VOTING RIGHTS
As set forth in the Multiple Class Plan, each share held entitles the
Shareholder of record to one vote. Each fund of the Trust will vote separately
on matters relating solely to that fund. In addition, each class of a fund shall
have exclusive voting rights on any matter submitted to
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Shareholders that relates solely to that class, and shall have separate voting
rights on any matter submitted to Shareholders in which the interests of one
class differ from the interests of any other class. However, all fund
Shareholders will have equal voting rights on matters that affect all fund
Shareholders equally. As a Massachusetts Business Trust, the Trust is not
required to hold annual meetings of Shareholders but approval will be sought for
certain changes in the operation of the Trust and for the election of Trustees
under certain circumstances. In addition, a Trustee may be elected or removed by
the remaining Trustees or by Shareholders at a special meeting called upon
written request of Shareholders owning at least 10% of the outstanding shares of
the Trust. In the event that such a meeting is requested, the Trust will provide
appropriate assistance and information to the Shareholders requesting the
meeting.
DIVIDENDS
Substantially all of the net investment income (exclusive of capital gains) of
the Fund is declared on the last Business Day of each month as a dividend for
Shareholders of record as of the close of business on that day and is
distributed in the form of periodic dividends to such Shareholders of the Fund
on the first Business Day of each month. Capital gains of the Fund, if any, will
be distributed at least annually.
Shareholders automatically receive all income dividends and capital gain
distributions in additional Class A, Class B, or Fiduciary Class shares, as
applicable, at the net asset value next determined following the record date,
unless the Shareholder has elected to take such payment in cash. Such election,
or any revocation thereof, must be made in writing, at least 15 days prior to
distribution, to the Transfer Agent at P.O. Box 8500, Boston, MA 02266-8500, and
will become effective with respect to dividends and distributions having record
dates after its receipt by the Transfer Agent. Reinvested dividends and
distribution receive the same tax treatment as dividends and distributions paid
in cash.
Class B shares received as dividends and capital gains distributions at the net
asset value next determined following the record date shall be held in a
separate Class B sub-account. Each time any Class B shares (other than those in
the subaccount) convert to Class A shares, a pro-rata portion of the Class B
shares in the sub-account will also convert to Class A shares. (See "Conversion
Feature.") Reinvested dividends and distributions receive the same tax treatment
as dividends and distributions paid in cash.
Dividends and distributions of the Fund are paid on a per-share basis. The value
of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a dividend or the distribution of
capital gains, a Shareholder will pay the full price for the shares and receive
some portion of the price back as a taxable dividend or distribution even though
such distribution would, in effect, represent a return of the Shareholder's
investment.
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The amount of dividends payable on Fiduciary Class shares will be more than the
dividends payable on Class A and Class B shares because of the distribution
expenses charged to Class A and Class B shares.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Administrator, The One Group
Services Company, 3435 Stelzer Road, Columbus, OH 43219.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes proxy statements and other
reports to Shareholders of record.
OTHER INVESTMENT POLICIES
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes during periods when the Adviser determines that
market conditions warrant such action, the Fund may invest up to 100% of its
assets in cash equivalents (including securities issued or guaranteed as to
principal and interest by the U.S. government, its agencies or
instrumentalities, repurchase agreements, certificates of deposit and bankers'
acceptances issued by banks or savings and loan associations having net assets
of at least $1 billion as of the end of their most recent fiscal year,
commercial paper rated in one of the two highest short-term rating categories by
at least one NRSRO or, if unrated, determined by the Adviser to be of comparable
quality, variable amount master demand notes and bank money market deposit
accounts), and may hold cash for liquidity purposes.
To the extent the Fund is engaged in a temporary defensive position, the Fund
will not be pursuing its investment objective.
For a further description of the Fund's permitted investments, see "Description
of Permitted Investments" and the Statement of Additional Information, and for a
description of ratings, see "Description of Ratings."
PORTFOLIO TURNOVER
The Fund may engage in short-term trading, which involves selling securities
that have been held for a short period of time in order to increase the
potential for capital appreciation and/or income of the Fund or to take
advantage of a temporary disparity in the normal price or yield relationship
between two securities or changes in market, industry or company conditions or
outlook. Any such trading would increase a portfolio's turnover rate and its
transaction costs.
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The Adviser will choose brokers by judging professional ability, quality of
service and reasonableness of commissions. Higher commissions may be paid to
those firms that provide research, superior execution and other services. The
Adviser may use any such research information in managing the assets of the
Fund.
The portfolio turnover rate for the Fund may vary greatly from year to year, as
well as within a particular year. It is presently estimated that the annual
portfolio turnover rate of the Fund will not exceed 100%.
Higher portfolio turnover rates will likely result in higher transaction costs
to the Fund and may result in additional tax consequences to the Fund's
Shareholders.
INVESTMENT LIMITATIONS
The investment objective and the following investment limitations are
fundamental policies of the Fund. Fundamental policies cannot be changed without
the consent of the holders of a majority of the Fund's outstanding shares. The
term "majority of the outstanding shares" means the vote of (i) 67% or more of
the Fund's shares present at a meeting, if more than 50% of the outstanding
shares of the Fund are present or represented by proxy, or (ii) more than 50% of
the Fund's outstanding shares, whichever is less.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and, if consistent with the
Fund's investment objective and policies, repurchase agreements involving such
securities) if as a result more than 5% of the total assets of the Fund would be
invested in the securities of such issuer or the Fund would own more than 10% of
the outstanding voting securities of such issuer. These restrictions apply to
75% of the Fund's total assets. For purposes of these limitations, a security is
considered to be issued by the government entity whose assets and revenues
guarantee or back the security. With respect to private activity bonds or
industrial development bonds backed only by the assets and revenues of a
non-governmental user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total assets of
the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in the obligations issued or guaranteed
by the U.S. government or its agencies and instrumentalities and repurchase
agreements involving such securities. For purposes of this limitation (i)
utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents.
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3. Make loans, except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described in
this Prospectus and in the Statement of Additional Information.
The foregoing percentages will apply at the time of the purchase of a security.
Additional investment limitations are set forth in the Statement of Additional
Information.
DESCRIPTION OF PERMITTED INVESTMENTS
The following is a description of certain of the permitted investments for the
Fund.
The Fund invests in common stocks (including sponsored and unsponsored American
Depository Receipts ("ADRs")) and convertible securities only if they are listed
on registered exchanges or actively traded in the over-the-counter market,
except that the Fund may invest up to 5% of its net assets in restricted
securities.
U.S. TREASURY OBLIGATIONS -- The Fund may invest in bills, notes and bonds
issued by the U.S. Treasury and separately traded interest and principal
component parts of such obligations that are transferable through the Federal
book-entry system, known as Separately Traded Registered Interest and Principal
Securities ("STRIPS") and Coupon Under Book Entry Safekeeping ("CUBES").
RECEIPTS -- The Fund may purchase interests in separately traded interest and
principal component parts of U.S. Treasury obligations that are issued by banks
or brokerage firms and are created by depositing U.S. Treasury notes and U.S.
Treasury bonds into a special account at a custodian bank. The custodian holds
the interest and principal payments for the benefit of the registered owners of
the certificates or receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains the register.
Receipts include Treasury Receipts ("TRS"), Treasury Investment Growth Receipts
("TIGRS") and Certificates of Accrual on Treasury Securities ("CATS").
STRIPS, CUBES, TRS, TIGRS and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
interest rate volatility than interest-paying U.S. Treasury obligations. The
Fund may invest up to 20% of its total assets in STRIPS, CUBES, TRS, TIGRS and
CATS. See also "Taxes."
CERTIFICATES OF DEPOSIT -- Certificates of deposit are negotiable interest
bearing instruments with a specific maturity. Certificates of deposit ("CDs")
are issued by banks and savings and
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loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity.
TIME DEPOSITS -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, a time deposit
("TD") earns a specified rate of interest over a definite period of time;
however, it cannot be traded in the secondary market. Time deposits with a
withdrawal penalty are considered to be illiquid securities; therefore, the Fund
will not invest more than 15% of its net assets in such time deposits and other
illiquid securities.
BANKERS' ACCEPTANCES -- Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by (i.e., made an obligation of) a commercial bank.
They are used by corporations to finance the shipment and storage of goods and
to furnish dollar exchange. Maturities are generally six months or less.
COMMERCIAL PAPER -- Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations and other entities.
Maturities on these issues vary from a few days to nine months.
U.S. GOVERNMENT AGENCIES -- Certain Federal agencies have been established as
instrumentalities of the U.S. government to supervise and finance certain types
of activities. Select agencies, such as the Government National Mortgage
Association ("Ginnie Mae") and the Export-Import Bank, are supported by the full
faith and credit of the U.S. Treasury; others, such as the Federal National
Mortgage Association ("Fannie Mae"), are supported by the credit of the
instrumentality and have the right to borrow from the U.S. Treasury; others are
supported by the authority of the U.S. government to purchase the agency's
obligations; while still others, such as the Federal Farm Credit Banks and the
Federal Home Loan Mortgage Corporation ("Freddie Mac"), are supported solely by
the credit of the instrumentality itself. No assurance can be given that the
U.S. government would provide financial support to U.S. government sponsored
agencies or instrumentalities if it is not obligated to do so by law.
Obligations of U.S. government agencies include debt issues and mortgage-backed
securities issued or guaranteed by select agencies.
CONVERTIBLE SECURITIES -- Convertible securities have characteristics similar to
both fixed income and equity securities. Because of the conversion feature, the
market value of convertible securities tends to move together with the market
value of the underlying stock. As a result, the Fund's selection of convertible
securities is based, to a great extent, on the potential for capital
appreciation that may exist in the underlying stock. The value of convertible
securities is also affected by prevailing interest rates, the credit quality of
the issuer, and any call provisions.
INVESTMENT COMPANY SECURITIES -- The Fund may invest up to 5% of its total
assets in the securities of any one investment company, but may not own more
than 3% of the securities of
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any one investment company or invest more than 10% of its total assets in the
securities of other investment companies. In accordance with an exemptive order
issued to the Trust by the SEC, such other investment company securities may
include securities of a money market fund of the Trust, and such companies may
include companies of which the Adviser or a sub-adviser to a fund of the Trust,
or an affiliate of such Adviser or sub-adviser, serves as investment adviser,
administrator or distributor. Because other investment companies employ an
investment adviser, such investment by the Fund may cause Shareholders to bear
duplicative fees. The Adviser will waive its fee attributable to the assets of
the investing fund invested in a money market fund of the Trust; and, to the
extent required by the laws of any state in which shares of the Trust are sold,
the Adviser will waive its fees attributable to the assets of the Fund invested
in any investment company.
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a person
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. The custodian or
its agent will hold the security as collateral for the repurchase agreement.
Collateral must be maintained at a value at least equal to 100% of the
repurchase price. The Fund bears a risk of loss in the event the other party
defaults on its obligations and the Fund is delayed or prevented from its right
to dispose of the collateral securities or if the Fund realizes a loss on the
sale of the collateral securities. The Adviser will enter into repurchase
agreements on behalf of the Fund only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the agreement based on
guidelines established and periodically reviewed by the Trustees. Repurchase
agreements are considered by the SEC to be loans under the Investment Company
Act of 1940.
REVERSE REPURCHASE AGREEMENTS -- The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Fund would sell portfolio securities to financial institutions
such as banks and broker-dealers, and agree to repurchase them at a mutually
agreed-upon date and price. The Fund will enter into reverse repurchase
agreements only to avoid otherwise selling securities during unfavorable market
conditions to meet redemptions. At the time the Fund enters into a reverse
repurchase agreement, it would place in a segregated custodial account assets,
such as liquid high grade debt securities, consistent with the Fund's investment
restrictions and having a value equal to the repurchase price (including accrued
interest), and would subsequently monitor the account to ensure that such
equivalent value was maintained. Reverse repurchase agreements involve the risk
that the market value of the securities sold by the Fund may decline below the
price at which the Fund is obligated to repurchase the securities. Reverse
repurchase agreements are considered by the SEC to be borrowings by a Fund under
the Investment Company Act of 1940.
SECURITIES LENDING -- In order to generate additional income, the Fund may lend
up to 33% of the securities in which it is invested pursuant to agreements
requiring that the loan be continuously secured by cash, securities of the U.S.
government or its agencies, shares of an
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investment trust or mutual fund or any combination of cash and such securities
as collateral equal at all times to at least 100% of the market value plus
accrued interest on the securities lent. The Fund will continue to receive
interest on the securities lent while simultaneously seeking to earn interest on
the investment of cash collateral in U.S. government securities, shares of an
investment trust or mutual fund, or other short-term, highly liquid investments.
Collateral is marked to market daily to provide a level of collateral at least
equal to the market value of the securities lent. There may be risks of delay in
recovery of the securities or even loss of rights in the collateral should the
borrower of the securities fail financially. However, loans will only be made to
borrowers deemed by the Adviser to be of good standing under guidelines
established by the Trust's Board of Trustees and when, in the judgment of the
Adviser, the consideration which can be earned currently from such securities
loans justifies the attendant risk. The Fund will enter into loan arrangements
only with counterparties which the Adviser has deemed to be creditworthy under
guidelines established by the Board of Trustees. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
RESTRICTED SECURITIES -- The Fund may invest in commercial paper issued in
reliance on the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933. Section 4(2) commercial paper is restricted as to
disposition under Federal securities law and is generally sold to institutional
investors, such as the Fund, who agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) commercial paper is
normally resold to other institutional investors like the Fund through or with
the assistance of the issuer or investment dealers who make a market in Section
4(2) commercial paper, thus providing liquidity. The Fund believes that Section
4(2) commercial paper and possibly certain other restricted securities that meet
the criteria for liquidity established by the Trustees are quite liquid. The
Fund intends, therefore, to treat the restricted securities that meet the
criteria for liquidity established by the Trustees, including Section 4(2)
commercial paper, as determined by the Adviser, as liquid and not subject to the
investment limitation applicable to illiquid securities. In addition, because
Section 4(2) commercial paper is liquid, the Fund will not subject such paper to
the limitation applicable to restricted securities.
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under an SEC staff position set forth in the adopting
release for Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule is
a nonexclusive safe-harbor for certain secondary market transactions involving
securities subject to restrictions on resale under Federal securities laws. The
Rule provides an exemption from registration for resales of otherwise restricted
securities to qualified institutional buyers. The Rule is expected to further
enhance the liquidity of the secondary market for securities eligible for resale
under Rule 144A. The Fund believes that the staff of the SEC has left the
question of determining the liquidity of all restricted securities to the
Trustees. The Trustees have directed the Adviser to consider the following
criteria in determining the liquidity of certain restricted securities:
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- - the frequency of trades and quotes for the security;
- - the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
- - dealer undertakings to make a market in the security; and
- - the nature of the security and the nature of the marketplace trades.
VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain of the obligations purchased
by the Fund may carry variable or floating rates of interest, may involve a
conditional or unconditional demand feature and may include variable amount
master demand notes. A demand instrument with a demand notice period exceeding
seven days may be considered illiquid if there is no secondary market for such
security; therefore, the Fund will not invest more than 15% of its net assets in
such instruments and other illiquid securities. The interest rates on these
securities may be reset daily, weekly, quarterly or some other reset period, and
may have a floor or ceiling on interest rate charges. There is a risk that the
current interest rate on such obligations may not accurately reflect existing
rates. The Fund will not invest more than 5% of its total assets in variable
rate master demand notes.
There is no limit on the extent to which the Fund may purchase variable and
floating rate instruments that are not illiquid. The Fund will purchase variable
and floating rate instruments to facilitate portfolio liquidity or to permit the
investment of the Fund's assets at a favorable rate of return.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS AND FORWARD COMMITMENTS -- The Fund
may purchase securities on a when-issued basis when deemed by the Adviser to
present attractive investment opportunities. When-issued securities are
purchased for delivery beyond the normal settlement date at a stated price and
yield, thereby involving the risk that the yield obtained will be less than that
available in the market at delivery. Although the purchase of securities on a
when-issued basis is not considered leveraging, it has the effect of leveraging.
When the Adviser purchases a when-issued security, the Custodian will set aside
cash or liquid securities to satisfy the purchase commitment. The Fund generally
will not pay for such securities or earn interest on them until received.
Commitments to purchase when-issued securities will not, under normal market
conditions, exceed 25% of the Fund's total assets, and a commitment will not
exceed 90 days. The Fund will only purchase when-issued securities for the
purpose of acquiring portfolio securities and not for speculative purposes.
In a forward commitment transaction, the Fund contracts to purchase securities
for a fixed price at a future date beyond customary settlement time. The Fund is
required to hold and maintain in a segregated account until the settlement date,
cash, U.S. government securities or liquid high-grade debt obligations in an
amount sufficient to meet the purchase price. Alternatively, the Fund may enter
into offsetting contracts for the forward sale of other
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securities that it owns. The purchase of securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date. Although the Fund would
generally purchase securities on a when-issued or forward commitment basis with
the intention of actually acquiring securities for its portfolio, the Fund may
dispose of a when-issued security or forward commitment prior to settlement if
the Adviser deems it appropriate to do so.
OPTIONS -- The Fund may purchase and write (i.e., sell) call options and put
options on securities and indices, which options are traded on national
securities exchanges. A call option gives the purchaser the right to buy, and
obligates the writer of the option to sell, the underlying security at the
agreed upon exercise (or "strike") price during the option period. A put option
gives the purchaser the right to sell, and obligates the writer to buy, the
underlying security at the strike price during the option period. Purchasers of
options pay an amount, known as a premium, to the option writer in exchange for
the right under the option contract. Option contracts may be written with terms
that would permit the holder of the option to purchase or sell the underlying
security only upon the expiration date of the option. The initial purchase
(sale) of an option contract is an "opening transaction." In order to close out
an option position, the Fund may enter into a "closing transaction," the sale
(purchase) of an option contract on the same security with the same exercise
price and expiration date as the option contract originally opened.
The Fund may purchase put and call options in hedging transactions to protect
against a decline in the market value of the securities in the Fund (e.g., by
the purchase of a put option) and to protect against an increase in the cost of
fixed-income securities that the Fund may seek to purchase in the future (e.g.,
by the purchase of a call option). In the event that paying premiums for put and
call options, together with price movements in the underlying securities, are
such that exercise of the options would not be profitable for the Fund, losses
of the premiums paid may be offset by an increase in the value of the Fund's
securities (in the case of a purchase of put options) or by a decrease in the
cost of acquisition of securities by the Fund (in the case of a purchase of call
options).
The Fund also may write secured put and covered call options as a means of
increasing the yield on the Fund and as a means of providing limited protection
against decreases in market value of the Fund.
There are risks associated with options transactions, including the following:
(i) the success of a hedging strategy may depend on the ability of the Adviser
to predict movements in the prices of the individual securities, fluctuations in
markets and movements in interest rates; (ii) there may be an imperfect or no
correlation between the changes in market value of the securities held by the
Fund and the prices of options; (iii) there may not be a liquid secondary market
for options; and (iv) while the Fund will receive a premium when it writes
covered call options, it may not participate fully in a rise in the market value
of the underlying security. It is expected
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that the Fund will only engage in option transactions with respect to permitted
investments and related indices.
Generally, the policy of the Fund, in order to avoid the exercise of an option
sold by it, will be to cancel its obligation under the option by entering into a
closing purchase transaction, if available, unless selling (in the case of a
call option) or purchasing (in the case of a put option) the underlying
securities is determined to be in the Fund's interest. A closing purchase
transaction consists of the Fund purchasing an option having the same terms as
the option sold by the Fund, and has the effect of canceling the Fund's position
as a seller. The premium which the Fund will pay in executing a closing purchase
transaction may be higher (or lower) than the premium received when the option
was sold, depending in large part upon the relative price of the underlying
security at the time of each transaction. To the extent options sold by the Fund
are exercised and the Fund either delivers securities to the holder of a call
option or liquidates securities as a source of funds to purchase securities put
to the Fund, the Fund's turnover rate will increase, which would cause the Fund
to incur additional brokerage expenses.
During the option period, the Fund, as a covered call writer, gives up the
potential appreciation above the exercise price should the underlying security
rise in value, and the Fund, as a covered put writer, retains the risk of loss
should the underlying security decline in value. For the covered call writer,
substantial appreciation in the value of the underlying security would result in
the security being "called away" at the strike price of the option which may be
substantially below the fair market value of such security. For the covered put
writer, substantial depreciation in the value of the underlying security would
result in the security being "put to" the writer at the strike price of the
option which may be substantially in excess of the fair market value of such
security. If a covered call option or a covered put option expires unexercised,
the writer realizes a gain, and the buyer a loss, in the amount of the premium.
The SEC requires that obligations of investment companies such as the Fund, in
connection with option sale positions, must comply with certain segregation or
coverage requirements, which are more fully described in the Statement of
Additional Information.
The Fund will only write covered call options on its securities and will limit
such activities to provide that the aggregate market value of such options and
the Fund's obligations under such written puts does not exceed 25% of the Fund's
net assets as of the time such options are entered into by the Fund.
FUTURES CONTRACTS AND RELATED OPTIONS -- The Fund may enter into futures
contracts, options on futures contracts, index futures and options thereon that
are traded on an exchange regulated by the Commodities Futures Trading
Commission ("CFTC") if, to the extent that such futures and options are not for
"bona fide hedging purposes" (as defined by the CFTC), the aggregate initial
margin and premiums on such positions (excluding the amount by which
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options are in the money) do not exceed 5% of the Fund's total assets at current
value. The Fund, however, may invest more than such amount for bona fide hedging
purposes, and also may invest more than such amount if it obtains authority to
do so from the appropriate regulatory agencies without rendering the Fund a
commodity pool operator or adversely affecting its status as an investment
company for Federal securities law or income tax purposes. However, the Fund may
enter into futures contracts and options on futures only to the extent that
obligations under such contracts or transactions, together with options on
securities, represent not more than 25% of the Fund's total assets.
The Fund may buy and sell futures contracts and related options to manage its
exposure to changing interest rates and security prices. Some futures
strategies, including selling futures, buying puts and writing calls, may reduce
the Fund's exposure to price fluctuations. Other strategies, including buying
futures, writing puts and buying calls, tend to increase market exposure.
Futures and options may be combined with each other in order to adjust the risk
and return characteristics of the overall portfolio. The Fund expects to enter
into these transactions to "lock in" a return or spread on a particular
investment or portion of its assets, to protect against any increase in the
price of securities the Fund anticipates purchasing at a later date, or for
other risk management strategies.
Options and futures can be volatile instruments, and involve certain risks. If
the Adviser applies a hedge at an inappropriate time or judges interest rates
incorrectly, options and futures strategies may lower the Fund's return. The
Fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other instruments, or if it could not
close out its positions because of an illiquid secondary market.
Typically, investment in these contracts requires the Fund to deposit with the
applicable exchange or other specified financial intermediary as a good faith
deposit for its obligations, known as "initial margin," an amount of cash or
specified debt securities which initially is 1%-15% of the face amount of the
contract and that thereafter fluctuates on a periodic basis as the value of the
contract fluctuates. Thereafter, the Fund must make additional deposits equal to
any net losses due to unfavorable price movements of the contract and will be
credited with an amount equal to any net gains due to favorable price movements.
These additional deposits or credits are calculated and required daily and are
known as "variation margin."
The SEC requires that when an investment company such as the Fund effects
transactions of the foregoing nature, it must either segregate cash or high
quality, readily marketable portfolio securities with its custodian in the
amount of its obligations under the foregoing transactions or must cover such
obligations by maintaining positions in portfolio securities, futures contracts
or options that would serve to satisfy or offset the risk of such obligations.
When effecting transactions of the foregoing nature, the Fund will comply with
such segregation or cover requirements. No limitation exists on the amount of
the Fund's assets that may be used to comply with such segregation or cover
requirements.
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The Fund also may engage in straddles and spreads with respect to 5% of its
total assets. In a straddle transaction, the Fund either buys a call and a put
or sells a call and a put on the same security. In a spread, the Fund purchases
and sells a call or a put. The Fund will sell a straddle when the Adviser
believes the price of a security will be stable. The Fund will receive a premium
on the sale of the put and the call. A spread permits the Fund to make a hedged
investment that the price of a security will increase or decline.
SECURITIES OF FOREIGN ISSUERS -- The Fund may invest in securities of foreign
issuers to achieve income or capital appreciation. Foreign investments involve
risks that are different from investments in securities of U.S. issuers. These
risks may include future unfavorable political and economic developments,
possible withholding taxes, seizure of foreign deposits, currency controls,
interest limitations or other governmental restrictions which might affect
payment of principal or interest. Additionally, there may be less public
information available about foreign issuers. Foreign branches of foreign banks
are not regulated by U.S. banking authorities and generally are not bound by
accounting, auditing and financial reporting standards comparable to U.S. banks.
The Fund may invest in commercial paper of foreign issuers and obligations of
foreign branches of U.S. banks, U.S. and London branches of foreign banks, and
supranational entities which are established through the joint participation of
several governments (e.g., the Asian Development Bank and the Inter-American
Development Bank). Securities of foreign issuers may include sponsored and
unsponsored ADRs, which are securities typically issued by a U.S. financial
institution that evidence ownership interests in a pool of securities issued by
a foreign issuer. There may be less information available on the foreign issuers
of unsponsored ADRs than on the issuers of sponsored ADRs. ADRs include American
Depository Shares and New York Shares.
DESCRIPTION OF RATINGS
The following descriptions are summaries of published ratings.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
The following descriptions of commercial paper ratings have been published by
Standard & Poor's Corporation ("S&P"), Moody's Investors Service ("Moody's"),
Fitch's Investors Service ("Fitch"), Duff and Phelps ("Duff") and IBCA Limited
("IBCA"), respectively.
Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1+, 1, and 2 to indicate the relative degree of safety. Issues rated
A-1+ are those with an "overwhelming degree" of credit protection. Those rated
A-1 reflect a "very strong" degree of safety regarding timely payment. Those
rated A-2 reflect a high degree of safety regarding timely payment but not as
high as A-1.
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Commercial paper issues rated Prime-1 and Prime-2 by Moody's are judged by
Moody's to be of the "highest" quality and "higher" quality, respectively, on
the basis of relative repayment capacity.
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the second
highest commercial paper rating assigned by Fitch which reflects an assurance of
timely payment only slightly less in degree than the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by ample asset protection. Risk
factors are minor. Paper rated Duff-2 is regarded as having good certainty of
timely payment, good access to capital markets and sound liquidity factors and
company fundamentals. Risk factors are small.
The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. Those obligations rated A1+ are supported
by the highest capacity for timely repayment. Obligations rated A2 are supported
by a strong capacity for timely repayment, although such capacity may be
susceptible to adverse changes in business, economic or financial conditions.
SHORT-TERM DEBT RATINGS
Thomson BankWatch, Inc. ("TBW") ratings are based upon a qualitative and
quantitative analysis of all segments of the organization including, where
applicable, holding company and operating subsidiaries.
BankWatch(TM) Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper, other senior short-term
obligations and deposit obligations of the entities to which the rating has been
assigned.
The TBW Short-Term Ratings apply only to unsecured instruments that have a
maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an untimely
payment of principal or interest.
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TBW-1 The highest category; indicates a very high degree of
likelihood that principal and interest will be paid
on a timely basis.
TBW-2 The second highest category; while the degree of
safety regarding timely repayment of principal and
interest is strong, the relative degree of safety is
not as high as for issues rated "TBW-1."
TBW-3 The lowest investment grade category; indicates that
while more susceptible to adverse developments (both
internal and external) than obligations with higher
ratings, capacity to service principal and interest
in a timely fashion is considered adequate.
TBW-4 The lowest rating category; this rating is regarded
as non-investment grade and therefore speculative.
DESCRIPTION OF CORPORATE BOND RATINGS
The following descriptions of S&P's and Moody's corporate bond ratings have been
published by S&P and Moody's, respectively.
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in a small degree. Debt rated A has a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
Bonds that are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by all
standards. Together with bonds rated Aaa, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.
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Bonds that are rated A possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
PERFORMANCE
From time to time, the Fund may advertise yield, total return and/or
distribution rate. These figures will be based on historical earnings and are
not intended to indicate future performance. The yield of the Fund refers to the
annualized income generated by an investment in the Fund over a specified 30-day
period. The yield is calculated by assuming that the income generated by the
investment during that period is generated over a one-year period and is shown
as a percentage of the investment.
Total return is the change in value of an investment in the Fund over a given
period, assuming reinvestment of any dividends and capital gains. A cumulative
total return reflects an actual rate of return over a stated period of time. An
average annual total return is a hypothetical rate of return that, if achieved
annually, would have produced the same cumulative total return if performance
had been constant over the entire period. Average annual total returns smooth
out variations in performance; they are not the same as actual year-by-year
results.
The distribution rate is computed by dividing the total amount of the dividends
per share paid out during the past period by the maximum offering price or
month-end net asset value depending on the class of the Fund. This figure is
then "annualized" (multiplied by 365 days and divided by the applicable number
of days in the period). Funds with a front-end sales charge would incorporate
the offering price into the distribution yield in place of month-end net asset
value.
Distribution rate is a measure of the level of income paid out in cash to
Shareholders over a specified period. It differs from yield and total return and
is not intended to be a complete measure of performance. Furthermore, the
distribution rate may include return of principal and/or capital gains. Total
return is the change in value of a hypothetical investment over a given period
assuming reinvestment of dividends and capital gain distributions. The yield
refers to the cumulative 30-day rolling net investment income, divided by
maximum offering price and multiplied by average shares outstanding during this
period. See the Statement of Additional Information.
The Trust will include information on all classes of the Fund in any
advertisement or information containing performance data for the Fund. The
performance of Fiduciary Class shares may be higher than for Class A shares and
Class B shares because Fiduciary Class shares are not subject to sales charges
and distribution expenses.
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The performance of each class of the Fund may from time to time be compared to
that of other mutual funds tracked by mutual fund rating services, to that of
broad groups of comparable mutual funds or to that of unmanaged indices that may
assume investment of dividends but do not reflect deductions for administrative
and management costs. In addition, the performance of each class of the Fund may
be compared to other funds or to relevant indices that may calculate total
return without reflecting sales charges; in which case, the Fund may advertise
its total return in the same manner. If reflected, sales charges would reduce
these total return calculations.
TAXES
The following summary of Federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial, or
administrative action. No attempt has been made to present a complete
explanation of the Federal, state, local or foreign tax treatment of the Fund or
its Shareholders. Accordingly, Shareholders are urged to consult their tax
advisers regarding specific questions as to the tax consequences of investing in
the Fund.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for Federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify as a
"regulated investment company" for Federal income tax purposes and to meet all
other requirements that are necessary for it to be relieved of Federal taxes on
that part of its net investment income and net capital gains (the excess of net
long-term capital gain over net short-term capital loss) that is distributed to
Shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gain) to Shareholders of
each class of shares of the Fund on at least an annual basis. Generally,
dividends from net investment income will be taxable to Shareholders as ordinary
income whether received in cash or in additional shares, and any net capital
gains will be distributed at least annually and will be taxed to Shareholders as
long-term capital gains, regardless of how long the Shareholder has held shares.
Distributions by the Fund to retirement plans that qualify for tax-exempt
treatment under the Code ("qualified retirement plans") will not be taxable. The
Federal tax treatment of qualified retirement plans, as well as distributions
from such plans, is governed by specific provisions of the Code. If shares are
held by a retirement plan that ceases to qualify for tax-exempt treatment under
the Code or by an individual who has received such shares as a distribution from
a retirement plan, the Fund's distributions will be taxable to such plan or
individual as described in the preceding paragraph. Persons considering
directing the investment of their
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qualified retirement plan account in the Fund and qualified retirement plan
trusts considering purchasing such shares, should consult their tax advisers for
a more complete explanation of the Federal tax consequences, and for an
explanation of the state, local and (if applicable) foreign tax consequences of
making such an investment.
The Fund will make annual reports to Shareholders of the Federal income tax
status of all distributions.
Certain securities purchased by the Fund (such as STRIPS, CUBES, TRS, TIGRS and
CATS), as defined in the "Description of Permitted Investments," are sold at
original issue discount and thus do not make periodic cash interest payments.
The Fund will be required to include as part of its current income the imputed
interest on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because the Fund distributes
substantially all of its net investment income to its Shareholders (including
such imputed interest), the Fund may have to sell portfolio securities in order
to generate the cash necessary for the required distributions. Such sales may
occur at a time when the Adviser would not have chosen to sell such securities
and may result in a taxable gain or loss.
Dividends declared by the Fund in October, November or December of any year and
payable to Shareholders of record on a date in such a month will be deemed to
have been paid by the Fund and received by Shareholders on December 31 of that
year, if paid by the Fund at any time during the following January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for Federal excise tax.
Dividends received by a Shareholder that are derived from the Fund's investments
in U.S. government obligations may not be entitled to the exemptions from state
and local income taxes that would be available if the Shareholder had purchased
U.S. government obligations directly. The Fund will inform Shareholders annually
of the percentage of income and distributions derived from U.S. government
obligations. Shareholders should consult their tax advisers regarding the state
and local tax treatment of the dividends received from the Fund.
The Fund may be subject to foreign withholding taxes on income derived from
obligations of foreign issuers . The Fund will not be able to elect to treat
Shareholders as having paid their proportionate share of such foreign taxes.
Sale, exchange, or redemption of Fund shares by a Shareholder will generally be
a taxable event to such Shareholder.
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<PAGE> 153
Investment Adviser and Sub-Administrator
Banc One Investment Advisors Corporation
774 Park Meadow Road
Columbus, OH 43271-0211
Distributor
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
TOG-F-062
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<PAGE> 154
THE ONE GROUP(R) GULF SOUTH GROWTH FUND PROSPECTUS
Investment Adviser: BANC ONE INVESTMENT ADVISORS CORPORATION
The One Group(R) (the "Trust") is a mutual fund seeking to provide a convenient
and economical means of investing in one or more professionally managed
portfolios of securities. This Prospectus relates to The One Group(R) Gulf South
Growth Fund Class A, Class B and Fiduciary Class shares.
THE ONE GROUP(R) GULF SOUTH GROWTH FUND (THE "FUND") SEEKS LONG-TERM CAPITAL
GROWTH BY INVESTMENT IN A PORTFOLIO OF EQUITY SECURITIES OF SMALL
CAPITALIZATION, EMERGING GROWTH AND MEDIUM CAPITALIZATION COMPANIES WHICH ARE
EITHER HEADQUARTERED IN OR WHOSE PRIMARY MARKET IS IN THE SOUTHEASTERN REGION OF
THE UNITED STATES.
Class A and Class B shares are offered to the general public.
Fiduciary Class shares are offered to institutional investors, including
affiliates of BANC ONE CORPORATION and any bank, depository institution,
insurance company, pension plan or other organization authorized to act in
fiduciary, advisory, agency, custodial or similar capacities (each an
"Authorized Financial Organization").
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY BANC ONE CORPORATION OR ITS BANK OR NON-BANK AFFILIATES. THE TRUST'S SHARES
ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY
ANY OTHER GOVERNMENTAL AGENCY OR GOVERNMENT SPONSORED AGENCY OF THE FEDERAL
GOVERNMENT OR ANY STATE. AN INVESTMENT IN MUTUAL FUND SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. BANC ONE
INVESTMENT ADVISORS CORPORATION RECEIVES FEES FROM THE FUND FOR INVESTMENT
ADVISORY AND OTHER SERVICES.
This Prospectus sets forth concisely the information about the Trust that a
prospective investor should know before investing. Investors are advised to read
this Prospectus and retain it for future reference. A Statement of Additional
Information dated February 7, 1996 has been filed with the Securities and
Exchange Commission and is available without charge through the Distributor, The
One Group Services Company, 3435 Stelzer Road, Columbus, OH 43219 or by calling
1-800-480-4111 during business hours. The Statement of Additional Information is
incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
<PAGE> 155
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
February 7, 1996
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<PAGE> 156
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY.................................................................
ABOUT THE FUND..........................................................
Expense Summary.......................................................
Financial Highlights..................................................
The Fund..............................................................
Investment Objective..................................................
Investment Policies...................................................
HOW TO DO BUSINESS WITH THE ONE GROUP(R)................................
How to Invest in The One Group(R).....................................
Alternative Sales Arrangements........................................
Exchanges.............................................................
Redemptions...........................................................
FUND MANAGEMENT.........................................................
The Adviser...........................................................
The Distributor.......................................................
The Administrator.....................................................
The Transfer Agent and Custodian......................................
Counsel and Independent Accountants...................................
OTHER INFORMATION.......................................................
The Trust.............................................................
Other Investment Policies.............................................
Description of Permitted Investments..................................
Description of Ratings................................................
Performance...........................................................
Taxes.................................................................
</TABLE>
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<PAGE> 157
SUMMARY
The One Group(R) (the "Trust") is an open-end management investment company that
provides a convenient way to invest in professionally managed portfolios of
securities. The following provides basic information about the Class A, Class B
and Fiduciary Class shares of The One Group(R) Gulf South Growth Fund.
WHAT IS THE INVESTMENT OBJECTIVE? The Fund seeks long-term capital growth by
investment in a portfolio of equity securities of small capitalization, emerging
growth and medium capitalization companies which are either headquartered in or
whose primary market is in the southeastern region of the United States. See
"Investment Objective."
WHAT ARE THE PERMITTED INVESTMENTS? The Fund will invest primarily in common
stocks, debt securities, preferred stock, convertible securities, warrants and
other equity securities of the types of companies described in the investment
objective. Equity securities such as those in which the Fund may invest are more
volatile and carry more risk than some other forms of investment. Accordingly,
the net asset value per share of the Fund may decrease over time. The Fund may
only invest in a select few derivatives; their characteristics and limitations
on their use are more fully described in "Description of Permitted Investments."
There are many different types of derivative securities with varying degrees of
potential risk and return. See "Investment Policies."
WHO IS THE ADVISER? Banc One Investment Advisors Corporation, an indirect
subsidiary of BANC ONE CORPORATION, serves as the Adviser of the Trust. The
Adviser is entitled to a fee for advisory services provided to the Trust. The
Adviser may voluntarily agree to waive a part of its fees. See "The Adviser" and
"Expense Summary."
WHO IS THE ADMINISTRATOR? The One Group Services Company serves as the
Administrator of the Trust. The Administrator is entitled to a fee for services
provided to the Trust. Banc One Investment Advisors Corporation serves as the
Sub-Administrator of the Trust, pursuant to an agreement with the Administrator
for which Banc One Investment Advisors Corporation receives a fee paid by the
Administrator. See "The Administrator" and "Expense Summary."
WHO IS THE TRANSFER AGENT AND CUSTODIAN? State Street Bank and Trust Company
serves as Transfer Agent and Custodian for the Trust for which services it
receives a fee. Bank One Trust Company, N.A. serves as Sub-Custodian for the
Trust, for which services it receives a fee. See "The Transfer Agent and
Custodian."
WHO IS THE DISTRIBUTOR? The One Group Services Company acts as Distributor of
the Trust's shares. The Distributor is entitled to fees for distribution
services for the Class A and Class B shares of the Fund. No compensation is paid
to the Distributor for distribution services for the Fiduciary Class shares of
the Fund. See "The Distributor."
<PAGE> 158
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions of shares of the
Fund may be made through the Distributor on any day that the New York Stock
Exchange is open for trading ("Business Days"). See "How to Invest in The One
Group(R)" and "Redemptions."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is declared on the last Business Day of
each month as a dividend for Shareholders of record as of the close of business
on that day and is distributed in the form of periodic dividends to such
Shareholders of the Fund on the first Business Day of each month. Any capital
gains are distributed at least annually. Distributions are paid in additional
shares of the same class unless the Shareholder elects to take the payment in
cash. See "Dividends."
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<PAGE> 159
ABOUT THE FUND
EXPENSE SUMMARY--THE ONE GROUP(R) GULF SOUTH GROWTH FUND
<TABLE>
<CAPTION>
FIDUCIARY
CLASS A CLASS B CLASS
------- ------- ---------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none 5.00% none
Redemption Fees none none none
Exchange Fees none none none
ANNUAL OPERATING EXPENSES(2)
(as a percentage of average daily
net assets)
Investment Advisory Fees(4) .65% .65% .65%
12b-1 Fees (after fee waiver)(3) .25% 1.00% none
Other Expenses .32% .32% .32%
TOTAL OPERATING EXPENSES(4) 1.22% 1.97% .97%
</TABLE>
(1) A person who purchases shares through an account with a financial
institution or broker-dealer may be charged separate transaction fees
by the financial institution or broker-dealer. In addition, a wire
redemption charge, currently $7.00, is deducted from the amount of a
wire redemption payment made at the request of a Shareholder.
(2) The expense information in the table has been restated to reflect
current fees that would have been applicable had they been in effect
during the previous fiscal year.
(3) Absent the voluntary waiver of fees under the Trust's Distribution and
Shareholder Services Plans, 12b-1 fees (as a percentage of average
daily net assets) would be .35% for Class A shares. There are no 12b-1
fees charged to Fiduciary Class shares. See "The Distributor." The
12b-1 fees include a Shareholder servicing fee of .25% of the average
daily net assets of the Fund's Class B shares and may include a
Shareholder servicing fee of .25% of the average daily net assets of
the Fund's Class A shares.
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<PAGE> 160
(4) Investment Advisory Fees and Total Operating Expenses have been revised
to reflect fee waivers effective as of the date of this Prospectus. The
Adviser may voluntarily agree to waive a part of its fees. Absent this
voluntary reduction, Investment Advisory Fees would be .74% for all
classes of shares, and Total Operating Expenses would be 1.41% for
Class A shares, 2.06% for the Class B shares and 1.06% for the
Fiduciary Class Shares.
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<PAGE> 161
EXAMPLE: An investor would pay the following expenses on a $1,000 investment in
Class A and Fiduciary Class shares of the Fund, assuming: (1) imposition of the
maximum sales charge for Class A shares; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class A $57 $82
Fiduciary Class $10 $31
</TABLE>
Absent the voluntary reduction of 12b-1 fees, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class A $59 $88
Fiduciary Class $11 $34
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment in
Class B shares, assuming: (1) deduction of the applicable maximum Contingent
Deferred Sales Charge; and (2) 5% annual return.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Assuming a complete redemption at end
of period $70 $92
Assuming no redemption $20 $62
</TABLE>
Absent voluntary reduction of fees, the dollar amounts in the above example
would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Assuming a complete redemption at end
of period $71 $95
Assuming no redemption $21 $65
</TABLE>
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
purpose of these tables is to assist the investor in understanding the various
costs and expenses that may be directly or indirectly borne by investors in the
Trust.
-5-
<PAGE> 162
The rules of the Securities and Exchange Commission (the "SEC") require that the
maximum sales charge be reflected in the above table. However, investors in the
Fund ("Shareholders") may, under certain circumstances, qualify for reduced
sales charges. See "How to Invest in The One Group(R)." Long-term Shareholders
of Class A shares and Class B shares may pay more than the equivalent of the
maximum front-end sales charges otherwise permitted by the National Association
of Securities Dealers' Rules.
-6-
<PAGE> 163
THE FUND
The One Group(R) Gulf South Growth Fund (the "Fund") is part of The One Group(R)
(the "Trust"), which is an open-end management investment company that offers
units of beneficial interest ("shares") in 32 separate funds and different
classes of certain of the funds. This Prospectus relates to the Class A, Class B
and Fiduciary Class shares of The One Group(R) Gulf South Growth Fund which
provide for variations in distribution costs, voting rights, dividends and per
share net asset value pursuant to a multiple class plan (the "Multiple Class
Plan") adopted by the Board of Trustees of the Trust. Except for these
differences among classes, each share of the Fund represents an undivided,
proportionate interest in the Fund. The Fund is a non-diversified mutual fund.
Information regarding the Trust's other funds and their classes is contained in
separate prospectuses which may be obtained from the Trust's Distributor, The
One Group Services Company, 3435 Stelzer Road, Columbus, OH 43219 or by calling
1-800-480-4111.
INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth by investing in a portfolio of equity
securities of small-capitalization, emerging growth and medium capitalization
companies, which are either headquartered in or whose primary market is in the
southeastern region of the United States.
The investment objective of the Fund is fundamental and may not be changed
without a vote of the holders of a majority of the Fund's outstanding shares (as
defined in the Statement of Additional Information).
There is no assurance that the Fund will meet its investment objective.
INVESTMENT POLICIES
The investment policies of the Fund may be changed without an affirmative vote
of the holders of a majority of the Fund's outstanding shares unless a policy is
expressly deemed to be fundamental or is expressly deemed to be changeable only
by such a majority vote.
PERMISSIBLE INVESTMENTS
The Fund pursues its objective by investing primarily in a portfolio of common
stocks, debt securities, preferred stocks, convertible securities, warrants and
other equity securities of small capitalization, emerging growth and medium
capitalization growth companies, which are either headquartered in or whose
primary market is in the southeastern region of the United States. In the
Adviser's opinion, small to medium capitalization companies in general and those
located in the southeast in particular will provide above average investment
performance over the long term as they grow and become more recognized by the
investment community.
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<PAGE> 164
Dividend income, if any, is a consideration incidental to the Fund's objective
of capital growth.
The Adviser anticipates that the Fund's portfolio will normally consist of
securities of approximately twenty-five to sixty emerging growth companies from
Virginia, North Carolina, South Carolina, Florida, Georgia, Tennessee, Alabama,
Mississippi, Arkansas, Louisiana, Kentucky and Texas. In selecting portfolio
securities for the Fund, the Adviser analyzes emerging growth companies whose
securities have been analyzed by several regional brokerage firms. Stock
selection is guided by a company's earnings forecasts over a one to two year
period, as well as by its financial strength. In addition, on an ongoing basis,
the Adviser reviews a stock's current valuation relative to (1) the entire stock
market, (2) that of other companies in the same industry, and (3) its recent and
expected earnings growth rate. It is expected that companies selected would
generally have market capitalizations ranging from $50,000,000 to
$2,000,000,000, although the Fund may occasionally hold securities of companies
whose market capitalizations are considerably larger if doing so contributes to
the Fund's investment objective. Companies selected would also be expected to
show earnings growth over time that is well above the growth rate of the overall
economy and the rate of inflation.
As a matter of non-fundamental policy, the Fund will ordinarily invest at least
65% of the value of its total assets in securities with the characteristics
described above. Although the Fund intends to invest all of its assets in such
securities, up to 35% of its total assets may be held in cash or invested in
U.S. Government Securities, other investment grade fixed-income securities and
cash equivalents, when the Adviser's assessment of the attractiveness of the
entire stock market and individual market sectors changes.
The Fund may also enter into futures contracts, provided that the value of these
contracts does not exceed 25% of the Fund's total assets. In addition, the Fund
may write covered call options on securities it owns and enter into related
closing purchase transactions when such activity will further the Fund's
investment objective, and may also engage in other options transactions in
furtherance of its investment objective. The balance of the Fund's assets will
be held in cash equivalents rated within one of the highest two rating
categories assigned by at least one nationally recognized statistical rating
organization ("NRSRO"), which categories are described below in "Description of
Ratings," at the time of investment or, if unrated, to be of comparable quality.
In addition to the permissible investments described above, the Fund may invest
in U.S. Treasury obligations, including Separately Traded Registered Interest
and Principal Securities ("STRIPS") and Coupon Under Book Entry Safekeeping
("CUBES"), receipts, including Treasury Receipts ("TRS"), Treasury Investment
Growth Receipts ("TIGRS"), and Certificates of Accrual on Treasury Securities
("CATS"), certificates of deposit, time deposits, mortgage-backed securities,
zero coupon obligations, U.S. government agency securities, repurchase
agreements, reverse repurchase agreements, securities of other investment
-8-
<PAGE> 165
companies, when-issued securities, forward commitments, options, futures
contracts, and options on futures contracts. The Fund may also invest in
variable and floating rate notes, bankers' acceptances, commercial paper and
securities of foreign issuers, including sponsored and unsponsored American
Depository Receipts ("ADRs"). The Fund may also engage in securities lending
transactions. All of the Fund's investments, where applicable, must possess one
of the ratings described below in the "Description of Ratings" at the time of
investment or, if unrated, to be of comparable quality.
This list of permissible investments includes select securities that may be
commonly considered to be derivatives, including: options, futures contracts and
options on futures contracts. These securities and limitations on their use are
more fully described in the "Description of Permitted Investments."
For a description of the Fund's permitted investments, see "Description of
Permitted Investments." For a description of permitted investments for temporary
defensive purposes, see "Temporary Defensive Position."
DIVERSIFICATION AND CONCENTRATION
The Fund is a "non-diversified" investment company and, accordingly, is not
limited in the proportion of its assets that may be invested in securities of a
single issuer. However, the Fund intends to conduct its operations so as to
qualify as a "regulated investment company" for purposes of the Internal Revenue
Code of 1986, as amended (the "Code"). To so qualify, the Fund, along with
satisfying other requirements, will limit its investments so that, at the close
of each quarter of the taxable year, (i) at least 50% of the market value of the
Fund's total assets will be invested in cash, cash items, U.S. government
securities and other securities that are, for purposes of this requirement,
limited in respect of a single issuer to an amount not greater in market value
than 5% of the market value of its total assets and to not more than 10% of the
outstanding voting securities of a single issuer; and (ii) not more than 25% of
the market value of the Fund's total assets will be invested in the securities
(other than U.S. government securities or the securities of other regulated
investment companies) of a single issuer.
As a matter of nonfundamental policy, the Fund will not concentrate in any
industry.
RISK FACTORS
Changes in the value of portfolio securities will not affect cash income, if
any, derived from these securities but will affect the Fund's net asset value.
Because the Fund invests primarily in equity securities, which fluctuate in
value, the Fund's shares will fluctuate in value. Because the Fund is
non-diversified, its share price may be subject to greater fluctuations as a
result of changes in an issuer's financial condition or the market's assessment
of an individual issuer.
-9-
<PAGE> 166
Smaller, less seasoned companies may be subject to greater business risk than
larger, established companies. They may be more vulnerable to changes in
economic conditions, specific industry conditions, market fluctuations and other
factors affecting the profitability of companies. Therefore, the stock price of
smaller capitalization companies may be subject to greater price fluctuations
than that of larger, established companies. Due to these and other risk factors,
the price movement of the securities held by the Fund may be volatile and the
net asset value of a share of the Fund may fluctuate.
Certain investment management techniques that the Fund may use, such as the
purchase and sale of futures, options and forward commitments, could expose the
Fund to potentially greater risk of loss than more traditional equity
investments.
Investments in securities of foreign issuers may involve greater risks than are
present in U.S. investments. In general, issuers in many foreign countries are
not subject to accounting, auditing and financial reporting standards, practices
and requirements comparable to those applicable to U.S. companies. There is
generally less information publicly available about, and less regulation of,
foreign issuers than U.S. companies. Transaction costs are generally higher for
investments in foreign issuers. Securities of some foreign companies are less
liquid, and their prices are more volatile, than securities of comparable U.S.
companies. Settlement of transactions in some foreign markets may be delayed or
may be less frequent than in the United States, which could adversely affect the
liquidity of the Fund. In addition, with respect to some foreign countries,
there are the possibilities of expropriation or confiscatory taxation, the
imposition of additional taxes or tax withholding, limitations on the removal of
securities, property or other assets of the Fund, political or social
instability, and diplomatic developments, which could affect the value of
investments in those countries.
For additional information on each of the Fund's permitted investments and
associated risks, see "Description of Permitted Investments."
HOW TO DO BUSINESS WITH THE ONE GROUP(R)
HOW TO INVEST IN THE ONE GROUP(R)
Shares of the Fund are sold on a continuous basis and may be purchased directly
from the Trust's Distributor, The One Group Services Company by mail, by
telephone, or by wire. Shares may also be purchased through a financial
institution, such as a bank, savings and loan association or insurance company
(each a "Shareholder Servicing Agent"), that has established a Shareholder
servicing agreement with the Distributor or through a broker-dealer that has
established a dealer agreement with the Distributor.
Purchases and redemptions of shares of the Fund may be made on any day that the
New York Stock Exchange is open for trading ("Business Days"). The minimum
initial and subsequent investments in the Fund are $1,000 and $100, respectively
($100 and $25, respectively, for
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<PAGE> 167
employees of BANC ONE CORPORATION and its affiliates). Initial and subsequent
investment minimums may be waived at the Distributor's discretion. Investors may
purchase up to a maximum of $250,000 of Class B shares per individual purchase
order.
Class A and Class B shares are offered to the general public. Fiduciary Class
shares are offered to institutional investors, including affiliates of BANC ONE
CORPORATION and any bank, depository institution, insurance company, pension
plan or other organization authorized to act in fiduciary, advisory, agency,
custodial or similar capacities (each an "Authorized Financial Organization").
For additional details regarding eligibility, call the Distributor at
1-800-480-4111.
BY MAIL
Investors may purchase Class A and Class B shares of the Fund by completing and
signing an Account Application Form and mailing it, along with a check (or other
negotiable bank instrument or money order) payable to "The One Group(R)," to
State Street Bank and Trust Company (the Trust's Transfer Agent and Custodian),
P.O. Box 8500, Boston, MA 02266-8500. Subsequent purchases of shares may be made
at any time by mailing a check to the Transfer Agent. Account Application Forms
are available through the Distributor by calling 1-800-480-4111.
Purchases of Fiduciary Class shares and Class A shares that are being offered to
investors in certain retirement plans such as 401(k) and similar plans, other
than Individual Retirement Accounts, are made by an institutional investor
and/or other intermediary on behalf of an investor (each also a "Shareholder
Servicing Agent"). The Shareholder Servicing Agent may require an investor to
complete forms in addition to the Account Application Form and to follow
procedures established by the Shareholder Servicing Agent. Such Shareholders
should contact their Shareholder Servicing Agents regarding purchases, exchanges
and redemptions of shares. See "Additional Information Regarding Purchases."
BY TELEPHONE OR BY WIRE
Once an Account Application Form has been received, Shareholders are eligible to
make purchases by telephone or wire (if that option has been selected by a
Shareholder) by calling the Transfer Agent at 1-800-480-4111 or their
Shareholder Servicing Agents, if applicable.
Shareholders may revoke their automatic eligibility to make purchases and/or
redemptions by telephone or by wire, by sending a letter so stating to the
Transfer Agent, State Street Bank and Trust Company, P.O. Box 8500, Boston, MA
02266-8500.
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<PAGE> 168
SYSTEMATIC INVESTMENT PLAN
Class A and Class B investors may make automatic monthly investments in the Fund
from their bank, savings and loan or other depository institution accounts. The
minimum initial and subsequent investments must be $25 under the Systematic
Investment Plan, which minimum may be waived at the discretion of the
Distributor. The Trust pays the costs associated with these transfers, but
reserves the right, upon thirty days' written notice, to impose reasonable
charges for this service. A depository institution may impose a charge for
debiting an investor's account, which would reduce the investor's return from an
investment in the Fund.
FUND-DIRECT IRA
The Trust offers a tax-advantaged retirement plan for which shares of the Fund
may be an appropriate investment. The Trust's retirement plan allows
participants to defer taxes while helping them build their retirement savings.
The One Group(R)'s Fund-Direct IRA is a retirement plan with a wide choice of
investments, offering people with earned income the opportunity to compound
earnings on a tax-deferred basis. An IRA Adoption Agreement may be obtained by
calling the Distributor at 1-800-480-4111.
ADDITIONAL INFORMATION REGARDING PURCHASES
A purchase order will be effective as of the day received by the Distributor if
the Distributor receives the order before 4:00 p.m., eastern time. However, an
order may be canceled if the Transfer Agent does not receive Federal funds
before close of business on the next Business Day for Fiduciary Class shares,
and before the close of business on the third Business Day for Class A and Class
B shares, and the investor could be liable for any fees or expenses incurred by
the Trust. Federal funds are monies credited to a bank's account with a Federal
Reserve Bank. The purchase price of shares of the Fund is the net asset value
next determined after a purchase order is effected plus any applicable sales
charge (the "offering price"). The net asset value per share of the Fund is
determined by dividing the total market value of the Fund's investments and
other assets allocable to a class, less any liabilities allocable to that class,
by the total number of outstanding shares of such class. Net asset value per
share is determined daily as of 4:00 p.m., eastern time, on each Business Day.
For a further discussion of the calculation of net asset value, see the
Statement of Additional Information. Shares may also be issued in transactions
involving the acquisition by the Fund of securities held by collective
investment funds sponsored and administered by affiliates of the Adviser.
Purchases will be made in full and fractional shares of the Fund calculated to
three decimal places. Although the methodology and procedures are identical, the
net asset value per share of classes within the Fund may differ because the
distribution fees and expenses charged to Class A shares and Class B shares are
not charged to Fiduciary Class shares.
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<PAGE> 169
The Trust reserves the right to reject a purchase order when the Distributor
determines that it is not in the best interest of the Trust and/or its
Shareholders to accept such order. Except as provided below, neither the Trust's
Transfer Agent, the Distributor, the Adviser nor the Trust will be responsible
for any loss, liability, cost or expense for acting upon telephone or wire
instructions, and the investor will bear all risk of loss. The Trust will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine, including requiring a form of personal identification prior to acting
upon instructions received by telephone and recording telephone instructions. If
such procedures are not employed, the Trust may be liable for any losses due to
unauthorized or fraudulent instructions.
Fiduciary Class shares offered to institutional investors and investors in
certain retirement plans, and Class A shares that are being offered to investors
in certain retirement plans such as 401(k) and similar plans, other than
Individual Retirement Accounts, will normally be held in the name of the
Shareholder Servicing Agent effecting the purchase on the Shareholder's behalf,
and it is the Shareholder Servicing Agent's responsibility to transmit purchase
orders to the Distributor. A Shareholder Servicing Agent may impose an earlier
cut-off time for receipt of purchase orders directed through it to allow for
processing and transmittal of these orders to the Distributor for effectiveness
the same day. The Shareholder should contact his or her Shareholder Servicing
Agent for information as to the Shareholder Servicing Agent's procedures for
transmitting purchase, exchange or redemption orders to the Trust. A Shareholder
who desires to transfer the registration of shares beneficially owned by him or
her, but held of record by a Shareholder Servicing Agent, should contact the
Shareholder Servicing Agent to accomplish such change. Other Shareholders who
desire to transfer the registration of their shares should contact the Transfer
Agent.
No certificates representing the shares of the Fund will be issued. In
communications to Shareholders, the Fund will not duplicate mailings of Fund
material to Shareholders who reside at the same address.
SALES CHARGE
The following table shows the initial sales charge on Class A shares to a
"single purchaser" (defined below) together with the sales charge reallowed to
financial institutions and intermediaries (the "commission"):
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<TABLE>
<CAPTION> Sales Charge as Appropriate
Sales Charge as a Percentage of Net Commission as a Percentage
Amount of Purchase Percentage of Offering Price Amount Invested of Offering Price
- ------------------ ---------------------------- ---------------------------- --------------------------
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.05%
$100,000 but less
than $250,000 3.50% 3.63% 3.05%
$250,000 but less
than $500,000 2.50% 2.56% 2.05%
$500,000 but
less than $1,000,000 2.00% 2.04% 1.60%
1,000,000 or more 0.00% 0.00% 0.00%
</TABLE>
The commissions shown in the table apply to sales through financial institutions
and intermediaries. Under certain circumstances, the Distributor will use its
own funds to compensate financial institutions and intermediaries in amounts
that are additional to the commission shown above. The maximum cash compensation
payable by the Distributor as a sales charge is 4.50% of the offering price
(including the commission shown above and additional cash compensation described
below). In addition, the Distributor will, from time to time and at its own
expense, provide promotional incentives to financial institutions and
intermediaries, whose registered representatives have sold or are expected to
sell significant amounts of shares of the Fund, in the form of payment for
travel expenses, including lodging, incurred in connection with trips taken by
qualifying registered representatives to places within or outside the United
States, and additional compensation in an amount up to 1.00% of the offering
price of Class A shares of the Fund for sales of $1 million to $5 million, and
0.50% for sales over $5 million. However, the Distributor will be reimbursed
by the person receiving such additional compensation for sales of the Fund of
$1 million or more, if a Shareholder redeems any or all of the shares for
which such additional compensation was paid by the Distributor prior to the
first year anniversary of purchase. Under certain circumstances, commissions
up to the amount of the entire sales charge will be reallowed to financial
institutions and intermediaries, which might then be deemed to be
"underwriters" under the Securities Act of 1933.
RIGHT OF ACCUMULATION
In calculating the sales charge rates applicable to current purchases of Class A
shares, a "single purchaser" is entitled to cumulate current purchases with the
current value at the offering price of previously purchased Class A and Class B
shares of the Fund and other eligible funds of the Trust, other than the Trust's
money market funds, that are sold subject to a comparable sales charge.
The term "single purchaser" refers to (i) an individual, (ii) an individual and
spouse purchasing shares of the Fund for their own account or for trust or
custodial accounts for their
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minor children, or (iii) a fiduciary purchasing for any one trust, estate or
fiduciary account, including employee benefit plans created under Sections 401
or 457 of the Internal Revenue Code of 1986, as amended (the "Code"), and
including related plans of the same employer. To be entitled to a reduced sales
charge based upon shares already owned, the investor must ask the Distributor
for such reduction at the time of purchase and provide the account number(s) of
the investor, the investor and spouse, and their minor children, and give the
age of such children. The Fund may amend or terminate this right of accumulation
at any time as to subsequent purchases.
LETTER OF INTENT
By initially investing at least $2,000 in Class A shares of one or more funds of
the Trust that impose a comparable sales charge over the next 13 months, the
sales charge may be reduced by completing the Letter of Intent section of the
Account Application Form. The Letter of Intent includes a provision for a sales
charge adjustment depending on the amount actually purchased within the 13-month
period. In addition, pursuant to a Letter of Intent, the Custodian will hold in
escrow the difference between the sales charge applicable to the amount
initially purchased and the sales charge paid at the time of the investment,
which is based on the amount covered by the Letter of Intent.
For example, assume an investor signs a Letter of Intent to purchase $250,000 in
Class A shares of one (or more) of the funds of the Trust that impose a
comparable sales charge and, at the time of signing the Letter of Intent,
purchases $100,000 of Class A shares of one of these funds. The investor would
pay an initial sales charge of 1.50% (the sales charge applicable to purchases
of $250,000) and 1.00% of the investment (representing the difference between
the 2.50% sales charge applicable to purchases of $100,000 and the 1.50% sales
charge already paid) would be held in escrow until the investor has purchased
the remaining $150,000 or more in Class A shares under the investor's Letter of
Intent.
The amount held in escrow will be applied to the investor's account at the end
of the 13-month period unless the amount specified in the Letter of Intent is
not purchased. In order to qualify for a Letter of Intent, the investor will be
required to make a minimum purchase of at least $2,000.
The Letter of Intent will not obligate the investor to purchase Class A shares,
but if he or she does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. The Letter of
Intent may be dated as of a prior date to include any purchases made within the
past 90 days.
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<PAGE> 172
OTHER CIRCUMSTANCES
No sales charge is imposed on Class A shares of the Fund: (i) issued through
reinvestment of dividends and capital gains distributions; (ii) acquired through
the exercise of exchange privileges where a comparable sales charge has been
paid for exchanged shares; (iii) purchased by officers, directors or trustees,
retirees and employees (and their spouses and immediate family members) of the
Trust, of BANC ONE CORPORATION and its subsidiaries and affiliates, of the
Distributor and its subsidiaries and affiliates, or of an investment sub-adviser
of a fund of the Trust and such sub-adviser's subsidiaries and affiliates; (iv)
sold to affiliates of BANC ONE CORPORATION and to certain accounts (other than
Individual Retirement Accounts) for which Authorized Financial Organizations act
in fiduciary, advisory, agency, custodial or similar capacities, or purchased by
investment advisers, financial planners or other intermediaries who have a
dealer arrangement with the Distributor, who place trades for their own accounts
or for the accounts of their clients and who charge a management, consulting or
other fee for their services, as well as clients of such investment advisers,
financial planners or other intermediaries who place trades for their own
accounts if the accounts are linked to the master account of such investment
adviser, financial planner or other intermediary; (v) purchased with proceeds
from the recent redemption of Fiduciary Class shares of a fund of the Trust or
acquired in an exchange of Fiduciary Class shares of a fund for Class A shares
of the same fund; (vi) purchased with proceeds from the recent redemption of
shares of a mutual fund (other than a fund of the Trust) for which a sales
charge was paid; (vii) purchased in an Individual Retirement Account with the
proceeds of a distribution from an employee benefit plan, provided that, at the
time of distribution, the employee benefit plan had plan assets invested in a
fund of the Trust; (viii) purchased with Trust assets; (ix) purchased in
accounts as to which a bank or broker-dealer charges an asset allocation fee,
provided the bank or broker-dealer has an agreement with the Distributor; or (x)
directly purchased with the proceeds of a distribution on a bond for which a
Banc One Corporation affiliate bank or trust company is the Trustee or Paying
Agent.
An investor relying upon any of the categories of waivers of the sales charge
must qualify for such waiver in advance of the purchase with the Distributor or
the financial institution or intermediary through which shares are purchased by
the investor.
The waiver of the sales charge under circumstances (v), (vi) and (vii) above
applies only if the purchase is made within 60 days of the redemption or
distribution and if conditions imposed by the Distributor are met. The waiver
policy with respect to the purchase of shares through the use of proceeds from a
recent redemption or distribution as described in clauses (v), (vi) and (vii)
above will not be continued indefinitely and may be discontinued at any time
without notice. Investors should call the Distributor at 1-800-480-4111 to
determine whether they are eligible to purchase shares without paying a sales
charge through the use of proceeds from a
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<PAGE> 173
recent redemption or distribution as described above, and to confirm continued
availability of these waiver policies prior to initiating the procedures
described in clauses (v), (vi) and (vii).
ALTERNATIVE SALES ARRANGEMENTS
CLASS B SHARES
Class B shares are not subject to a sales charge when they are purchased, but
are subject to a sales charge (the "Contingent Deferred Sales Charge") if a
Shareholder redeems them prior to the sixth anniversary of purchase. When a
Shareholder purchases Class B shares, the full purchase amount is invested
directly in the Fund. Class B shares of the Fund are subject to an ongoing
distribution and Shareholder service fee at an annual rate of 1.00% of the
Fund's average daily net assets as provided in the Class B Plan (described below
under "The Distributor"). This ongoing fee will cause Class B shares to have a
higher expense ratio and to pay lower dividends than Class A shares. Class B
shares convert automatically to Class A shares after eight years, commencing
from the end of the calendar month in which the purchase order was accepted
under the circumstances and subject to the qualifications described in this
Prospectus.
Proceeds from the Contingent Deferred Sales Charge and the distribution and
Shareholder service fees under the Class B Plan are payable to the Distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
Shareholder services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to dealers and agents for selling
Class B shares. A dealer reallowance of 4.00% of the original purchase price of
the Class B shares will be paid to financial institutions and intermediaries.
CONTINGENT DEFERRED SALES CHARGE
If the Shareholder redeems Class B shares prior to the sixth anniversary of
purchase, the Shareholder will pay a Contingent Deferred Sales Charge at the
rates set forth below. The Contingent Deferred Sales Charge is assessed on an
amount equal to the lesser of the then-current market value or the cost of the
shares being redeemed. Accordingly, no sales charge is imposed on increases in
net asset value above the initial purchase price. In addition, no charge is
assessed on shares derived from reinvestment of dividends or capital gain
distributions.
The amount of the Contingent Deferred Sales Charge, if any, varies depending on
the number of years from the time of payment for the purchase of Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of shares, all
payments during a month are aggregated and deemed to have been made on the first
day of the month.
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<PAGE> 174
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED
SALES CHARGE AS A
YEAR(S) PERCENTAGE OF
SINCE DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
- -------- -----------------
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
6-7 None
7-8 None
</TABLE>
In determining whether a particular redemption is subject to a Contingent
Deferred Sales Charge, it is assumed that the redemption is first of any Class A
shares in the Shareholder's Fund account (unless the Shareholder elects to have
Class B shares redeemed first) or shares representing capital appreciation, next
of shares acquired pursuant to reinvestment of dividends and capital gain
distributions, and finally of other shares held by the Shareholder for the
longest period of time. This method should result in the lowest possible sales
charge.
To provide an example, assume you purchased 100 shares at $10 per share (a total
cost of $1,000) and prior to the second anniversary after purchase, the net
asset value per share is $12 and during such time you have acquired 10
additional shares through dividends paid in shares. If you then make your first
redemption of 50 shares (proceeds of $600), 10 shares will not be subject to
charge because you received them as dividends. With respect to the remaining 40
shares, the charge is applied only to the original cost of $10 per share and not
to the increase in net asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds is subject to a Contingent Deferred Sales Charge at a rate
of 4.00% (the applicable rate prior to the second anniversary after purchase).
The Contingent Deferred Sales Charge is waived on redemption of shares: (i) for
distributions that are made under a Systematic Withdrawal Plan of the Trust and
that are limited to no more than 10% of the account value annually, determined
in the first year as of the date the redemption request is received by the
Transfer Agent, and in subsequent years, as of the most recent anniversary of
that date; (ii) following the death or disability (as defined in the Code) of a
Shareholder or a participant or beneficiary of a qualifying retirement plan if
redemption is made within one year of such death or disability; or (iii) to the
extent that the redemption represents a minimum required distribution from an
Individual Retirement Account or other qualifying retirement plan to a
Shareholder who has attained the age of 70-1/2. A Shareholder or his or her
representative should contact the Transfer Agent to determine whether a
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<PAGE> 175
retirement plan qualifies for a waiver and must notify the Transfer Agent prior
to the time of redemption if such circumstances exist and the Shareholder is
eligible for this waiver. In addition, the following circumstances are not
deemed to result in a "redemption" of Class B shares for purposes of the
assessment of a Contingent Deferred Sales Charge, which is therefore waived: (i)
plans of reorganization of the Fund, such as mergers, asset acquisitions and
exchange offers to which the Fund is a party; or (ii) exchanges for Class B
shares of other funds of the Trust as described under "Exchanges."
CONVERSION FEATURE
Class B shares include all shares purchased pursuant to the Contingent Deferred
Sales Charge which have been outstanding for less than the period ending eight
years after the end of the month in which the shares were purchased. At the end
of this period, Class B shares will automatically convert to Class A shares and
will be subject to the lower distribution and Shareholder service fees charged
to Class A shares. Such conversion will be on the basis of the relative net
asset values of the two classes, without the imposition of any sales charge, fee
or other charge. The conversion is not a taxable event to a Shareholder.
For purposes of conversion to Class A shares, shares received as dividends and
other distributions paid on Class B shares in a Shareholder's Fund account will
be considered to be held in a separate sub-account. Each time any Class B shares
in a Shareholder's Fund account (other than those in the sub-account) convert to
Class A shares, a pro-rata portion of the Class B shares in the sub-account will
also convert to Class A shares.
If a Shareholder effects one or more exchanges among Class B shares of the funds
of the Trust during the eight-year period, the Trust will aggregate the holding
periods for the shares of each fund of the Trust for purposes of calculating
that eight-year period. Because the per share net asset value of the Class A
shares may be higher than that of the Class B shares at the time of conversion,
a Shareholder may receive fewer Class A shares than the number of Class B shares
converted, although the dollar value will be the same.
EXCHANGES
CLASS A AND FIDUCIARY CLASS
Fiduciary Class Shareholders of the Fund may exchange their shares for Class A
shares of the Fund or for Class A shares or Fiduciary Class shares of another
fund of the Trust.
Class A Shareholders may exchange their shares for Fiduciary Class shares of the
Fund or for Fiduciary Class shares or Class A shares of another fund of the
Trust, if the Shareholder is eligible to purchase such shares.
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<PAGE> 176
The exchange privilege may be exercised only in those states where the shares of
the Fund or such other fund of the Trust may be legally sold. All exchanges
discussed herein are made at the net asset value of the exchanged shares, except
as provided below. The Trust does not impose a charge for processing exchanges
of shares. If a Shareholder seeks to exchange Class A shares of a fund that does
not impose a sales charge for Class A shares of a fund that does or the fund
being exchanged into has a higher sales charge, the Shareholder will be required
to pay a sales charge in the amount equal to the difference between the sales
charge applicable to the fund into which the shares are being exchanged and any
sales charges previously paid for the exchanged shares, including any sales
charges incurred on any earlier exchanges of the shares (unless such sales
charge is otherwise waived, as provided in "Other Circumstances"). The exchange
of Fiduciary Class shares for Class A shares also will require payment of the
sales charge unless the sales charge is waived, as provided in "Other
Circumstances."
CLASS B
Class B Shareholders of the Fund may exchange their shares for Class B shares of
any other fund of the Trust on the basis of the net asset value of the exchanged
Class B shares, without the payment of any Contingent Deferred Sales Charge that
might otherwise be due upon redemption of the outstanding Class B shares. The
newly acquired Class B shares will be subject to the higher Contingent Deferred
Sales Charge of either the fund from which the shares were exchanged or the fund
into which the shares were exchanged. With respect to outstanding Class B shares
as to which previous exchanges have taken place, "higher Contingent Deferred
Sales Charge" shall mean the higher of the Contingent Deferred Sales Charge
applicable to either the fund the shares are exchanging into or any other fund
from which the shares previously have been exchanged. For purposes of computing
the Contingent Deferred Sales Charge that may be payable upon a disposition of
the newly acquired Class B shares, the holding period for outstanding Class B
shares of the fund from which the exchange was made is "tacked" to the holding
period of the newly acquired Class B shares. For purposes of calculating the
holding period applicable to the newly acquired Class B shares, the newly
acquired Class B shares shall be deemed to have been issued on the date of
receipt of the Shareholder's order to purchase the outstanding Class B shares of
the fund from which the initial exchange was made.
ADDITIONAL INFORMATION REGARDING EXCHANGES
In the case of shares held of record by a Shareholder Servicing Agent but
beneficially owned by a Shareholder, to exchange such shares the Shareholder
should contact the Shareholder Servicing Agent, who will contact the Transfer
Agent and effect the exchange on behalf of the Shareholder. If an exchange
request in good order is received by the Transfer Agent by 4:00 p.m., eastern
time, on any Business Day, the exchange usually will occur on that day. Any
Shareholder who wishes to make an exchange must receive a current prospectus of
the fund of the Trust in which he or she wishes to invest before the exchange
will be effected.
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<PAGE> 177
The Trust reserves the right to change the terms and conditions of the exchange
privilege discussed herein upon sixty days' written notice. An exchange between
classes of shares of the same fund is not considered a taxable event; however,
an exchange between funds of the Trust is considered a sale of shares and
usually results in a capital gain or loss for Federal income tax purposes.
Shareholders should consult their tax advisers for a more complete explanation
of the Federal income tax consequences of an exchange of shares of the Fund.
A more detailed description of the above is set forth in the Statement of
Additional Information.
REDEMPTIONS
Shareholders may redeem their shares without charge (except Class B shares, as
provided above) on any Business Day; shares may ordinarily be redeemed by mail,
by telephone or by wire. All redemption orders are effected at the net asset
value per share next determined for Class A and Fiduciary Class shares, and at
net asset value per share next determined reduced by any applicable Contingent
Deferred Sales Charge for Class B shares, after receipt of a valid request for
redemption. Payment to Shareholders for shares redeemed will be made within
seven days after receipt by the Transfer Agent of the request for redemption.
BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to constitute a valid request for redemption. All written redemption requests
should be sent to The One Group(R), c/o State Street Bank and Trust Company,
P.O. Box 8500, Boston, MA 02266-8500, or the Shareholder Servicing Agent, if
applicable. The Transfer Agent may require that the signature on the written
request be guaranteed by a commercial bank, a member firm of a domestic stock
exchange or by a member of the Securities Transfer Association Medallion Program
or the Stock Exchange Medallion Program.
The signature guarantee requirement will be waived if all of the following
conditions apply: (i) the redemption is for $5,000 worth of shares or less; (ii)
the redemption check is payable to the Shareholder(s) of record; and (iii) the
redemption check is mailed to the Shareholder(s) at the address of record. The
Shareholder may also have the proceeds mailed to a commercial bank account
previously designated on the Account Application Form or by written instruction
to the Transfer Agent or the Shareholder Servicing Agent, if applicable. There
is no charge for having redemption requests mailed to a designated bank account.
BY TELEPHONE OR BY WIRE
Shareholders may have the payment of redemption requests wired or mailed to a
domestic commercial bank account previously designated on the Account
Application Form. Wire redemption requests may be made by the Shareholder by
telephone to the Transfer Agent at
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<PAGE> 178
1-800-480-4111, provided that the Shareholder has elected the telephone
redemption privilege in writing to the Distributor, or to the Shareholder
Servicing Agent, if applicable. The Transfer Agent may reduce the amount of a
wire redemption payment by its then-current wire redemption charge, which, as of
the date of this Prospectus, is $7.00.
Neither the Trust nor the Transfer Agent will be responsible for the
authenticity of the redemption instructions received by telephone if it
reasonably believes those instructions to be genuine. The Trust and the Transfer
Agent will each employ reasonable procedures to confirm that telephone
instructions are genuine, and may be liable for losses resulting from
unauthorized or fraudulent telephone transactions if it does not employ those
procedures. Such procedures may include requesting personal identification
information or recording telephone conversations.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders whose accounts have a value of at least $10,000 may elect to
receive, or may designate another person to receive, monthly, quarterly or
annual payments in a specified amount of not less than $100 each. There is no
charge for this service. Under the Systematic Withdrawal Plan, all dividends and
distributions must be reinvested in shares of the Fund. Purchases of additional
Class A shares while the Systematic Withdrawal Plan is in effect are generally
undesirable because a sales charge is incurred whenever purchases are made.
Pursuant to the Systematic Withdrawal Plan, Class B Shareholders may elect to
receive, or may designate another person to receive, distributions provided the
distributions are limited to no more than 10% of their account value annually,
determined in the first year as of the date the redemption request is received
by the Transfer Agent, and in subsequent years, as of the most recent
anniversary of that date. In addition, Shareholders who have attained the age of
70 1/2 may elect to receive distributions, to the extent that the redemption
represents a minimum required distribution from an Individual Retirement Account
or other qualifying retirement plan.
If the amount of the systematic withdrawal exceeds the income accrued since the
previous withdrawal under the Systematic Withdrawal Plan, the principal balance
invested will be reduced and shares will be redeemed.
OTHER INFORMATION REGARDING REDEMPTIONS
At various times, the Fund may be requested to redeem shares for which it has
not yet received good payment. In such circumstances, the forwarding of proceeds
may be delayed for 15 or more days until payment has been collected for the
purchase of such shares. The Fund intends to pay cash for all shares redeemed.
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<PAGE> 179
Due to the relatively high costs of handling small investments, the Fund
reserves the right to redeem, at net asset value, the shares of any Shareholder
if, because of redemptions of shares by or on behalf of the Shareholder, the
account of such Shareholder in the Fund has a value of less than $1,000, the
minimum initial purchase amount. Accordingly, an investor purchasing shares of
the Fund in only the minimum investment amount may be subject to such
involuntary redemption if he or she thereafter redeems any of these shares.
Before the Fund exercises its right to redeem such shares and to send the
proceeds to the Shareholder, the Shareholder will be given notice that the value
of the shares in his or her account is less than the minimum amount and will be
allowed 60 days to make an additional investment in the Fund in an amount which
will increase the value of the account to at least $1,000.
See the Statement of Additional Information for examples of when the Trust may
suspend the right of redemption or redeem shares involuntarily if it appears
appropriate to do so in light of the Trust's responsibilities under the
Investment Company Act of 1940.
FUND MANAGEMENT
THE ADVISER
The Trust and Banc One Investment Advisors Corporation (the "Adviser") have
entered into an investment advisory agreement (the "Advisory Agreement"). Under
the Advisory Agreement, the Adviser makes the investment decisions for the
assets of the Fund and continuously reviews, supervises and administers the
Fund's investment program. The Adviser discharges its responsibilities subject
to the supervision of, and policies established by, the Trustees of the Trust.
The Trust's shares are not deposits or obligations of, or endorsed or guaranteed
by BANC ONE CORPORATION or its bank or non-bank affiliates. The Trust's shares
are not insured or guaranteed by the Federal Deposit Insurance Corporation
("FDIC") or by any other governmental agency or government sponsored agency of
the Federal government or any state.
The Adviser is an indirect, wholly-owned subsidiary of BANC ONE CORPORATION, a
bank holding company incorporated in the state of Ohio. BANC ONE CORPORATION
currently has affiliate banking organizations in Arizona, Colorado, Illinois,
Indiana, Kentucky, Louisiana, Ohio, Oklahoma, Texas, Utah, West Virginia and
Wisconsin. In addition, BANC ONE CORPORATION has several affiliates that engage
in data processing, venture capital, investment and merchant banking, and other
diversified services including trust management, investment management,
brokerage, equipment leasing, mortgage banking, consumer finance and insurance.
On a consolidated basis, BANC ONE CORPORATION had assets of over $88 billion as
of September 30, 1995.
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<PAGE> 180
The Adviser represents a consolidation of the investment advisory staffs of a
number of bank affiliates of BANC ONE CORPORATION, which have considerable
experience in the management of open-end management investment company
portfolios, including The One Group(R) since 1985 (then known as "The Helmsman
Fund").
Donald E. Allred will serve as Fund Manager and Richard R. Jandrain, III will
serve as Assistant Fund Manager for the Fund. Prior to becoming affiliated with
the Adviser, Mr. Allred served as the President, Chief Executive Officer and
Chief Investment Officer at Premier Investment Advisors, L.L.C., where he also
served as the Portfolio Manager of the Paragon Gulf South Growth Fund from its
inception in 1991. Mr. Allred has over 30 years of investment experience.
Mr. Jandrain also serves as the Senior Managing Director of Equity Securities
for the Adviser and in this capacity is responsible for the development and
implementation of the equity investment policies of the Adviser. Mr. Jandrain
has over 18 years of investment experience and has served in various investment
management positions with the Adviser and its affiliates for the past five
years.
The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .74% of the average daily net assets of the Fund. The Adviser
may voluntarily agree to waive a part of its fees. (See "About the Fund --
Expense Summary.") These fee waivers would be voluntary and may be terminated at
any time. Shareholders will be notified in advance if and when these waivers are
terminated. The total compensation to the Adviser for investment advisory and
sub-administration services exceeds 0.75%, which is considered by the SEC staff
to be higher than such fees paid by most other mutual funds. However, the
Adviser believes it is comparable to compensation paid by other mutual funds
having similar investment objectives and policies.
THE DISTRIBUTOR
The One Group Services Company (the "Distributor"), a wholly-owned subsidiary of
the BISYS Group, Inc., and the Trust are parties to a distribution agreement
(the "Distribution Agreement") under which shares of the Fund are sold on a
continuous basis.
Class A shares are subject to a distribution and Shareholder services plan (the
"Plan"). As provided in the Plan, the Trust will pay the Distributor a fee of
.35% of the average daily net assets of Class A shares of the Fund. Currently,
the Distributor has voluntarily agreed to limit payments under the Plan to .25%
of the average daily net assets of the Class A shares of the Fund. Up to .25% of
the fees payable under the Plan may be used as compensation for Shareholder
services by the Distributor and/or financial institutions and intermediaries.
All such fees that may be paid under the Plan will be paid pursuant to Rule
12b-1 of the Investment Company Act of 1940. The Distributor may apply these
fees toward: (i) compensation for its services in connection with distribution
assistance or provision of Shareholder services; or (ii) payments to financial
institutions and intermediaries such as banks
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<PAGE> 181
(including affiliates of the Adviser), savings and loan associations, insurance
companies, investment counselors, broker-dealers, and the Distributor's
affiliates and subsidiaries, as compensation for services or reimbursement of
expenses incurred in connection with distribution assistance or provision of
Shareholder services.
Class B shares are subject to a Contingent Deferred Sales Charge if such shares
are redeemed prior to the sixth anniversary of purchase. Class B shares of the
Fund are subject to an ongoing distribution and Shareholder service fee as
provided in the Class B distribution and Shareholder services plan (the "Class B
Plan") at an annual rate of 1.00% of the Fund's average daily net assets, which
includes Shareholder servicing fees of .25% of the Fund's average daily net
assets.
Proceeds from the Contingent Deferred Sales Charge and the distribution and
Shareholder service fees under the Class B Plan are payable to the Distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
Shareholder services to the Fund in connection with the sale of Class B shares,
such as the payment of compensation to dealers and agents for selling Class B
shares. The combination of the Contingent Deferred Sales Charge and the
distribution and Shareholder service fees facilitate the ability of the Fund to
sell the Class B shares without a sales charge being deducted at the time of
purchase.
The Plan and the Class B Plan are characterized as compensation plans since the
distribution fees will be paid to the Distributor without regard to the
distribution or Shareholder service expenses incurred by the Distributor or the
amount of payments made to financial institutions and intermediaries. The Fund
also may execute brokerage or other agency transactions through an affiliate of
the Adviser or through the Distributor for which the affiliate or the
Distributor receives compensation. Pursuant to guidelines adopted by the Board
of Trustees of the Trust, any such compensation will be reasonable and fair
compared to compensation received by other brokers in connection with comparable
transactions.
Fiduciary Class shares of the Fund are offered without distribution fees to
institutional investors, including Authorized Financial Organizations. It is
possible that an institution may offer different classes of shares to its
customers and thus receive different compensation with respect to different
classes of shares. In addition, a financial institution that is the record owner
of shares for the account of its customers may impose separate fees for account
services to its customers.
THE ADMINISTRATOR
The One Group Services Company (the "Administrator"), a wholly-owned subsidiary
of the BISYS Group, Inc., and the Trust are parties to an administration
agreement relating to the Fund (the "Administration Agreement"). Under the terms
of the Administration Agreement, the Administrator is responsible for providing
the Trust with administrative services (other
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than investment advisory services), including regulatory reporting and all
necessary office space, equipment, personnel and facilities.
The Adviser also serves as Sub-Administrator to each fund of the Trust, pursuant
to an agreement between the Administrator and the Adviser. Pursuant to this
agreement, the Adviser performs many of the Administrator's duties for which the
Adviser receives a fee paid by the Administrator.
The Administrator is entitled to a fee for administrative services, which is
calculated daily and paid monthly, at an annual rate of .20% of each fund's
average daily net assets on the first $1.5 billion in Trust assets (excluding
the Treasury Only Money Market Fund and the Government Money Market Fund), .18%
of each fund's average daily net assets to $2 billion in Trust assets (excluding
the Treasury Only Money Market Fund and the Government Money Market Fund), and
.16% of each fund's average daily net assets when Trust assets exceed $2 billion
(excluding the Treasury Only Money Market Fund and the Government Money Market
Fund).
THE TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500 acts
as Transfer Agent and Custodian for the Trust for which services it receives a
fee. The Custodian holds cash, securities and other assets of the Trust as
required by the Investment Company Act of 1940. Bank One Trust Company, N.A.
serves as Sub-Custodian in connection with the Trust's securities lending
activities, pursuant to an agreement between State Street Bank and Trust Company
and Bank One Trust Company. Bank One Trust Company receives a fee paid by the
Trust.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Ropes & Gray serves as counsel to the Trust. Coopers & Lybrand L.L.P. serves as
the independent accountants of the Trust.
OTHER INFORMATION
THE TRUST
The Trust was organized as a Massachusetts Business Trust under a Declaration of
Trust filed on May 23, 1985. The Declaration of Trust permits the Trust to offer
separate funds and different classes of each fund. All consideration received by
the Trust for shares of any Fund and all assets of such fund belong to that fund
and would be subject to liabilities related thereto.
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The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to Shareholders, costs of custodial services and registering the
shares under Federal and state securities laws, pricing, insurance expenses,
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organizational expenses.
The Adviser and the Administrator of the Fund each bears all expenses incurred
in connection with the performance of their services as investment adviser and
administrator, respectively, other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund.
As a general matter, as set forth in the Multiple Class Plan, expenses are
allocated to each class of shares of the Fund on the basis of the net asset
value of that class in relation to the net asset value of the Fund. At present,
the only expenses that are allocated to Class A and Class B shares, other than
in accordance with the relative net asset value of the class, are the different
distribution and Shareholder services costs. See "Expense Summary." At present,
no expenses are allocated to Fiduciary Class shares as a class that are not also
borne by the other classes of shares of the Fund in proportion to the relative
net asset values of the shares of such classes.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described above, certain
companies provide essential management services to the Trust.
VOTING RIGHTS
As set forth in the Multiple Class Plan, each share held entitles the
Shareholder of record to one vote. Each fund of the Trust will vote separately
on matters relating solely to that fund. In addition, each class of a fund shall
have exclusive voting rights on any matter submitted to Shareholders that
relates solely to that class, and shall have separate voting rights on any
matter submitted to Shareholders in which the interests of one class differ from
the interests of any other class. However, all fund Shareholders will have equal
voting rights on matters that affect all fund Shareholders equally. As a
Massachusetts Business Trust, the Trust is not required to hold annual meetings
of Shareholders but approval will be sought for certain changes in the operation
of the Trust and for the election of Trustees under certain circumstances. In
addition, a Trustee may be elected or removed by the remaining Trustees or by
Shareholders at a special meeting called upon written request of Shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the Shareholders requesting the meeting.
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DIVIDENDS
Substantially all of the net investment income (exclusive of capital gains) of
the Fund is declared on the last Business Day of each month as a dividend for
Shareholders of record as of the close of business on that day and is
distributed in the form of periodic dividends to such Shareholders of the Fund
on the first Business Day of each month. Capital gains of the Fund, if any, will
be distributed at least annually.
Shareholders automatically receive all income dividends and capital gain
distributions in additional Class A, Class B, or Fiduciary Class shares, as
applicable, at the net asset value next determined following the record date,
unless the Shareholder has elected to take such payment in cash. Such election,
or any revocation thereof, must be made in writing, at least 15 days prior to
distribution, to the Transfer Agent at P.O. Box 8500, Boston, MA 02266-8500, and
will become effective with respect to dividends and distributions having record
dates after its receipt by the Transfer Agent. Reinvested dividends and
distribution receive the same tax treatment as dividends and distributions paid
in cash.
Class B shares received as dividends and capital gains distributions at the net
asset value next determined following the record date shall be held in a
separate Class B sub-account. Each time any Class B shares (other than those in
the subaccount) convert to Class A shares, a pro-rata portion of the Class B
shares in the sub-account will also convert to Class A shares. (See "Conversion
Feature.") Reinvested dividends and distributions receive the same tax treatment
as dividends and distributions paid in cash.
Dividends and distributions of the Fund are paid on a per-share basis. The value
of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a dividend or the distribution of
capital gains, a Shareholder will pay the full price for the shares and receive
some portion of the price back as a taxable dividend or distribution even though
such distribution would, in effect, represent a return of the Shareholder's
investment.
The amount of dividends payable on Fiduciary Class shares will be more than the
dividends payable on Class A and Class B shares because of the distribution
expenses charged to Class A and Class B shares.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Administrator, The One Group
Services Company, 3435 Stelzer Road, Columbus, OH 43219.
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REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes proxy statements and other
reports to Shareholders of record.
OTHER INVESTMENT POLICIES
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes during periods when the Adviser determines that
market conditions warrant such action, the Fund may invest up to 100% of its
assets in cash equivalents (including securities issued or guaranteed as to
principal and interest by the U.S. government, its agencies or
instrumentalities, repurchase agreements, certificates of deposit and bankers'
acceptances issued by banks or savings and loan associations having net assets
of at least $1 billion as of the end of their most recent fiscal year,
commercial paper rated in one of the two highest short-term rating categories by
at least one NRSRO or, if unrated, determined by the Adviser to be of comparable
quality, variable amount master demand notes and bank money market deposit
accounts), and may hold cash for liquidity purposes.
To the extent the Fund is engaged in a temporary defensive position, the Fund
will not be pursuing its investment objective.
For a further description of the Fund's permitted investments, see "Description
of Permitted Investments" and the Statement of Additional Information, and for a
description of ratings, see "Description of Ratings."
PORTFOLIO TURNOVER
The Fund may engage in short-term trading, which involves selling securities
that have been held for a short period of time in order to increase the
potential for capital appreciation and/or income of the Fund or to take
advantage of a temporary disparity in the normal price or yield relationship
between two securities or changes in market, industry or company conditions or
outlook. Any such trading would increase a portfolio's turnover rate and its
transaction costs.
The Adviser will choose brokers by judging professional ability, quality of
service and reasonableness of commissions. Higher commissions may be paid to
those firms that provide research, superior execution and other services. The
Adviser may use any such research information in managing the assets of the
Fund.
The portfolio turnover rate for the Fund may vary greatly from year to year, as
well as within a particular year. It is presently estimated that the annual
portfolio turnover rate of the Fund will not exceed 100%.
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Higher portfolio turnover rates will likely result in higher transaction costs
to the Fund and may result in additional tax consequences to the Fund's
Shareholders.
INVESTMENT LIMITATIONS
The investment objective and the following investment limitations are
fundamental policies of the Fund. Fundamental policies cannot be changed without
the consent of the holders of a majority of the Fund's outstanding shares. The
term "majority of the outstanding shares" means the vote of (i) 67% or more of
the Fund's shares present at a meeting, if more than 50% of the outstanding
shares of the Fund are present or represented by proxy, or (ii) more than 50% of
the Fund's outstanding shares, whichever is less.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities, and if consistent with the
Fund's investment objective and policies, repurchase agreements involving such
securities) if as a result more than 25% of the total assets of the Fund would
be invested in the securities of such issuer. This restriction applies to 50% of
the Fund's total assets. For purposes of this limitation, a security is
considered to be issued by the government entity whose assets and revenues
guarantee or back the security. With respect to private activity bonds or
industrial development bonds backed only by the assets and revenues of a
non-governmental user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total assets of
the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in the obligations issued or guaranteed
by the U.S. government or its agencies and instrumentalities and repurchase
agreements involving such securities. For purposes of this limitation (i)
utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents.
3. Make loans, except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described in
this Prospectus and in the Statement of Additional Information.
The foregoing percentages will apply at the time of the purchase of a security.
Additional investment limitations are set forth in the Statement of Additional
Information.
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DESCRIPTION OF PERMITTED INVESTMENTS
The following is a description of certain of the permitted investments for the
Fund.
The Fund invests in common stocks (including sponsored and unsponsored American
Depository Receipts ("ADRs")) and convertible securities only if they are listed
on registered exchanges or actively traded in the over-the-counter market,
except that the Fund may invest up to 5% of its net assets in restricted
securities.
U.S. TREASURY OBLIGATIONS -- The Fund may invest in bills, notes and bonds
issued by the U.S. Treasury and separately traded interest and principal
component parts of such obligations that are transferable through the Federal
book-entry system, known as Separately Traded Registered Interest and Principal
Securities ("STRIPS") and Coupon Under Book Entry Safekeeping ("CUBES").
RECEIPTS -- The Fund may purchase interests in separately traded interest and
principal component parts of U.S. Treasury obligations that are issued by banks
or brokerage firms and are created by depositing U.S. Treasury notes and U.S.
Treasury bonds into a special account at a custodian bank. The custodian holds
the interest and principal payments for the benefit of the registered owners of
the certificates or receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains the register.
Receipts include Treasury Receipts ("TRS"), Treasury Investment Growth Receipts
("TIGRS") and Certificates of Accrual on Treasury Securities ("CATS").
STRIPS, CUBES, TRS, TIGRS and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
interest rate volatility than interest-paying U.S. Treasury obligations. The
Fund may invest up to 20% of its total assets in STRIPS, CUBES, TRS, TIGRS and
CATS. See also "Taxes."
CERTIFICATES OF DEPOSIT -- Certificates of deposit are negotiable interest
bearing instruments with a specific maturity. Certificates of deposit ("CDS")
are issued by banks and savings and loan institutions in exchange for the
deposit of funds and normally can be traded in the secondary market prior to
maturity.
TIME DEPOSITS -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, a time deposit
("TD") earns a specified rate of interest over a definite period of time;
however, it cannot be traded in the secondary market. Time deposits with a
withdrawal penalty are considered to be illiquid securities;
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therefore, the Fund will not invest more than 15% of its net assets in such time
deposits and other illiquid securities.
BANKERS' ACCEPTANCES -- Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by (i.e., made an obligation of) a commercial bank.
They are used by corporations to finance the shipment and storage of goods and
to furnish dollar exchange. Maturities are generally six months or less.
COMMERCIAL PAPER -- Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations and other entities.
Maturities on these issues vary from a few days to nine months.
U.S. GOVERNMENT AGENCIES -- Certain Federal agencies have been established as
instrumentalities of the U.S. government to supervise and finance certain types
of activities. Select agencies, such as the Government National Mortgage
Association ("Ginnie Mae") and the Export-Import Bank, are supported by the full
faith and credit of the U.S. Treasury; others, such as the Federal National
Mortgage Association ("Fannie Mae"), are supported by the credit of the
instrumentality and have the right to borrow from the U.S. Treasury; others are
supported by the authority of the U.S. government to purchase the agency's
obligations; while still others, such as the Federal Farm Credit Banks and the
Federal Home Loan Mortgage Corporation ("Freddie Mac"), are supported solely by
the credit of the instrumentality itself. No assurance can be given that the
U.S. government would provide financial support to U.S. government sponsored
agencies or instrumentalities if it is not obligated to do so by law.
Obligations of U.S. government agencies include debt issues and mortgage-backed
securities issued or guaranteed by select agencies.
CONVERTIBLE SECURITIES -- Convertible securities have characteristics similar to
both fixed income and equity securities. Because of the conversion feature, the
market value of convertible securities tends to move together with the market
value of the underlying stock. As a result, the Fund's selection of convertible
securities is based, to a great extent, on the potential for capital
appreciation that may exist in the underlying stock. The value of convertible
securities is also affected by prevailing interest rates, the credit quality of
the issuer, and any call provisions.
INVESTMENT COMPANY SECURITIES -- The Fund may invest up to 5% of its total
assets in the securities of any one investment company, but may not own more
than 3% of the securities of any one investment company or invest more than 10%
of its total assets in the securities of other investment companies. In
accordance with an exemptive order issued to the Trust by the SEC, such other
investment company securities may include securities of a money market fund of
the Trust, and such companies may include companies of which the Adviser or a
sub-adviser to a fund of the Trust, or an affiliate of such Adviser or
sub-adviser, serves as investment adviser, administrator or distributor. Because
other investment companies employ an investment adviser, such investment by the
Fund may cause Shareholders to bear
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duplicative fees. The Adviser will waive its fee attributable to the assets of
the investing fund invested in a money market fund of the Trust; and, to the
extent required by the laws of any state in which shares of the Trust are sold,
the Adviser will waive its fees attributable to the assets of the Fund invested
in any investment company.
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a person
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. The custodian or
its agent will hold the security as collateral for the repurchase agreement.
Collateral must be maintained at a value at least equal to 100% of the
repurchase price. The Fund bears a risk of loss in the event the other party
defaults on its obligations and the Fund is delayed or prevented from its right
to dispose of the collateral securities or if the Fund realizes a loss on the
sale of the collateral securities. The Adviser will enter into repurchase
agreements on behalf of the Fund only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the agreement based on
guidelines established and periodically reviewed by the Trustees. Repurchase
agreements are considered by the SEC to be loans under the Investment Company
Act of 1940.
REVERSE REPURCHASE AGREEMENTS -- The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Fund would sell portfolio securities to financial institutions
such as banks and broker-dealers, and agree to repurchase them at a mutually
agreed-upon date and price. The Fund will enter into reverse repurchase
agreements only to avoid otherwise selling securities during unfavorable market
conditions to meet redemptions. At the time the Fund enters into a reverse
repurchase agreement, it would place in a segregated custodial account assets,
such as liquid high grade debt securities, consistent with the Fund's investment
restrictions and having a value equal to the repurchase price (including accrued
interest), and would subsequently monitor the account to ensure that such
equivalent value was maintained. Reverse repurchase agreements involve the risk
that the market value of the securities sold by the Fund may decline below the
price at which the Fund is obligated to repurchase the securities. Reverse
repurchase agreements are considered by the SEC to be borrowings by a Fund under
the Investment Company Act of 1940.
SECURITIES LENDING -- In order to generate additional income, the Fund may lend
up to 33% of the securities in which it is invested pursuant to agreements
requiring that the loan be continuously secured by cash, securities of the U.S.
government or its agencies, shares of an investment trust or mutual fund or any
combination of cash and such securities as collateral equal at all times to at
least 100% of the market value plus accrued interest on the securities lent. The
Fund will continue to receive interest on the securities lent while
simultaneously seeking to earn interest on the investment of cash collateral in
U.S. government securities, shares of an investment trust or mutual fund, or
other short-term, highly liquid investments. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of the
securities lent. There may be risks of delay in recovery of the securities or
even
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loss of rights in the collateral should the borrower of the securities fail
financially. However, loans will only be made to borrowers deemed by the Adviser
to be of good standing under guidelines established by the Trust's Board of
Trustees and when, in the judgment of the Adviser, the consideration which can
be earned currently from such securities loans justifies the attendant risk. The
Fund will enter into loan arrangements only with counterparties which the
Adviser has deemed to be creditworthy under guidelines established by the Board
of Trustees. Loans are subject to termination by the Fund or the borrower at any
time, and are, therefore, not considered to be illiquid investments.
RESTRICTED SECURITIES -- The Fund may invest in commercial paper issued in
reliance on the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933. Section 4(2) commercial paper is restricted as to
disposition under Federal securities law and is generally sold to institutional
investors, such as the Fund, who agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) commercial paper is
normally resold to other institutional investors like the Fund through or with
the assistance of the issuer or investment dealers who make a market in Section
4(2) commercial paper, thus providing liquidity. The Fund believes that Section
4(2) commercial paper and possibly certain other restricted securities that meet
the criteria for liquidity established by the Trustees are quite liquid. The
Fund intends, therefore, to treat the restricted securities that meet the
criteria for liquidity established by the Trustees, including Section 4(2)
commercial paper, as determined by the Adviser, as liquid and not subject to the
investment limitation applicable to illiquid securities. In addition, because
Section 4(2) commercial paper is liquid, the Fund will not subject such paper to
the limitation applicable to restricted securities.
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under an SEC staff position set forth in the adopting
release for Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule is
a nonexclusive safe-harbor for certain secondary market transactions involving
securities subject to restrictions on resale under Federal securities laws. The
Rule provides an exemption from registration for resales of otherwise restricted
securities to qualified institutional buyers. The Rule is expected to further
enhance the liquidity of the secondary market for securities eligible for resale
under Rule 144A. The Fund believes that the staff of the SEC has left the
question of determining the liquidity of all restricted securities to the
Trustees. The Trustees have directed the Adviser to consider the following
criteria in determining the liquidity of certain restricted securities:
- - the frequency of trades and quotes for the security;
- - the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
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- - dealer undertakings to make a market in the security; and
- - the nature of the security and the nature of the marketplace trades.
VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain of the obligations purchased
by the Fund may carry variable or floating rates of interest, may involve a
conditional or unconditional demand feature and may include variable amount
master demand notes. A demand instrument with a demand notice period exceeding
seven days may be considered illiquid if there is no secondary market for such
security; therefore, the Fund will not invest more than 15% of its net assets in
such instruments and other illiquid securities. The interest rates on these
securities may be reset daily, weekly, quarterly or some other reset period, and
may have a floor or ceiling on interest rate charges. There is a risk that the
current interest rate on such obligations may not accurately reflect existing
rates. The Fund will not invest more than 5% of its total assets in variable
rate master demand notes.
There is no limit on the extent to which the Fund may purchase variable and
floating rate instruments that are not illiquid. The Fund will purchase variable
and floating rate instruments to facilitate portfolio liquidity or to permit the
investment of the Fund's assets at a favorable rate of return.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS AND FORWARD COMMITMENTS -- The Fund
may purchase securities on a when-issued basis when deemed by the Adviser to
present attractive investment opportunities. When-issued securities are
purchased for delivery beyond the normal settlement date at a stated price and
yield, thereby involving the risk that the yield obtained will be less than that
available in the market at delivery. Although the purchase of securities on a
when-issued basis is not considered leveraging, it has the effect of leveraging.
When the Adviser purchases a when-issued security, the Custodian will set aside
cash or liquid securities to satisfy the purchase commitment. The Fund generally
will not pay for such securities or earn interest on them until received.
Commitments to purchase when-issued securities will not, under normal market
conditions, exceed 25% of the Fund's total assets, and a commitment will not
exceed 90 days. The Fund will only purchase when-issued securities for the
purpose of acquiring portfolio securities and not for speculative purposes.
In a forward commitment transaction, the Fund contracts to purchase securities
for a fixed price at a future date beyond customary settlement time. The Fund is
required to hold and maintain in a segregated account until the settlement date,
cash, U.S. government securities or liquid high-grade debt obligations in an
amount sufficient to meet the purchase price. Alternatively, the Fund may enter
into offsetting contracts for the forward sale of other securities that it owns.
The purchase of securities on a when-issued or forward commitment basis involves
a risk of loss if the value of the security to be purchased declines prior to
the settlement date. Although the Fund would generally purchase securities on a
when-issued or forward commitment basis with the intention of actually acquiring
securities for its portfolio,
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the Fund may dispose of a when-issued security or forward commitment prior to
settlement if the Adviser deems it appropriate to do so.
OPTIONS -- The Fund may purchase and write (i.e., sell) call options and put
options on securities and indices, which options are traded on national
securities exchanges. A call option gives the purchaser the right to buy, and
obligates the writer of the option to sell, the underlying security at the
agreed upon exercise (or "strike") price during the option period. A put option
gives the purchaser the right to sell, and obligates the writer to buy, the
underlying security at the strike price during the option period. Purchasers of
options pay an amount, known as a premium, to the option writer in exchange for
the right under the option contract. Option contracts may be written with terms
that would permit the holder of the option to purchase or sell the underlying
security only upon the expiration date of the option. The initial purchase
(sale) of an option contract is an "opening transaction." In order to close out
an option position, the Fund may enter into a "closing transaction," the sale
(purchase) of an option contract on the same security with the same exercise
price and expiration date as the option contract originally opened.
The Fund may purchase put and call options in hedging transactions to protect
against a decline in the market value of the securities in the Fund (e.g., by
the purchase of a put option) and to protect against an increase in the cost of
fixed-income securities that the Fund may seek to purchase in the future (e.g.,
by the purchase of a call option). In the event that paying premiums for put and
call options, together with price movements in the underlying securities, are
such that exercise of the options would not be profitable for the Fund, losses
of the premiums paid may be offset by an increase in the value of the Fund's
securities (in the case of a purchase of put options) or by a decrease in the
cost of acquisition of securities by the Fund (in the case of a purchase of call
options).
The Fund also may write secured put and covered call options as a means of
increasing the yield on the Fund and as a means of providing limited protection
against decreases in market value of the Fund.
There are risks associated with options transactions, including the following:
(i) the success of a hedging strategy may depend on the ability of the Adviser
to predict movements in the prices of the individual securities, fluctuations in
markets and movements in interest rates; (ii) there may be an imperfect or no
correlation between the changes in market value of the securities held by the
Fund and the prices of options; (iii) there may not be a liquid secondary market
for options; and (iv) while the Fund will receive a premium when it writes
covered call options, it may not participate fully in a rise in the market value
of the underlying security. It is expected that the Fund will only engage in
option transactions with respect to permitted investments and related indices.
Generally, the policy of the Fund, in order to avoid the exercise of an option
sold by it, will be to cancel its obligation under the option by entering into a
closing purchase transaction, if
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available, unless selling (in the case of a call option) or purchasing (in the
case of a put option) the underlying securities is determined to be in the
Fund's interest. A closing purchase transaction consists of the Fund purchasing
an option having the same terms as the option sold by the Fund, and has the
effect of canceling the Fund's position as a seller. The premium which the Fund
will pay in executing a closing purchase transaction may be higher (or lower)
than the premium received when the option was sold, depending in large part upon
the relative price of the underlying security at the time of each transaction.
To the extent options sold by the Fund are exercised and the Fund either
delivers securities to the holder of a call option or liquidates securities as a
source of funds to purchase securities put to the Fund, the Fund's turnover rate
will increase, which would cause the Fund to incur additional brokerage
expenses.
During the option period, the Fund, as a covered call writer, gives up the
potential appreciation above the exercise price should the underlying security
rise in value, and the Fund, as a covered put writer, retains the risk of loss
should the underlying security decline in value. For the covered call writer,
substantial appreciation in the value of the underlying security would result in
the security being "called away" at the strike price of the option which may be
substantially below the fair market value of such security. For the covered put
writer, substantial depreciation in the value of the underlying security would
result in the security being "put to" the writer at the strike price of the
option which may be substantially in excess of the fair market value of such
security. If a covered call option or a covered put option expires unexercised,
the writer realizes a gain, and the buyer a loss, in the amount of the premium.
The SEC requires that obligations of investment companies such as the Fund, in
connection with option sale positions, must comply with certain segregation or
coverage requirements, which are more fully described in the Statement of
Additional Information.
The Fund will only write covered call options on its securities and will limit
such activities to provide that the aggregate market value of such options and
the Fund's obligations under such written puts does not exceed 25% of the Fund's
net assets as of the time such options are entered into by the Fund.
FUTURES CONTRACTS AND RELATED OPTIONS -- The Fund may enter into futures
contracts, options on futures contracts, index futures and options thereon that
are traded on an exchange regulated by the Commodities Futures Trading
Commission ("CFTC") if, to the extent that such futures and options are not for
"bona fide hedging purposes" (as defined by the CFTC), the aggregate initial
margin and premiums on such positions (excluding the amount by which options are
in the money) do not exceed 5% of the Fund's total assets at current value. The
Fund, however, may invest more than such amount for bona fide hedging purposes,
and also may invest more than such amount if it obtains authority to do so from
the appropriate regulatory agencies without rendering the Fund a commodity pool
operator or adversely affecting its status as an investment company for Federal
securities law or income tax
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purposes. However, the Fund may enter into futures contracts and options on
futures only to the extent that obligations under such contracts or
transactions, together with options on securities, represent not more than 25%
of the Fund's total assets.
The Fund may buy and sell futures contracts and related options to manage its
exposure to changing interest rates and security prices. Some futures
strategies, including selling futures, buying puts and writing calls, may reduce
the Fund's exposure to price fluctuations. Other strategies, including buying
futures, writing puts and buying calls, tend to increase market exposure.
Futures and options may be combined with each other in order to adjust the risk
and return characteristics of the overall portfolio. The Fund expects to enter
into these transactions to "lock in" a return or spread on a particular
investment or portion of its assets, to protect against any increase in the
price of securities the Fund anticipates purchasing at a later date, or for
other risk management strategies.
Options and futures can be volatile instruments, and involve certain risks. If
the Adviser applies a hedge at an inappropriate time or judges interest rates
incorrectly, options and futures strategies may lower the Fund's return. The
Fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other instruments, or if it could not
close out its positions because of an illiquid secondary market.
Typically, investment in these contracts requires the Fund to deposit with the
applicable exchange or other specified financial intermediary as a good faith
deposit for its obligations, known as "initial margin," an amount of cash or
specified debt securities which initially is 1%-15% of the face amount of the
contract and that thereafter fluctuates on a periodic basis as the value of the
contract fluctuates. Thereafter, the Fund must make additional deposits equal to
any net losses due to unfavorable price movements of the contract and will be
credited with an amount equal to any net gains due to favorable price movements.
These additional deposits or credits are calculated and required daily and are
known as "variation margin."
The SEC requires that when an investment company such as the Fund effects
transactions of the foregoing nature, it must either segregate cash or high
quality, readily marketable portfolio securities with its custodian in the
amount of its obligations under the foregoing transactions or must cover such
obligations by maintaining positions in portfolio securities, futures contracts
or options that would serve to satisfy or offset the risk of such obligations.
When effecting transactions of the foregoing nature, the Fund will comply with
such segregation or cover requirements. No limitation exists on the amount of
the Fund's assets that may be used to comply with such segregation or cover
requirements.
The Fund also may engage in straddles and spreads with respect to 5% of its
total assets. In a straddle transaction, the Fund either buys a call and a put
or sells a call and a put on the same security. In a spread, the Fund purchases
and sells a call or a put. The Fund will sell a straddle when the Adviser
believes the price of a security will be stable. The Fund will
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<PAGE> 195
receive a premium on the sale of the put and the call. A spread permits the Fund
to make a hedged investment that the price of a security will increase or
decline.
SECURITIES OF FOREIGN ISSUERS -- The Fund may invest in securities of foreign
issuers to achieve income or capital appreciation. Foreign investments involve
risks that are different from investments in securities of U.S. issuers. These
risks may include future unfavorable political and economic developments,
possible withholding taxes, seizure of foreign deposits, currency controls,
interest limitations or other governmental restrictions which might affect
payment of principal or interest. Additionally, there may be less public
information available about foreign issuers. Foreign branches of foreign banks
are not regulated by U.S. banking authorities and generally are not bound by
accounting, auditing and financial reporting standards comparable to U.S. banks.
The Fund may invest in commercial paper of foreign issuers and obligations of
foreign branches of U.S. banks, U.S. and London branches of foreign banks, and
supranational entities which are established through the joint participation of
several governments (e.g., the Asian Development Bank and the Inter-American
Development Bank). Securities of foreign issuers may include sponsored and
unsponsored ADRs, which are securities typically issued by a U.S. financial
institution that evidence ownership interests in a pool of securities issued by
a foreign issuer. There may be less information available on the foreign issuers
of unsponsored ADRs than on the issuers of sponsored ADRs. ADRs include American
Depository Shares and New York Shares.
DESCRIPTION OF RATINGS
The following descriptions are summaries of published ratings.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
The following descriptions of commercial paper ratings have been published by
Standard & Poor's Corporation ("S&P"), Moody's Investors Service ("Moody's"),
Fitch's Investors Service ("Fitch"), Duff and Phelps ("Duff") and IBCA Limited
("IBCA"), respectively.
Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1+, 1, and 2 to indicate the relative degree of safety. Issues rated
A-1+ are those with an "overwhelming degree" of credit protection. Those rated
A-1 reflect a "very strong" degree of safety regarding timely payment. Those
rated A-2 reflect a high degree of safety regarding timely payment but not as
high as A-1.
Commercial paper issues rated Prime-1 and Prime-2 by Moody's are judged by
Moody's to be of the "highest" quality and "higher" quality, respectively, on
the basis of relative repayment capacity.
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<PAGE> 196
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the second
highest commercial paper rating assigned by Fitch which reflects an assurance of
timely payment only slightly less in degree than the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by ample asset protection. Risk
factors are minor. Paper rated Duff-2 is regarded as having good certainty of
timely payment, good access to capital markets and sound liquidity factors and
company fundamentals. Risk factors are small.
The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. Those obligations rated A1+ are supported
by the highest capacity for timely repayment. Obligations rated A2 are supported
by a strong capacity for timely repayment, although such capacity may be
susceptible to adverse changes in business, economic or financial conditions.
SHORT-TERM DEBT RATINGS
Thomson BankWatch, Inc. ("TBW") ratings are based upon a qualitative and
quantitative analysis of all segments of the organization including, where
applicable, holding company and operating subsidiaries.
BankWatch(TM) Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper, other senior short-term
obligations and deposit obligations of the entities to which the rating has been
assigned.
The TBW Short-Term Ratings apply only to unsecured instruments that have a
maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an untimely
payment of principal or interest.
TBW-1 The highest category; indicates a very high degree of
likelihood that principal and interest will be paid on a
timely basis.
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<PAGE> 197
TBW-2 The second highest category; while the degree of safety
regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for
issues rated "TBW-1."
TBW-3 The lowest investment grade category; indicates that while
more susceptible to adverse developments (both internal and
external) than obligations with higher ratings, capacity to
service principal and interest in a timely fashion is
considered adequate.
TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
DESCRIPTION OF CORPORATE BOND RATINGS
The following descriptions of S&P's and Moody's corporate bond ratings have been
published by S&P and Moody's, respectively.
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in a small degree. Debt rated A has a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
Bonds that are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by all
standards. Together with bonds rated Aaa, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.
Bonds that are rated A possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are
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<PAGE> 198
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future.
PERFORMANCE
From time to time, the Fund may advertise yield, total return and/or
distribution rate. These figures will be based on historical earnings and are
not intended to indicate future performance. The yield of the Fund refers to the
annualized income generated by an investment in the Fund over a specified 30-day
period. The yield is calculated by assuming that the income generated by the
investment during that period is generated over a one-year period and is shown
as a percentage of the investment.
Total return is the change in value of an investment in the Fund over a given
period, assuming reinvestment of any dividends and capital gains. A cumulative
total return reflects an actual rate of return over a stated period of time. An
average annual total return is a hypothetical rate of return that, if achieved
annually, would have produced the same cumulative total return if performance
had been constant over the entire period. Average annual total returns smooth
out variations in performance; they are not the same as actual year-by-year
results.
The distribution rate is computed by dividing the total amount of the dividends
per share paid out during the past period by the maximum offering price or
month-end net asset value depending on the class of the Fund. This figure is
then "annualized" (multiplied by 365 days and divided by the applicable number
of days in the period). Funds with a front-end sales charge would incorporate
the offering price into the distribution yield in place of month-end net asset
value.
Distribution rate is a measure of the level of income paid out in cash to
Shareholders over a specified period. It differs from yield and total return and
is not intended to be a complete measure of performance. Furthermore, the
distribution rate may include return of principal and/or capital gains. Total
return is the change in value of a hypothetical investment over a given period
assuming reinvestment of dividends and capital gain distributions. The yield
refers to the cumulative 30-day rolling net investment income, divided by
maximum offering price and multiplied by average shares outstanding during this
period. See the Statement of Additional Information.
The Trust will include information on all classes of the Fund in any
advertisement or information containing performance data for the Fund. The
performance of Fiduciary Class shares may be higher than for Class A shares and
Class B shares because Fiduciary Class shares are not subject to sales charges
and distribution expenses.
The performance of each class of the Fund may from time to time be compared to
that of other mutual funds tracked by mutual fund rating services, to that of
broad groups of comparable mutual funds or to that of unmanaged indices that may
assume investment of dividends but do
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<PAGE> 199
not reflect deductions for administrative and management costs. In addition, the
performance of each class of the Fund may be compared to other funds or to
relevant indices that may calculate total return without reflecting sales
charges; in which case, the Fund may advertise its total return in the same
manner. If reflected, sales charges would reduce these total return
calculations.
TAXES
The following summary of Federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial, or
administrative action. No attempt has been made to present a complete
explanation of the Federal, state, local or foreign tax treatment of the Fund or
its Shareholders. Accordingly, Shareholders are urged to consult their tax
advisers regarding specific questions as to the tax consequences of investing in
the Fund.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for Federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify as a
"regulated investment company" for Federal income tax purposes and to meet all
other requirements that are necessary for it to be relieved of Federal taxes on
that part of its net investment income and net capital gains (the excess of net
long-term capital gain over net short-term capital loss) that is distributed to
Shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gain) to Shareholders of
each class of shares of the Fund on at least an annual basis. Generally,
dividends from net investment income will be taxable to Shareholders as ordinary
income whether received in cash or in additional shares, and any net capital
gains will be distributed at least annually and will be taxed to Shareholders as
long-term capital gains, regardless of how long the Shareholder has held shares.
Distributions by the Fund to retirement plans that qualify for tax-exempt
treatment under the Code ("qualified retirement plans") will not be taxable. The
Federal tax treatment of qualified retirement plans, as well as distributions
from such plans, is governed by specific provisions of the Code. If shares are
held by a retirement plan that ceases to qualify for tax-exempt treatment under
the Code or by an individual who has received such shares as a distribution from
a retirement plan, the Fund's distributions will be taxable to such plan or
individual as described in the preceding paragraph. Persons considering
directing the investment of their qualified retirement plan account in the Fund
and qualified retirement plan trusts considering purchasing such shares, should
consult their tax advisers for a more complete explanation of
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<PAGE> 200
the Federal tax consequences, and for an explanation of the state, local and (if
applicable) foreign tax consequences of making such an investment.
The Fund will make annual reports to Shareholders of the Federal income tax
status of all distributions.
Certain securities purchased by the Fund (such as STRIPS, CUBES, TRS, TIGRS and
CATS), as defined in the "Description of Permitted Investments," are sold at
original issue discount and thus do not make periodic cash interest payments.
The Fund will be required to include as part of its current income the imputed
interest on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because the Fund distributes
substantially all of its net investment income to its Shareholders (including
such imputed interest), the Fund may have to sell portfolio securities in order
to generate the cash necessary for the required distributions. Such sales may
occur at a time when the Adviser would not have chosen to sell such securities
and may result in a taxable gain or loss.
Dividends declared by the Fund in October, November or December of any year and
payable to Shareholders of record on a date in such a month will be deemed to
have been paid by the Fund and received by Shareholders on December 31 of that
year, if paid by the Fund at any time during the following January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for Federal excise tax.
Dividends received by a Shareholder that are derived from the Fund's investments
in U.S. government obligations may not be entitled to the exemptions from state
and local income taxes that would be available if the Shareholder had purchased
U.S. government obligations directly. The Fund will inform Shareholders annually
of the percentage of income and distributions derived from U.S. government
obligations. Shareholders should consult their tax advisers regarding the state
and local tax treatment of the dividends received from the Fund.
The Fund may be subject to foreign withholding taxes on income derived from
obligations of foreign issuers . The Fund will not be able to elect to treat
Shareholders as having paid their proportionate share of such foreign taxes.
Sale, exchange, or redemption of Fund shares by a Shareholder will generally be
a taxable event to such Shareholder.
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<PAGE> 201
Investment Adviser and Sub-Administrator
Banc One Investment Advisors Corporation
774 Park Meadow Road
Columbus, OH 43271-0211
Distributor
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
TOG-F-061
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<PAGE> 202
STATEMENT OF ADDITIONAL INFORMATION
The One Group(R)
The One Group(R) U.S. Treasury Securities Money Market Fund
(the "U.S. Treasury Securities Money Market Fund")
The One Group(R) Prime Money Market Fund (the "Prime Money Market Fund")
The One Group(R) Municipal Money Market Fund
(the "Municipal Money Market Fund")
The One Group(R) Ohio Municipal Money Market Fund
(the "Ohio Municipal Money Market Fund")
The One Group(R) Income Equity Fund (the "Income Equity Fund")
The One Group(R) Disciplined Value Fund (the "Disciplined Value Fund")
The One Group(R) Growth Opportunities Fund (the "Growth Opportunities Fund")
The One Group(R) International Equity Index Fund
(the "International Equity Index Fund")
The One Group(R) Equity Index Fund (the "Equity Index Fund")
The One Group(R) Large Company Value Fund (the "Large Company Value Fund")
The One Group(R) Large Company Growth Fund (the "Large Company Growth Fund")
The One Group(R) Asset Allocation Fund (the "Asset Allocation Fund")
The One Group(R) Income Bond Fund (the "Income Bond Fund")
The One Group(R) Limited Volatility Bond Fund
(the "Limited Volatility Bond Fund")
The One Group(R) Intermediate Bond Fund (the "Intermediate Bond Fund")
The One Group(R) Government Bond Fund (the "Government Bond Fund")
The One Group(R) Government ARM Fund (the "Government ARM Fund")
The One Group(R) Municipal Income Fund (the "Municipal Income Fund")
The One Group(R) Intermediate Tax-Free Bond Fund
(the "Intermediate Tax-Free Bond Fund")
The One Group(R) Ohio Municipal Bond Fund (the "Ohio Municipal Bond Fund")
The One Group(R) Texas Tax-Free Bond Fund (the "Texas Tax-Free Bond Fund")
The One Group(R) West Virginia Tax-Free Bond Fund
(the "West Virginia Tax-Free Bond Fund")
The One Group(R) Kentucky Municipal Bond Fund
(the "Kentucky Municipal Bond Fund")
The One Group(R) Arizona Tax-Free Bond Fund (the "Arizona Tax-Free Bond Fund")
The One Group(R) Treasury Money Market Fund (the "Treasury Money Market Fund")
The One Group(R) Treasury Only Money Market Fund
(the "Treasury Only Money Market Fund")
The One Group(R) Government Money Market Fund
(the "Government Money Market Fund")
The One Group(R) Tax Exempt Money Market Fund
(the "Tax Exempt Money Market Fund")
The One Group(R) Institutional Prime Money Market Fund
(the "Institutional Prime Money Market Fund")
The One Group(R) Louisiana Municipal Bond Fund
(the "Louisiana Municipal Bond Fund")
The One Group(R) Value Growth Fund (the "Value Growth Fund")
The One Group(R) Gulf South Growth Fund (the "Gulf South Growth Fund")
February 7, 1996
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectuses for the U.S. Treasury Securities Money
Market Fund, the Prime Money Market Fund, the Municipal Money Market Fund, the
Income Equity Fund, the Disciplined Value Fund, the Growth
Opportunities Fund, the International Equity Index Fund, the Equity
Index Fund, the Large Company Value Fund, the Large Company Growth Fund, the
Income Bond Fund, the Limited Volatility Bond Fund, the Intermediate Bond Fund,
the Intermediate Tax-Free Bond Fund, the Ohio Municipal Bond Fund, the
Government Bond Fund, the Government ARM Fund, the Asset Allocation Fund, the
Municipal Income Fund, the Texas Tax-Free Bond Fund, the West Virginia
Tax-Free Bond Fund, the Kentucky Municipal Bond Fund, the Arizona Tax-Free Bond
Fund and the Ohio Municipal Money Market Fund, the Treasury Money Market Fund,
the Treasury Only Money Market Fund, the Government Money Market Fund, the Tax
Exempt Money Market Fund , the Institutional Prime Money Market
Fund, the Louisiana Municipal Bond Fund, the Value Growth Fund and the Gulf
South Growth Fund. The Prospectuses for each of The One Group(R) Funds are
dated November 1, 1995 (except the prospectuses for the Louisiana Municipal
Bond Fund, the Value Growth Fund and the Gulf South Growth Fund which
are dated February 7, 1996. This Statement of Additional Information
is incorporated in its entirety into each of those Prospectuses. A copy of each
of the Prospectuses for the Trust may be obtained by writing to the Distributor
for the Trust, The One GROUP Services Company, 3435 Stelzer Road,
Columbus, Ohio 43219, or by telephoning toll free (800)-480-4111.
<PAGE> 203
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Information on Fund Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . 2
High Quality Investments With Regard to the Money Market and Institutional
Money Market Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bank Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Government Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Futures and Options Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Restrictions on the Use of Futures Contracts . . . . . . . . . . . . . . . . 9
Risk Factors in Futures Transactions . . . . . . . . . . . . . . . . . . . . 10
Options Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Covered Calls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Puts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Purchasing Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Risk Factors in Options Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 15
Mortgage-related Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Yield, Market Value and Risk Considerations of Mortgage-Backed
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Foreign Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PERCS* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
When-Issued Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Securities Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Index Investing by the Equity Index and International Equity Index Funds . . . . . . . 21
Foreign Currency Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Transaction Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Position Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Currency Forward and Futures Contracts . . . . . . . . . . . . . . . . . . . 25
General Characteristics of Currency Futures Contracts . . . . . . . . . . . . . . . . 26
Foreign Currency Options . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Foreign Currency Conversion . . . . . . . . . . . . . . . . . . . . . . . . . 28
Variable and Floating Rate Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Municipal Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Demand Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Swaps, Caps and Floors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Structured Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
New Financial Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Ohio Municipal Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Risk Factors Regarding Investments in Ohio Municipal Securities . . . . . . . 38
West Virginia Municipal Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Risk Factors Regarding Investments in West Virginia Municipal Securities . . 39
Kentucky Municipal Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Risk Factors Regarding Investments in Kentucky Municipal
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Texas Municipal Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Risk Factors Regarding Investments in Texas Municipal Securities . . . . . . 41
Arizona Municipal Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Risk Factors Regarding Investments in Arizona Municipal
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Louisiana Municipal Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Risk Factors Regarding Investments in Louisiana Municipal
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Additional Tax Information Concerning All Funds of the Trust . . . . . . . . . . . . . . . . 51
Additional Tax Information Concerning the Tax-Free Funds . . . . . . . . . . . . . . . . . . 54
Additional Tax Information Concerning the International Equity Index Fund . . . . . . . . . . 55
Foreign Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Valuation of the Money Market and Institutional Money Market Funds . . . . . . . . . . . . . . 57
Valuation of the Equity Funds, the Bond Funds and the Municipal Bond Funds . . . . . . . . . . 57
ADDITIONAL INFORMATION REGARDING THE CALCULATIONOF PER SHARE NET ASSET VALUE . . . . . . . . . . . . . 58
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
MANAGEMENT OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Trustees & Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Banc One Investment Advisors Corporation . . . . . . . . . . . . . . . . . . 65
Boston International Advisors, Inc. . . . . . . . . . . . . . . . . . . . . . 67
Glass-Steagall Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Description of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Shareholder and Trustee Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Calculation of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272
</TABLE>
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THE TRUST
The One Group (R) (the "Trust") is an open-end management investment
company. The Trust consists of thirty-two series of units of beneficial
interest ("Shares") each representing interests in one of thirty-two separate
investment portfolios ("Funds", formerly "Portfolios"), i.e., the U.S. Treasury
Securities Money Market Fund (formerly the U.S. Treasury Money Market
Portfolio), the Prime Money Market Fund, the Municipal Money Market Fund
(formerly the Tax-Free Obligations Portfolio) and the Ohio Municipal Money
Market Fund (these four Funds being collectively referred to as the "Money
Market Funds"), the Income Equity Fund, the Disciplined Value Fund, the Growth
Opportunities Fund (formerly the Small Company Growth Fund and the Growth
Equity Portfolio), the Equity Index Fund, the International Equity Index Fund,
the Large Company Value Fund (formerly, the Quantitative Equity Portfolio), the
Large Company Growth Fund, the Asset Allocation Fund (formerly, the Flexible
Balanced Portfolio), the Value Growth Fund and the Gulf South Growth Fund
(these ten Funds being collectively referred to as the "Equity Funds"), the
Income Bond Fund (formerly the Income Portfolio), the Limited Volatility Bond
Fund, the Intermediate Bond Fund, the Government Bond Fund, and the Government
ARM Fund (these five Funds being collectively referred to as the "Bond Funds"),
the Intermediate Tax-Free Bond Fund, the Municipal Income Fund (formerly the
Tax-Free Bond Fund), the Ohio Municipal Bond Fund, the Texas Tax-Free Bond Fund,
the West Virginia Tax-Free Bond Fund, the Kentucky Municipal Bond Fund, the
Arizona Tax-Free Bond Fund, and the Louisiana Municipal Bond Fund (these eight
Funds being collectively referred to as the "Municipal Bond Funds"), the
Treasury Money Market Fund, the Treasury Only Money Market Fund, the Government
Money Market Fund, the Tax Exempt Money Market Fund, and the Institutional Prime
Money Market Fund (these five Funds being collectively referred to as the
"Institutional Money Market Funds"). The Municipal Money Market Fund, the Ohio
Municipal Money Market Fund, the Ohio Municipal Bond Fund, the Intermediate
Tax-Free Bond Fund, the Municipal Income Fund, the Texas Tax-Free Bond Fund,
the West Virginia Tax-Free Bond Fund, the Kentucky Municipal Bond Fund, the
Arizona Tax-Free Bond Fund , the Tax Exempt Money Market Fund and the Louisiana
Municipal Bond Fund are sometimes referred to herein as the "Tax-Free Funds."
All of the Trust's Funds are diversified, as defined under the
Investment Company Act of 1940, as amended (the "1940 Act"), with the exception
of the Ohio Municipal Bond Fund, the Kentucky Municipal Bond Fund, the West
Virginia Tax-Free Bond Fund, the Texas Tax-Free Bond Fund, the Arizona Tax-Free
Bond Fund , the Ohio Municipal Money Market Fund, the Louisiana Municipal Bond
Fund and the Gulf South Growth Fund, which are non-diversified. The shares in
the Funds of the Trust (other than the Institutional Money Market Funds, the
U.S. Treasury Securities Money Market Fund and the Prime Money Market Fund) are
offered in three separate classes: Fiduciary Class Shares, Class A Shares and
Class B Shares. The U.S. Treasury Securities Money Market Fund and the Prime
Money
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Market Fund offer Class A Shares, Fiduciary Class Shares and Service Class
Shares. Much of the information contained herein expands upon subjects discussed
in the Prospectuses for the respective Funds. No investment in a particular
class of Shares of a Fund should be made without first reading that Fund's
Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The following policies supplement each Fund's investment objective and
policies as set forth in the respective Prospectus for that Fund.
ADDITIONAL INFORMATION ON FUND INSTRUMENTS
High Quality Investments With Regard to the Money Market and
Institutional Money Market Funds
As noted in the Prospectuses for the Money Market and Institutional
Money Market Funds, each such Fund may invest only in obligations determined by
the Fund's investment adviser ("Adviser") to present minimal credit risks under
guidelines adopted by the Trust's Board of Trustees.
The Treasury Money Market Fund and the Treasury Only Money Market Fund
may only invest in U.S. Treasury bills, notes and other U.S. Treasury
obligations issued or guaranteed by the U.S. government. Some of the securities
held by the Treasury Money Market Fund may be subject to repurchase agreements.
The Government Money Market Fund invests exclusively in securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, some of which may be subject to repurchase agreements.
The Tax Exempt Money Market Fund may invest only in obligations which,
at the time of purchase, (i) possess the highest short-term ratings from a
nationally recognized statistical rating organization (an "NRSRO") in the case
of single-rated securities; or (ii) possess, in the case of multiple-rated
securities, the highest short-term ratings by at least two NRSROs; or (iii) do
not possess a rating (i.e., are unrated) but are determined by the
Adviser or the Sub-Adviser to be of comparable quality to the rated instruments
eligible for purchase by the Fund under guidelines adopted by the Board of
Trustees (collectively, "First Tier Securities"). Some of the securities of the
Tax Exempt Money Market Fund may be subject to repurchase agreements.
With regard to the Money Market Funds and the Institutional Money
Market Funds other than the Tax Exempt Money Market Fund, investments will be
limited to those obligations which, at the time of purchase, (i) possess one of
the two highest short-term ratings from an NRSRO in the case of single-rated
securities; or (ii) possess, in the case of multiple-
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rated securities, one of the two highest short-term ratings by at least two
NRSROs or (iii) do not possess a rating (i.e., are unrated) but are
determined by the Adviser or the Sub-Adviser to be of comparable quality to the
rated instruments eligible for purchase by the Trust under guidelines adopted by
the Board of Trustees (collectively, "Eligible Securities"). A security that has
not received a rating will be deemed to possess the rating assigned to an
outstanding class of the issuer's short-term debt obligations if determined by
the Adviser or the Sub-Adviser to be comparable in priority and security to the
obligation selected for purchase by the Trust.
A security subject to a tender or demand feature will be considered an
Eligible Security only if both the demand feature and the underlying security
possess a high quality rating or, if such do not possess a rating, are
determined by the Adviser or the Sub-Adviser to be of comparable quality;
provided, however, that where the demand feature would be readily exercisable in
the event of a default in payment of principal or interest on the underlying
security, the obligation may be acquired based on the rating possessed by the
demand feature or, if the demand feature does not possess a rating, a
determination of comparable quality by the Adviser or the Sub-Adviser. A
security which at the time of issuance had a maturity exceeding 397 days but, at
the time of purchase, has a remaining maturity of 397 days or less, is not
considered an Eligible Security if it does not possess a high quality rating and
the long-term rating, if any, is not within the two highest rating categories.
Eligible Securities include First-Tier Securities and Second-Tier
Securities. First-Tier Securities include those that possess a rating in the
highest category, in the case of a single-rated security, or at least two
ratings in the highest rating category, in the case of multiple-rated
securities, or, if the securities do not possess a rating, are determined to be
of comparable quality by the Adviser or the Sub-Adviser pursuant to the
guidelines adopted by the Board of Trustees. Second-Tier Securities are all
other Eligible Securities.
Each Money Market and Institutional Money Market Fund other than the
Ohio Municipal Money Market, Municipal Money Market and Tax Exempt Money Market
Funds will not invest more than 5% of its total assets in the First Tier
Securities of any one issuer. In addition, each Fund other than the Municipal
Money Market Fund, the Ohio Municipal Money Market Fund, and the Tax Exempt
Money Market Fund may not invest more than 5% of its total assets in Second Tier
Securities, with investment in the Second Tier Securities of any one issuer
further limited to the greater of 1% of the Fund's total assets or $1.0 million.
If a percentage limitation is satisfied at the time of purchase, a later
increase in such percentage resulting from a change in the Fund's net asset
value or a subsequent change in a security's qualification as a First Tier or
Second Tier Security will not constitute a violation of the limitation. In
addition, there is no limit on the percentage of a Fund's assets that may be
invested in obligations issued or guaranteed by the U.S. government, its
agencies, or instrumentalities and, with respect to each Money Market Fund and
each Institutional Money Market Fund other than the Treasury Only Money Market
Fund, repurchase agreements fully collateralized by such obligations.
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Under the guidelines adopted by the Trust's Board of Trustees and in
accordance with Rule 2a-7 under the 1940 Act, the Adviser may be required to
promptly dispose of an obligation held in a Fund's portfolio in the event of
certain developments that indicate a diminishment of the instrument's credit
quality, such as where an NRSRO downgrades an obligation below the second
highest rating category, or in the event of a default relating to the financial
condition of the issuer.
The Appendix to this Statement of Additional Information identifies
each NRSRO which may be utilized by the Adviser with regard to portfolio
investments for the Funds and provides a description of relevant ratings
assigned by each such NRSRO. A rating by an NRSRO may be utilized only where the
NRSRO is neither controlling, controlled by, or under common control with the
issuer of, or any issuer, guarantor, or provider of credit support for, the
instrument.
Bank Obligations
Each Fund except the U.S. Treasury Securities Money Market Fund, the
International Equity Index Fund, the Treasury Money Market Fund, the Treasury
Only Money Market Fund, and the Government Money Market Fund may invest in bank
obligations such as bankers' acceptances, certificates of deposit, and demand
and time deposits. The International Equity Index Fund may invest in bank
obligations such as certificates of deposit and demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange
typically drawn by an importer or exporter to pay for specific merchandise,
which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Bankers' acceptances invested in by the Funds will be those guaranteed by
domestic and foreign banks having, at the time of investment, total assets in
excess of $1 billion (as of the date of their most recently published
financial statements).
Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return. Certificates of deposit
will be those of domestic and foreign branches of U.S. commercial banks which
are members of the Federal Reserve System or the deposits of which are insured
by the Federal Deposit Insurance Corporation and in certificates of deposit of
domestic savings and loan associations the deposits of which are insured by the
Federal Deposit Insurance Corporation if, at the time of purchase, such
institutions have total assets in excess of $1 billion (as of the date of their
most recently published financial statements). Certificates of deposit may also
include those issued by foreign banks outside the United States with total
assets at the time of purchase in excess of the equivalent of $1 billion. The
Funds may also invest in Eurodollar certificates of deposit, which are U.S.
dollar-denominated certificates of deposit issued by branches of foreign and
domestic banks located outside the
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United States, and Yankee certificates of deposit, which are certificates of
deposit issued by a U.S. branch of a foreign bank denominated in U.S. dollars
and held in the United States. The International Equity Index Fund may also
invest in obligations (including banker's acceptances and certificates of
deposit) denominated in foreign currencies (see "Foreign Investments" herein).
Time deposits are interest-bearing non-negotiable deposits at a bank or
a savings and loan association that have a specific maturity date. Demand
deposits are funds deposited in a commercial bank or a savings and loan
association which, without prior notice to the bank, may be withdrawn generally
by negotiable draft. Time and demand deposits will be maintained only at banks
or savings and loan associations from which a Fund could purchase certificates
of deposit.
Commercial Paper
Commercial paper consists of unsecured promissory notes issued by
corporations. Except as noted below with respect to variable amount master
demand notes, issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
The Limited Volatility Bond Fund may purchase commercial paper
consisting of issues rated at the time of purchase in the highest rating
category by at least one NRSRO (such as A-1 by Standard & Poor's Corporation
("S&P"), P-1 by Moody's Investor Service, Inc. ("Moody's") or F-1 by Fitch
Investors Services ("Fitch")) or if unrated, determined by the Adviser to be of
comparable quality. The Asset Allocation Fund, the Equity Funds other than the
International Equity Index Fund, the Municipal Bond Funds, the Income Bond Fund,
the Intermediate Bond Fund, the Government Bond Fund and the Government ARM Fund
may purchase commercial paper consisting of issues rated at the time of purchase
in the highest or second highest rating category by at least one NRSRO (such as
A-2 or better by S&P, P-2 or better by Moody's or F-2 or better by Fitch) or if
unrated, determined by the Adviser or Investment Sub-Adviser ("Sub-Adviser") to
be of comparable quality.
Repurchase Agreements
Securities held by each Fund other than the Treasury Only Money Market
Fund may be subject to repurchase agreements. Under the terms of a repurchase
agreement, a Fund would acquire securities from member banks of the Federal
Deposit Insurance Corporation (or in the case of the International Equity Index
Fund, such banks or foreign banks) with total assets in excess of $1 billion (or
in the case of the International Equity Index Fund, the equivalent of $1
billion) and registered broker-dealers (or in the case of the International
Equity Index Fund, broker-dealers which may or may not be registered) which the
Fund's Adviser deems creditworthy under guidelines approved by the Board of
Trustees, subject to the seller's agreement to repurchase such securities at a
mutually agreed-upon date and price. The repurchase price would generally equal
the price paid by the Fund plus interest negotiated on
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the basis of current short-term rates, which may be more or less than the rate
on the underlying portfolio securities. The seller under a repurchase agreement
will be required to maintain the value of collateral held pursuant to the
agreement at not less than the repurchase price (including accrued interest). If
the seller were to default on its repurchase obligation or become insolvent, the
Fund holding such obligation would suffer a loss to the extent that the proceeds
from a sale of the underlying portfolio securities were less than the repurchase
price under the agreement, or to the extent that the disposition of such
securities by the Fund were delayed pending court action. Additionally, there is
no controlling legal precedent under U.S. law and there may be no controlling
legal precedents under the laws of certain foreign jurisdictions confirming that
a Fund would be entitled, as against a claim by such seller or its receiver or
trustee in bankruptcy, to retain the underlying securities, although (with
respect to repurchase agreements subject to U.S. law) the Board of Trustees of
the Trust believes that, under the regular procedures normally in effect for
custody of a Fund's securities subject to repurchase agreements and under
federal laws, a court of competent jurisdiction would rule in favor of the Trust
if presented with the question. Securities subject to repurchase agreements will
be held by the Trust's custodian or another qualified custodian or in the
Federal Reserve/Treasury book-entry system. Although there is no current
intention to do so, the International Equity Index Fund reserves the right in
the future to enter into repurchase agreements. Repurchase agreements are
considered by the Securities and Exchange Commission to be loans by a Fund under
the 1940 Act.
Reverse Repurchase Agreements
Each of the Funds other than the Treasury Only Money Market Fund and
Ohio Municipal Money Market Fund may borrow funds for temporary purposes by
entering into reverse repurchase agreements, although the International Equity
Index Fund and the Government ARM Fund have no current intention to do so.
Pursuant to such agreements, a Fund would sell portfolio securities to financial
institutions such as banks and broker-dealers, and agree to repurchase them at a
mutually agreed-upon date and price. A Fund would enter into reverse repurchase
agreements only to avoid otherwise selling securities during unfavorable market
conditions to meet redemptions. At the time a Fund entered into a reverse
repurchase agreement, it would place in a segregated custodial account assets,
such as liquid high grade debt securities consistent with the Fund's investment
restrictions and having a value equal to the repurchase price (including accrued
interest), and would subsequently monitor the account to ensure that such
equivalent value was maintained. Reverse repurchase agreements involve the risk
that the market value of the securities sold by a Fund may decline below the
price at which the Fund is obligated to repurchase the securities. Reverse
repurchase agreements are considered by the Securities and Exchange Commission
to be borrowings by a Fund under the 1940 Act.
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Government Securities
With the exception of the U.S. Treasury Securities Money Market Fund,
the Treasury Money Market Fund and the Treasury Only Money Market Fund, which
will invest only in obligations issued or guaranteed by the U.S. Treasury, each
of the Funds may invest in obligations issued or guaranteed by agencies and
instrumentalities of the U.S. government. Obligations of certain agencies and
instrumentalities of the U.S. government are supported by the full faith and
credit of the U.S. Treasury; others are supported by the right of the issuer to
borrow from the Treasury; others are supported by the discretionary authority of
the U.S. government to purchase the agency's obligations; and still others are
supported only by the credit of the instrumentality. No assurance can be given
that the U.S. government would provide financial support to U.S.
government-sponsored agencies or instrumentalities if it is not obligated to do
so by law. A Fund will invest in the obligations of such agencies or
instrumentalities only when its Adviser or Sub-Adviser believes that the credit
risk with respect thereto is minimal. For information on mortgage-related
securities issued by certain agencies or instrumentalities of the U.S.
government, see "Investment Objectives and Policies--Mortgage-related
Securities" in this Statement of Additional Information.
Futures and Options Trading
Futures Contracts. The Equity Funds and the Bond Funds may enter into futures
contracts, options, options on futures contracts and stock index futures
contracts and options thereon for risk management and hedging purposes. Futures
contracts provide for the future sale by one party and purchase by another party
of a specified amount of a specific security, class of securities, or an index
at a specified future time and at a specified price. A stock index futures
contract is a bilateral agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading of the
contracts and the price at which the futures contract is originally struck.
Futures contracts which are standardized as to maturity date and underlying
financial instrument are traded on national futures exchanges. Futures exchanges
and trading are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission ("CFTC"), a U.S. government agency.
Although futures contracts by their terms call for actual delivery and
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold," or "selling" a contract previously
purchased) in an identical contract to terminate the position. A futures
contract on a securities index is an agreement obligating either party to pay,
and entitling the other party to receive, while the contract is outstanding,
cash payments based on the level of a specified securities index. The
acquisition of put and call options on futures contracts will, respectively,
give a Fund the right (but not the obligation), for a specified price, to sell
or to
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purchase the underlying futures contract, upon exercise of the option, at any
time during the option period. Brokerage commissions are incurred when a futures
contract is bought or sold.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying
security) if it is not terminated prior to the specified delivery date. Minimal
initial margin requirements are established by the futures exchange and may be
changed. Brokers may establish deposit requirements which are higher than the
exchange minimums. Initial margin deposits on futures contracts are customarily
set at levels much lower than the prices at which the underlying securities are
purchased and sold, typically ranging upward from less than 5% of the value of
the contract being traded.
After a futures contract position is opened, the value of the contract
is marked to market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Funds
expect to earn interest income on their margin deposits.
Traders in futures contracts may be broadly classified as either
"hedgers" or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations in
the prices of underlying securities. The Funds intend to enter into futures
contracts, options on futures contracts, index futures and options thereon that
are traded on an exchange regulated by the CFTC if, to the extent that such
futures and options are not for "bona fide hedging purposes" (as defined by the
CFTC), the aggregate initial margin and premiums on such positions (excluding
the amount by which options are in the money) do not exceed 5% of the Fund's
total assets at current value.
When interest rates are expected to rise or market values of portfolio
securities are expected to fall, a Fund can seek through the sale of futures
contracts to offset a decline in the value of its portfolio securities. When
interest rates are expected to fall or market values are expected to rise, a
Fund, through the purchase of such contracts, can attempt to secure better rates
or prices for the Fund than might later be available in the market when it
effects anticipated purchases.
The Funds will only sell futures contracts to protect securities they
own against price declines or purchase contracts to protect against an increase
in the price of securities they
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intend to purchase. When futures contracts or options thereon are purchased to
protect against a price increase on securities intended to be purchased later,
the Funds expect that approximately 75% of their futures contract purchases will
be "completed," that is, equivalent amounts of related securities will have been
purchased or will be purchased by the Funds upon sale of open futures contracts.
Although techniques other than the sale and purchase of futures
contracts could be used to control the Funds' exposure to market fluctuations,
the use of futures contracts may be a more effective means of hedging this
exposure. While the Funds will incur commission expenses in both opening and
closing out futures positions, these costs are lower than transaction costs that
would be incurred in the purchase and sale of the underlying securities.
A Fund's ability to effectively utilize futures trading depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying stock index.
Second, it is possible that a lack of liquidity for futures contracts could
exist in the secondary market, resulting in an inability to close a futures
position prior to its maturity date. Third, the purchase of a futures contract
involves the risk that a Fund could lose more than the original margin deposit
required to initiate a futures transaction.
Restrictions on the Use of Futures Contracts. None of the Funds will enter into
futures contract transactions for purposes other than bona fide hedging purposes
to the extent that, immediately thereafter, the sum of its initial margin
deposits and premiums on open contracts exceeds 5% of the market value of the
respective Fund's total assets. In addition, none of the Equity Funds will enter
into futures contracts to the extent that the value of the futures contracts
held would exceed 25% of the respective Fund's total assets. Futures
transactions will be limited to the extent necessary to maintain each Fund's
qualification as a regulated investment company.
The Funds have undertaken to restrict their futures contract trading as
follows: first, the Funds will not engage in transactions in futures if, to the
extent that such futures are not for "bona fide hedging purposes", the aggregate
initial margins and premiums on such positions does not exceed 5% of the Fund's
total assets at current value; second, the Funds will not market themselves to
the public as commodity pools or otherwise as vehicles for trading in the
commodities futures or commodity options markets; third, the Funds will disclose
to all prospective Shareholders the purpose of and limitations on their
commodity futures trading; fourth, the Funds will submit to the CFTC special
calls for information. Accordingly, registration as a commodities pool operator
with the CFTC is not required.
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to requirements
imposed by the Securities and Exchange Commission. Under those requirements,
where a Fund has a long position in a futures contract, it may be required to
establish a segregated account (not with a futures commission merchant or
broker) containing cash or certain liquid assets equal to the purchase
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price of the contract (less any margin on deposit). For a short position in
futures or forward contracts held by a Fund, those requirements may mandate the
establishment of a segregated account (not with a futures commission merchant or
broker) with cash or certain liquid assets that, when added to the amounts
deposited as margin, equal the market value of the instruments underlying the
futures contracts (but are not less than the price at which the short positions
were established). However, segregation of assets is not required if a Fund
"covers" a long position. For example, instead of segregating assets, a Fund,
when holding a long position in a futures contract, could purchase a put option
on the same futures contract with a strike price as high or higher than the
price of the contract held by the Fund. In addition, where a Fund takes short
positions, or engages in sales of call options, it need not segregate assets if
it "covers" these positions. For example, where a Fund holds a short position in
a futures contract, it may cover by owning the instruments underlying the
contract. The Funds may also cover such a position by holding a call option
permitting it to purchase the same futures contract at a price no higher than
the price at which the short position was established. Where a Fund sells a call
option on a futures contract, it may cover either by entering into a long
position in the same contract at a price no higher than the strike price of the
call option or by owning the instruments underlying the futures contract. A Fund
could also cover this position by holding a separate call option permitting it
to purchase the same futures contract at a price no higher than the strike price
of the call option sold by the Fund.
In addition, the extent to which a Fund may enter into transactions
involving futures contracts may be limited by the Internal Revenue Code's
requirements for qualification as a registered investment company and the
Trust's intention to qualify as such.
Risk Factors in Futures Transactions. Positions in futures contracts may be
closed out only on an exchange which provides a secondary market for such
futures. However, there can be no assurance that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements, a Fund would continue to be required to make daily cash payments to
maintain the required margin. In such situations, if a Fund has insufficient
cash, it may have to sell portfolio securities to meet daily margin requirements
at a time when it may be disadvantageous to do so. In addition, a Fund may be
required to make delivery of the instruments underlying futures contracts it
holds. The inability to close options and futures positions also could have an
adverse impact on the ability to effectively hedge them. The Funds will minimize
the risk that they will be unable to close out a futures contract by only
entering into futures contracts which are traded on national futures exchanges
and for which there appears to be a liquid secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. Because the deposit
requirements in the futures markets are less onerous than margin requirements in
the securities market, there may be increased participation by speculators in
the futures market which may also cause temporary price distortions. A
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relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the contract. However, because the
futures strategies engaged in by the Funds are for risk management and hedging
purposes, the respective Advisers and Sub-Advisers do not believe that the Funds
are subject to the risks of loss frequently associated with futures
transactions. Each Fund would presumably have sustained comparable losses if,
instead of the futures contract, it had invested in the underlying financial
instrument and sold it after the decline.
Utilization of futures transactions by a Fund does involve the risk of
imperfect or no correlation where the securities underlying futures contract
have different maturities than the portfolio securities being hedged. It is also
possible that a Fund could both lose money on futures contracts and also
experience a decline in value of its portfolio securities. There is also the
risk of loss by a Fund of margin deposits in the event of bankruptcy of a broker
with whom the Fund has an open position in a futures contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of a trading session.
Once the daily limit has been reached in a particular type of contract, no
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movement during a particular trading day and therefore does
not limit potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of future positions and subjecting some
futures traders to substantial losses.
Options Contracts. The respective Adviser or Sub-Adviser of the Equity and Bond
Funds may use trading of options on securities or futures contracts for risk
management and hedging purposes. An option on a futures contract gives the
purchaser of the option the right (but not the obligation) to take a position at
a specified price (the "striking," "strike" or "exercise" price) in the
underlying futures contract or security. A "call" option gives the purchaser the
right to take a long position in the underlying futures contract or security,
and the purchaser of a "put" option acquires the right to take a short position
in the underlying futures contract or security. The purchase price of an option
is referred to as its "premium." The seller (or "writer") of an option is
obligated to take a futures or securities position at a specified price if the
option is exercised. In the case of a call option, the seller must stand ready
to take a short position in the underlying futures contract or security at the
strike price if the option is exercised. A seller of a put option, on the other
hand, stands ready to take a long position in the underlying
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futures contract or security at the strike price if the option is exercised. A
"naked" option refers to an option written by a party which does not possess the
underlying futures contract or security. A "covered" option refers to an option
written by a party which does possess the underlying position.
A call option on a futures contract or security is said to be
"in-the-money" if the strike price is below current market levels. Similarly, a
put option on a futures contract or security is said to be "out-of-the-money" if
the strike price is below current market levels.
Options have limited life spans, usually tied to the delivery or
settlement date of the underlying futures contract or security. Some options,
however, expire significantly in advance of such dates. An option that is
"out-of-the-money" and not offset by the time it expires becomes worthless. On
certain exchanges "in-the-money" options are automatically exercised on their
expiration date, but on others unexercised options simply become worthless after
their expiration date. Options usually trade at a premium (referred to as the
"time value" of the option) above their intrinsic value (the difference between
the market price for the underlying futures contract or equity security and the
strike price). As an option nears its expiration date, the market value and the
intrinsic value move into parity as the time value diminishes.
The Funds other than the International Equity Index Fund will enter
into such option transactions only when the options are available on an
exchange. There will be an active over-the-counter market for such options which
will establish their pricing and liquidity. Broker/Dealers with whom the Trust
will enter into such option transactions shall have a minimum net worth of
$20,000,000.
Increased market volatility generally increases the value of options by
increasing the probability of favorable market swings, putting outstanding
options "in-the-money." Although purchasing options is a limited risk trading
approach, significant losses can be incurred by doing so.
Covered Calls
Each Equity Fund, Bond Fund, and the Ohio Municipal Bond Fund may write
(sell) only "covered" call options and purchase options to close out options
previously written by the Fund. In the case of each of the Funds other than the
International Equity Index Fund, such options must be listed on a national
securities exchange. The Funds' purpose in writing covered call options is to
generate additional premium income. This premium income will serve to enhance a
Fund's total return and will reduce the effect of any price decline of the
security involved in the option. Although the International Equity Index Fund
has no current intention to write such options, it reserves the right to do so
from time to time when such activity will further its investment objective.
Covered call options will generally be written on
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securities which, in the opinion of a Fund's Adviser or Sub-Adviser, are not
expected to make any major price moves in the near future but which, over the
long term, are deemed to be attractive investments for the Fund.
A call option gives the holder (buyer) the "right to purchase" a
security at a specified price (the exercise price) at any time until a certain
date (the expiration date). So long as the obligation of the writer of a call
option continues, the writer may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring the writer to deliver
the underlying security against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by repurchasing an option
identical to that previously sold. To secure the writer's obligation to deliver
the underlying security in the case of a call option, subject to the rules of
the Options Clearing Corporation, a writer is required to deposit in escrow the
underlying security or other assets in accordance with such rules. The Funds
will write only covered call options. This means that a Fund will only write a
call option on a security which a Fund already owns. (In order to comply with
the requirements of the securities laws in several states, a Fund will not write
a covered call option if, as a result, the aggregate market value of all
portfolio securities covering call options or subject to put options exceeds 25%
of the market value of the Fund's net assets.)
Fund securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with each Fund's
investment objectives. The writing of covered call options is a conservative
investment technique believed to involve relatively little risk (in contrast to
the writing of naked or uncovered options, which a Fund will not do), but
capable of enhancing the Fund's total return. When writing a covered call
option, a Fund, in return for the premium, gives up the opportunity for profit
from a price increase in the underlying security above the exercise price, but
conversely retains the risk of loss should the price of the security decline.
Unlike one who owns securities not subject to an option, a Fund has no control
over when it may be required to sell the underlying securities, since it may be
assigned an exercise notice at any time prior to the expiration of its
obligation as a writer. If a call option which a Fund has written expires, a
Fund will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security during the
option period. If the call option is exercised, a Fund will realize a gain or
loss from the sale of the underlying security. The security covering the call
will be maintained in a segregated account of the Fund's custodian. The Funds do
not consider a security covered by a call to be "pledged" as that term is used
in each Fund's policy which limits the pledging or mortgaging of its assets.
The premium received is the market value of an option. The premium each
Fund will receive from writing a call option will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying security, and the length of the option period. Once the decision to
write a call option has been made, the Fund's Adviser or Sub-Adviser, in
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determining whether a particular call option should be written on a particular
security, will consider the reasonableness of the anticipated premium and the
likelihood that a liquid secondary market will exist for those options. The
premium received by a Fund for writing covered call options will be recorded as
a liability in the Trust's statement of assets and liabilities. This liability
will be adjusted daily to the option's current market value, which will be the
latest sale price at the time at which the net asset value per Share of the Fund
is computed (close of the New York Stock Exchange), or, in the absence of such
sale, the latest asked price. The liability will be extinguished upon expiration
of the option, the purchase of an identical option in the closing transaction,
or delivery of the underlying security upon the exercise of the option.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
or to permit the sale of the underlying security. Furthermore, effecting a
closing transaction will permit a Fund to write another call option on the
underlying security with either a different exercise price or expiration date or
both. If a Fund desires to sell a particular security from its portfolio on
which it has written a call option it will seek to effect a closing transaction
prior to, or concurrently with, the sale of the security. There is, of course,
no assurance that a Fund will be able to effect such closing transactions at a
favorable price. If a Fund cannot enter into such a transaction, it may be
required to hold a security that it might otherwise have sold, in which case it
would continue to be at market risk on the security. This could result in higher
transaction costs. A Fund will pay transaction costs in connection with the
writing of options to close out previously written options. Such transaction
costs are normally higher than those applicable to purchases and sales of
portfolio securities.
Call options written by a Fund will normally have expiration dates of
less than nine months from the date written. The exercise price of the options
may be below, equal to, or above the current market values of the underlying
securities at the time the options are written. From time to time, a Fund may
purchase an underlying security for delivery in accordance with an exercise
notice of a call option assigned to it, rather than delivering such security
from its portfolio. In such cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market price
of a call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
Puts
Each Bond and Equity Fund may purchase put options to protect its
portfolio holdings in an underlying security against a decline in market value.
Such hedge protection is provided
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during the life of the put option since the Fund, as holder of the put option,
is able to sell the underlying security at the put exercise price regardless of
any decline in the underlying security's market price. For a put option to be
profitable, the market price of the underlying security must decline
sufficiently below the exercise price to cover the premium and transaction
costs. By using put options in this manner, the Fund will reduce any profit it
might otherwise have realized from appreciation of the underlying security by
the premium paid for the put option and by transaction cost. To the extent any
Fund writes put options, all such options will be covered.
Purchasing Call Options
Each Bond and Equity Fund may purchase call options to hedge against an
increase in the price of securities that the Fund wants ultimately to buy. Such
hedge protection is provided during the life of the call option since the Fund,
as holder of the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying security's market
price. In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover the
premium and transaction costs. These costs will reduce any profit the Fund might
have realized had it bought the underlying security at the time it purchased the
call option.
Risk Factors in Options Transactions
The successful use of the Bond Funds and the Equity Funds' options
strategies depends on the ability of their Adviser or, where applicable,
Sub-Adviser to forecast interest rate and market movements correctly.
When it purchases an option, a Fund runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless the
Fund exercises the option or enters into a closing sale transaction with respect
to the option during the life of the option. If the price of the underlying
security does not rise (in the case of a call) or fall (in the case of a put) to
an extent sufficient to cover the option premium and transaction costs, a Fund
will lose part or all of its investment in the option. This contrasts with an
investment by a Fund in the underlying securities, since the Fund may continue
to hold its investment in those securities notwithstanding the lack of a change
in price of those securities.
The effective use of options also depends on a Fund's ability to
terminate option positions at times when its Adviser or, where applicable,
Sub-Adviser deems it desirable to do so. Although a Fund will take an option
position only if its Adviser or, where applicable, Sub-Adviser believes there is
a liquid secondary market for the option, there is no assurance that a Fund will
be able to effect closing transactions at any particular time or at an
acceptable price.
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If a secondary trading market in options were to become unavailable, a
Fund could no longer engage in closing transactions. Lack of investor interest
might adversely affect the liquidity of the market for particular options or
series of options. A marketplace may discontinue trading of a particular option
or options generally. In addition, a market could become temporarily unavailable
if unusual events, such as volume in excess of trading or clearing capability,
were to interrupt normal market operations. A marketplace may at times find it
necessary to impose restrictions on particular types of options transactions,
which may limit a Fund's ability to realize its profits or limit its losses.
Disruptions in the markets for the securities underlying options
purchased or sold by a Fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, a Fund as purchaser or writer of an
option will be unable to close out its positions until option trading resumes,
and it may be faced with losses if trading in the security reopens at a
substantially different price. In addition, the Options Clearing Corporation
("OCC") or other options markets may impose exercise restrictions. If a
prohibition on exercise is imposed at the time when trading in the option has
also been halted, a Fund as purchaser or writer of an option will be locked into
its position until one of the two restrictions has been lifted. If a prohibition
on exercise remains in effect until an option owned by a Fund has expired, the
Fund could lose the entire value of its option.
Special risks are presented by internationally-traded options. Because
of time differences between the United States and the various foreign countries,
and because different holidays are observed in different countries, foreign
option markets may be open for trading during hours or on days when U.S. markets
are closed. As a result, option premiums may not reflect the current prices of
the underlying interest in the United States.
Mortgage-related Securities
Each of the Money Market Funds (other than the U.S. Treasury Securities
Money Market Fund), the Equity Funds (other than the International Equity Index
Fund) the Bond Funds, the Municipal Bond Funds, the Institutional Money Market
Funds (other than the Treasury Money Market Fund and Treasury Only Money Market
Fund) and the Asset Allocation Fund may, consistent with its investment
objective and policies, invest in mortgage-related securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities. All the
aforementioned Funds will limit their investment in such securities as disclosed
in the relevant Prospectus for each Fund.
Mortgage-related securities, for purposes of the Trust's Prospectuses
and this Statement of Additional Information, represent pools of mortgage loans
assembled for sale to investors by various governmental agencies such as the
Government National Mortgage Association and government-related organizations
such as the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation, as well as by nongovernmental issuers such as
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commercial banks, savings and loan institutions, mortgage bankers, and private
mortgage insurance companies. Although certain mortgage-related securities are
guaranteed by a third party or otherwise similarly secured, the market value of
the security, which may fluctuate, is not so secured. If a Fund of the Trust
purchases a mortgage-related security at a premium, that portion may be lost if
there is a decline in the market value of the security whether resulting from
changes in interest rates or prepayments in the underlying mortgage collateral.
As with other interest-bearing securities, the prices of such securities are
inversely affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true since in periods of declining interest rates the mortgages
underlying the securities are prone to prepayment. For this and other reasons, a
mortgage-related security's stated maturity may be shortened by unscheduled
prepayments on the underlying mortgages and, therefore, it is not possible to
predict accurately the security's return to the Trust's Funds. In addition,
regular payments received in respect of mortgage-related securities include both
interest and principal. No assurance can be given as to the return the Funds of
the Trust will received when these amounts are reinvested.
The Bond and Asset Allocation Funds may invest in mortgage-related
securities which are collateralized mortgage obligations structured on pools of
mortgage pass-through certificates or mortgage loans. Collateralized mortgage
obligations will be purchased only if rated in the three highest rating
categories by a nationally recognized rating organization such as Moody's or
S&P.
There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities issued by
the Government National Mortgage Association ("Ginnie Mae") include Ginnie Mae
Mortgage Pass-Through Certificates which are guaranteed as to the timely payment
of principal and interest by Ginnie Mae and such guarantee is backed by the full
faith and credit of the United States. Ginnie Mae is a wholly-owned U.S.
government corporation within the Department of Housing and Urban Development.
Ginnie Mae certificates also are supported by the authority of Ginnie Mae to
borrow funds from the U.S. Treasury to make payments under its guarantee.
Mortgage-related securities issued by the Federal National Mortgage Association
("Fannie Mae") include Fannie Mae Guaranteed Mortgage Pass-Through Certificates
which are solely the obligations of Fannie Mae and are not backed by or entitled
to the full faith and credit of the United States. Fannie Mae is a
government-sponsored organization owned entirely by private stockholders. Fannie
Mae Certificates are guaranteed as to timely payment of the principal and
interest by Fannie Mae. Mortgage-related securities issued by the Federal Home
Loan Mortgage Corporation ("Freddie Mac") include Freddie Mac Mortgage
Participation Certificates. Freddie Mac is a corporate instrumentality of the
United States, created pursuant to an Act of Congress, which is owned entirely
by Federal Home Loan Banks. Freddie Mac Certificates are not guaranteed by the
United States or by any Federal Home Loan Banks and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank.
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Freddie Mac Certificates entitle the holder to timely payment of interest, which
is guaranteed by Freddie Mac. Freddie Mac guarantees either ultimate collection
or timely payment of all principal payments on the underlying mortgage loans.
When Freddie Mac does not guarantee timely payment of principal, Freddie Mac may
remit the amount due on account of its guarantee of ultimate payment of
principal at any time after default on an underlying mortgage, but in no event
later than one year after it becomes payable.
Yield, Market Value and Risk Considerations of Mortgage-Backed
Securities
The Bond Funds and the Asset Allocation Fund may invest in certain
Mortgage-Backed Securities, such as Interest Only Stripped Mortgage-Backed
Securities, that are extremely sensitive to changes in prepayments and interest
rates. Even though such securities have been guaranteed by an agency or
instrumentality of the U.S. government, under certain interest rate or
prepayment rate scenarios, the Funds may fail to fully recover their investment
in such securities.
The yield characteristics of Mortgage-Backed Securities differ from
those of traditional fixed income securities. The major differences typically
include more frequent interest and principal payments, usually monthly, and the
possibility that prepayments of principal may be made at any time. Prepayment
rates are influenced by changes in current interest rates and a variety of
economic, geographic, social and other factors and cannot be predicted with
certainty. As with fixed rate mortgage loans, adjustable rate mortgage loans may
be subject to a greater prepayment rate in a declining interest rate
environment. The yields to maturity of the Mortgage-Backed Securities in which
the Trust invests will be affected by the actual rate of payment (including
prepayments) of principal of the underlying mortgage loans. The mortgage loans
underlying such securities generally may be prepaid at any time without penalty.
In a fluctuating interest rate environment, a predominant factor affecting the
prepayment rate on a pool of mortgage loans is the difference between the
interest rates on the mortgage loans and prevailing mortgage loan interest rates
(giving consideration to the cost of any refinancing). In general, if mortgage
loan interest rates fall sufficiently below the interest rates on fixed rate
mortgage loans underlying mortgage pass-through securities, the rate of
prepayment would be expected to increase. Conversely, if mortgage loan interest
rates rise above the interest rates on the fixed rate mortgage loans underlying
the mortgage pass-through securities, the rate of prepayment may be expected to
decrease.
In general, changes in both prepayment rates and interest rates will
change the yield on Mortgage-Backed Securities. The rate of principal
prepayments with respect to adjustable rate mortgage loans ("ARMs") has
fluctuated in recent years. As is the case with fixed mortgage loans, ARMs may
be subject to a greater rate of principal prepayments in a declining interest
rate environment. For example, if prevailing interest rates fall significantly,
ARMs could be subject to higher prepayment rates than if prevailing interest
rates remain constant because the availability of fixed rate mortgage loans at
competitive interest rates may encourage mortgagors to refinance their ARMs to
"lock-in" a lower fixed interest rate. Conversely, if
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prevailing interest rates rise significantly, ARMs may prepay at lower rates
than if prevailing rates remain at or below those in effect at the time such
ARMs were originated. As with fixed rate mortgages, there can be no certainty as
to the rate of prepayments on the ARMs in either stable or changing interest
rate environments. In addition, there can be no certainty as to whether
increases in the principal balances of the ARMs due to the addition of deferred
interest may result in a default rate higher than that on ARMs that do not
provide for negative amortization. Other factors affecting prepayment of ARMs
include changes in mortgagors' housing needs, job transfers, unemployment,
mortgagors' net equity in the mortgage properties and servicing decisions.
Foreign Investments
The International Equity Index Fund will invest primarily in, and the
Prime Money Market Fund, the Institutional Prime Money Market Fund, the Asset
Allocation Fund, the remaining Equity Funds (other than the Equity Index Fund),
the Income Bond Fund, the Limited Volatility Bond Fund and the Intermediate Bond
Fund, subject to their respective investment objectives and policies, may also
invest in certain obligations or securities of foreign issuers. Possible
investments include equity securities of foreign entities, obligations of
foreign branches of U.S. banks and of foreign banks, including, without
limitation, European Certificates of Deposit, European Time Deposits, European
Banker's Acceptances, Canadian Time Deposits and Yankee Certificates of
Deposits, and investments in Canadian Commercial Paper, foreign securities and
Europaper (as those terms are defined in the relevant Prospectuses of the
Trust). Securities of foreign issuers may include sponsored and unsponsored
American Depository Receipts ("ADRs"). Sponsored ADRs are listed on the New York
Stock Exchange; unsponsored ADRs are not. Therefore, there may be less
information available about the issuers of unsponsored ADRs than the issuers of
sponsored ADRs. Unsponsored ADRs are restricted securities. These instruments
may subject a Fund to investment risks that differ in some respects from those
related to investments in obligations of U.S. domestic issuers. Such risks
include future adverse political and economic developments, the possible
imposition of withholding taxes on interest or other income, possible seizure,
nationalization or expropriation of foreign deposits, the possible establishment
of exchange controls or taxation at the source, greater fluctuations in value
due to changes in exchange rates, or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and interest
on such obligations. Such investments may also entail higher custodial fees and
sales commissions than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks may be subject
to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks. Investments in all types of foreign obligations or
securities will not exceed 25% of the net assets of the Asset Allocation Fund,
the Equity Funds (with the exception of the International Equity Index Fund) and
the Income Bond and Limited Volatility Bond Funds.
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By investing in foreign securities, the International Equity Index Fund
attempts to take advantage of differences between both economic trends and the
performance of securities markets in the various countries, regions and
geographic areas as prescribed by the Fund's investment objective and policies.
During certain periods the investment return on securities in some or all
countries may exceed the return on similar investments in the United States,
while at other times the investment return may be less than that on similar U.S.
securities. Shares of the International Equity Index Fund, when included in
appropriate amounts in a portfolio otherwise consisting of domestic securities,
will provide a source of increased diversification. The International Equity
Index Fund itself seeks increased diversification by combining securities from
various countries and geographic areas that offer different investment
opportunities and are affected by different economic trends. The international
investments of the International Equity Index Fund may reduce the effect that
events in any one country or geographic area will have on its investment
holdings. Of course, negative movement by one of a Fund's investments in one
foreign market represented in its portfolio may offset potential gains from the
Fund's investments in another country's markets.
PERCS*
The Equity Funds may invest in Preferred Equity Redemption Cumulative
Stock ("PERCS") which is a form of convertible preferred stock that actually has
more of an equity component than it does fixed income characteristics. These
instruments permit companies to raise capital via a surrogate for common equity.
PERCS are preferred stock which convert to common stock after a specified period
of time, usually three years, and are considered the equivalent of equity by the
ratings agencies. Issuers pay holders a substantially higher dividend yield than
that on the underlying common, and in exchange, the holder's appreciation is
capped, usually at about 30 percent. PERCS are callable at any time. The PERC is
mandatorily convertible into common stock, but is callable at any time at an
initial call price that reflects a substantial premium to the stock's issue
price. PERCS offer a higher dividend than that available on the common stock,
but in exchange the investors agree to the company placing a cap on the
potential price appreciation. The call price declines daily in an amount that
reflects the incremental dividend that holders enjoy. PERCS are listed on an
exchange where the common stock is listed.
When-Issued Securities
As discussed in the Prospectuses, each Fund, except the Treasury Money
Market Fund, may purchase securities on a "when-issued" basis. When a Fund
agrees to purchase securities, the Fund's custodian will set aside cash or
liquid portfolio securities equal to the amount of the commitment in a separate
account. Normally, the custodian will set aside portfolio securities
- ---------------------
*PERCS are a registered trademark of Morgan Stanley, which does not sponsor and
is in no way affiliated with The One Group(R).
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to satisfy a purchase commitment. In such a case, a Fund may be required
subsequently to place additional assets in the separate account in order to
assure that the value of the account remains equal to the amount of the Fund's
commitment. It may be expected that a Fund's net assets will fluctuate to a
greater degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash. No Fund intends to purchase
"when-issued" securities for speculative purposes but only in furtherance of its
investment objective. Because a Fund will set aside cash or liquid portfolio
securities to satisfy its purchase commitments in the manner described, the
Fund's liquidity and the ability of the Adviser and Sub-Adviser to manage the
Fund might, as described in the Prospectuses, be affected in the event its
commitments to purchase when-issued securities ever exceeded 40% of the value of
its assets.
When a Fund engages in "when-issued" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund's incurring a loss or missing the opportunity to obtain a price considered
to be advantageous.
Securities Lending
Each of the Funds may lend up to 33% of its portfolio securities to
broker-dealers, banks or institutional borrowers of securities. A Fund must
receive a minimum of 100% collateral in the form of cash, U.S. government
securities, Shares of an investment trust or Shares of an investment company or
any combination of such cash and securities. This collateral must be valued
daily and should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower will pay the Fund any dividends
or interest paid on such securities. Loans will be subject to termination by a
Fund or the borrower at any time and are therefore not considered to be illiquid
investments. While a Fund will not have the right to vote securities on loan, it
intends to terminate the loan and regain the right to vote if that is considered
important with respect to the investment. A Fund will only enter into loan
arrangements with broker-dealers, banks or other institutions which the Fund's
Adviser has determined are creditworthy under guidelines established by the
Trust's Board of Trustees and when, in the judgement of the Adviser, the
consideration that can be earned currently from such securities loans justifies
the attendant risk.
Index Investing by the Equity Index and International Equity Index
Funds
It is anticipated that the indexing approach that will be employed by
the Equity Index Fund will be an effective method of substantially duplicating
percentage changes in the S&P 500 Index (the "Index"). It is a reasonable
expectation that there will be a close correlation between the Fund's
performance and that of the Index in both rising and falling markets. The Fund
will attempt to achieve a correlation between the performance of its portfolio
and that of the Index of at least 0.95, without taking into account expenses. A
correlation of 1.00 would indicate perfect correlation, which would be achieved
when the Fund's net asset value,
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including the value of its dividend and capital gains distributions, increases
or decreases in exact proportion to changes in the Index. The Fund's ability to
correlate its performance with the Index, however, may be affected by, among
other things, changes in securities markets, the manner in which the Index is
calculated by Standard & Poor's Corporation ("S&P") and the timing of purchases
and redemptions. In the future, the Trustees of the Trust, subject to the
approval of Shareholders, may select another index if such a standard of
comparison is deemed to be more representative of the performance of common
stocks.
S&P chooses the stocks to be included in the Index largely on a
statistical basis. Inclusion of a stock in the Index in no way implies an
opinion by S&P as to its attractiveness as an investment. The Index is
determined, composed and calculated by S&P without regard to the Equity Index
Fund. S&P is neither a sponsor of, nor in any way affiliated with the Equity
Index Fund, and S&P makes no representation or warranty, expressed or implied on
the advisability of investing in the Equity Index Fund or as to the ability of
the Index to track general stock market performance, and S&P disclaims all
warranties of merchantability or fitness for a particular purpose or use with
respect to the Index or any data included therein. "Standard and Poor's 500" is
a service mark of S&P.
The weightings of stocks in the Index are based on each stock's
relative total market value, i.e., market price per share times the number of
Shares outstanding. Because of this weighting, approximately 50% of the Index is
currently composed of the 50 largest companies in the Index, and the Index
currently represents over 65% of the market value of all U.S. common stocks
listed on the New York Stock Exchange. Typically, companies included in the
Index are the largest and most dominant firms in their respective industries.
The Adviser generally selects stocks for the Equity Index Fund in the
order of their weightings in the Index beginning with the heaviest weighted
stocks. The percentage of the Equity Index Fund's assets to be invested in each
stock is approximately the same as the percentage it represents in the Index. No
attempt is made to manage the Equity Index Fund in the traditional sense using
economic, financial and market analysis. The Equity Index Fund is managed using
a computer program to determine which stocks are to be purchased and sold to
replicate the Index to the extent feasible. From time to time, administrative
adjustments may be made in the Fund because of changes in the composition of the
Index, but such changes should be infrequent.
It is anticipated that the indexing approach that will be employed by
the International Equity Index Fund will be an effective method of substantially
duplicating percentage changes in the GDP weighted MSCI EAFE Index (the
"International Index"). The Fund will attempt to achieve a correlation between
the performance of its portfolio and that of the International Index of at least
0.95, without taking into account expenses. It is a reasonable expectation that
there will be a close correlation between the Fund's performance and that of the
International Index in both rising and falling markets. A correlation of 1.00
would indicate perfect correlation, which would be achieved when the Fund's net
asset value, including the value of
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its dividend and capital gains distributions, increases or decreases in exact
proportion to changes in the International Index. The Fund's ability to
correlate its performance with the International Index, however, may be affected
by, among other things, changes in securities markets, the manner in which the
International Index is calculated by Morgan Stanley International ("MSCI") and
the timing of purchases and redemptions. In the future, the Trustees of the
Trust, subject to the approval of Shareholders, may select another index if such
a standard of comparison is deemed to be more representative of the performance
of common stocks.
MSCI computes and publishes the International Index. MSCI also computes
the country weights which are established based on annual GDP data. Gross
Domestic Product is defined as a country's Gross National Product, or total
output of goods and services, adjusted by the following two factors: net labor
income (labor income of domestic residents working abroad less labor income of
foreigners working domestically) plus net interest income (interest income
earned from foreign investments less interest income earned from domestic
investments by foreigners). Country weights are thus established in proportion
to the size of their economies as measured by Gross Domestic Product, which
results in a more uniform distribution of capital across the EAFE markets than
if capitalization weights were used as the basis. The country weights within the
International Index are systematically rebalanced annually to the most recent
GDP weights.
MSCI chooses the stocks to be included in the International Index
largely on a statistical basis. Inclusion of a stock in the International Index
in no way implies an opinion by MSCI as to its attractiveness as an investment.
The International Index is determined, composed and calculated by MSCI without
regard to the International Equity Index Fund. MSCI is neither a sponsor of, nor
in any way affiliated with the International Equity Index Fund, and MSCI makes
no representation or warranty, expressed or implied on the advisability of
investing in the International Equity Index Fund or as to the ability of the
International Index to track general stock market performance, and MSCI
disclaims all warranties of merchantability or fitness for a particular purpose
or use with respect to the International Index or any data included therein.
"MSCI EAFE Index" is a service mark of MSCI.
Foreign Currency Transactions
The Adviser or Sub-Adviser of the International Equity Index Fund may,
if it so chooses, engage in Foreign Currency Transactions, as discussed below.
Transaction Hedging. When a Fund engages in transaction hedging, it enters into
foreign currency transactions with respect to specific receivables or payables
of the Fund generally arising in connection with the purchase or sale of its
portfolio securities. The International Equity Index Fund will engage in
transaction hedging when it desires to "lock in" the U.S. dollar price of a
security it has agreed to purchase or sell, or the U.S. dollar equivalent of a
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dividend or interest payment in a foreign currency. By transaction hedging, the
International Equity Index Fund will attempt to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
The International Equity Index Fund may purchase or sell a foreign
currency on a spot (or cash) basis at the prevailing spot rate in connection
with the settlement of transactions in portfolio securities denominated in that
foreign currency. The Fund may also enter into contracts to purchase or sell
foreign currencies at a future date ("forward contracts"). Although there is no
current intention to do so, the International Equity Index Fund reserves the
right to purchase and sell foreign currency futures contracts traded in the
United States and subject to regulation by the CFTC.
For transaction hedging purposes the International Equity Index Fund
may also purchase U.S. exchange-listed call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives the Fund the right to assume a short position in the futures contract
until expiration of the option. A put option on currency gives the Fund the
right to sell a currency at an exercise price until the expiration of the
option. A call option on a futures contract gives the Fund the right to assume a
long position in the futures contract until the expiration of the option. A call
option on currency gives the Fund the right to purchase a currency at the
exercise price until the expiration of the option.
Position Hedging. When it engages in position hedging, the International Equity
Index Fund enters into foreign currency exchange transactions to protect against
a decline in the values of the foreign currencies in which its portfolios
securities are denominated (or an increase in the value of currency for
securities which the Adviser or Sub-Adviser expects to purchase, when the Fund
holds cash or short-term investments). In connection with the position hedging,
the Fund may purchase or sell foreign currency forward contracts or foreign
currency on a spot basis. The International Equity Index Fund may purchase U.S.
exchange-listed put or call options on foreign currency and foreign currency
futures contracts and buy or sell foreign currency futures contracts traded in
the United States and subject to regulation by the CFTC, although the
International Equity Index Fund has no current intention to do so.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward contract or
futures contract. Accordingly, it may be
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necessary for the Fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the market value of the
security or securities being hedged is less than the amount of foreign currency
the Fund is obligated to deliver and if a decision is made to sell the security
or securities and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received upon
the sale of the portfolio security or securities if the market value of such
security or securities exceeds the amount of foreign currency the Fund is
obligated to deliver.
Although the Fund has no current intention to do so, the International
Equity Index Fund may write covered call options on up to 100% of the currencies
in its portfolio to offset some of the costs of hedging against fluctuations in
currency exchange rates.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the International Equity Index Fund
owns or expects to purchase or sell. They simply establish a rate of exchange
which one can achieve at some future point in time. Additionally, although these
techniques tend to minimize the risk of loss due to a decline in the value of
the hedged currency, they tend to limit any potential gain which might result
from the increase in the value of such currency.
Currency Forward and Futures Contracts. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
as agreed by the parties, at a price set at the time of the contract. In the
case of a cancellable forward contract, the holder has the unilateral right to
cancel the contract at maturity by paying a specified fee. The contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades. A foreign currency futures contract is a standardized contract
for the future delivery of a specified amount of a foreign currency at a future
date at a price set at the time of the contract. Foreign currency futures
contracts traded in the United States are designed by and traded on exchanges
regulated by the CFTC, such as the New York Mercantile Exchange. The
International Equity Index Fund would enter into foreign currency futures
contracts solely for bona fide hedging or other appropriate risk management
purposes as defined in CFTC regulations.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the maturity date
of a forward contract may be any fixed number of days from the date of the
contract agreed upon by the parties, rather than a predetermined date in a given
month. Forward contracts may be in any amounts agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange contracts are entered
into directly between currency traders so that no intermediary is required. A
forward contract generally requires no margin or other deposit.
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At the maturity of a forward or futures contract, the Fund may either
accept or make delivery of the currency specified in the contract, or at or
prior to maturity enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract. Closing transactions with respect to futures
contracts are effected on a commodities exchange; a clearing corporation
associated with the exchange assumes responsibility for closing out such
contracts.
Positions in the foreign currency futures contracts may be closed out
only on an exchange or board of trade which provides a secondary market in such
contracts. Although the International Equity Index Fund intends to purchase or
sell foreign currency futures contracts only on exchanges or boards of trade
where there appears to be an active secondary market, there is no assurance that
a secondary market on an exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse price
movements, the Fund would continue to be required to make daily cash payments of
variation margin.
General Characteristics of Currency Futures Contracts
When a Fund purchases or sells a futures contract, it is required to
deposit with its custodian an amount of cash or U.S. Treasury bills known as
"initial margin." The nature of initial margin is different from that of margin
in security transactions in that it does not involve borrowing money to finance
transactions. Rather, initial margin is similar to a performance bond or good
faith deposit that is returned to the Fund upon termination of the contract,
assuming the Fund satisfies its contractual obligation.
Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market." These payments are called "variation
margin" and are made as the value of the underlying futures contract fluctuates.
For example, when a Fund sells a futures contract and the price of the
underlying currency rises above the delivery price, the Fund's position declines
in value. The Fund then pays a broker a variation margin payment equal to the
difference between the delivery price of the futures contract and the market
price of the currency underlying the futures contract. Conversely, if the price
of the underlying currency falls below the delivery price of the contract, the
Fund's futures position increases in value. The broker then must make a
variation margin payment equal to the difference between the delivery price of
the futures contract and the market price of the currency underlying the futures
contract.
When a Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
Fund, and the Fund realizes a loss or gain. Such closing transactions involve
additional commission costs.
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In addition to the margin requirements discussed above, transactions in
currency futures contracts may involve the segregation of funds pursuant to
requirements imposed by the Securities and Exchange Commission. Under those
requirements, where a Fund has a long position in a futures or forward contract,
it may be required to establish a segregated account (not with a futures
commission merchant or broker) containing cash or certain liquid assets equal to
the purchase price of the contract (less any margin on deposit). For a short
position in futures or forward contracts held by a Fund, those requirements may
mandate the establishment of a segregated account (not with a futures commission
merchant or broker) with cash or certain liquid assets that, when added to the
amounts deposited as margin, equal the market value of the instruments or
currency underlying the futures or forward contracts (but are not less than the
price at which the short positions were established). However, segregation of
assets is not required if the Fund "covers" a long position. For example,
instead of segregating assets, a Fund, when holding a long position in a futures
or forward contract, could purchase a put option on the same futures or forward
contract with a strike price as high or higher than the price of the contract
held by the Fund. In addition, where a Fund takes short positions, or engages in
sales of call options, it need not segregate assets if it "covers" these
positions. For example, where a Fund holds a short position in a futures or
forward contract, it may cover by owning the instruments or currency underlying
the contract. A Fund may also cover such a position by holding a call option
permitting it to purchase the same futures or forward contract at a price no
higher than the price at which the short position was established. Where a Fund
sells a call option on a futures or forward contract, it may cover either by
entering into a long position in the same contract at a price no higher than the
strike price of the call option or by owning the instruments or currency
underlying the futures or forward contract. The Fund could also cover this
position by holding a separate call option permitting it to purchase the same
futures or forward contract at a price no higher than the strike price of the
call option sold by the Fund.
Foreign Currency Options. The International Equity Index Fund may
purchase U.S. exchange-listed call and put options on foreign currencies. Such
options on foreign currencies operate similarly to options on securities.
Options on foreign currencies are affected by all of those factors which
influence foreign exchange rates and investments generally.
The value of a foreign currency option is dependent upon the value of
the foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealer or other market sources be firm or revised on a timely basis.
Available quotation information is generally
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representative of very large transactions in the interbank market and thus may
not reflect relatively smaller transactions (less than $1 million) where rates
may be less favorable. The interbank market in foreign currencies is a global,
around-the-clock market. To the extent that the U.S. options markets are closed
while the markets for the underlying currencies remain open, significant price
and rate movements may take place in the underlying markets that cannot be
reflected in the options market.
Foreign Currency Conversion. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to a
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
Variable and Floating Rate Notes
Variable amount master demand notes, in which the Prime Money Market
Fund, the Tax Exempt Money Market Fund, the Institutional Prime Money Market
Fund, the Bond Funds, and the Equity Funds may invest, are unsecured demand
notes that permit the indebtedness thereunder to vary and provide for periodic
adjustments in the interest rate according to the terms of the instrument.
Because master demand notes are direct lending arrangements between a Fund and
the issuer, they are not normally traded. Although there is no secondary market
in the notes, a Fund may demand payment of principal and accrued interest at any
time. While the notes are not typically rated by credit rating agencies, issuers
of variable amount master demand notes (which are normally manufacturing,
retail, financial, and other business concerns) must satisfy the same criteria
as set forth above for commercial paper. Each Fund's Adviser or Sub-Adviser will
consider the earning power, cash flow, and other liquidity ratios of the issuers
of such notes and will continuously monitor their financial status and ability
to meet payment on demand. In determining average weighted portfolio maturity, a
variable amount master demand note will be deemed to have a maturity equal to
the period of time remaining until the principal amount can be recovered from
the issuer through demand.
As described in the Prospectuses of the Bond Funds, the Equity Funds,
the Tax-Free Funds, the Ohio Municipal Money Market, the Municipal Money Market,
the Institutional Prime Money Market and the Government Money Market Funds,
subject to their investment objective policies and restrictions, each such Fund
(other than the Equity Index Fund) may acquire variable and floating rate notes.
A variable rate note is one whose terms provide for the adjustment of its
interest rate on set dates and which, upon such adjustment, can reasonably be
expected to have a market value that approximates its par value. A floating rate
note is one whose terms provide for the adjustment of its interest rate whenever
a specified interest rate changes and which, at any time, can reasonably be
expected to have a market value that approximates its par value. Such notes are
frequently not rated by credit rating
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agencies; however, unrated variable and floating rate notes purchased by a Fund
will be determined by the Fund's Adviser under guidelines established by the
Trust's Board of Trustees to be of comparable quality at the time of purchase to
rated instruments eligible for purchase under the Fund's investment policies. In
making such determinations, the Adviser will consider the earning power, cash
flow and other liquidity ratios of the issuers of such notes (such issuers
include financial, merchandising, bank holding and other companies) and will
continuously monitor their financial condition. Although there may be no active
secondary market with respect to a particular variable or floating rate note
purchased by a Fund, the Fund may re-sell the note at any time to a third party.
The absence of such an active secondary market, however, could make it difficult
for the Fund to dispose of the variable or floating rate note involved in the
event the issuer of the note defaulted on its payment obligations, and the Fund
could, for this or other reasons, suffer a loss to the extent of the default.
Variable or floating rate notes may be secured by bank letters of credit.
Variable or floating rate notes with stated maturities of more than 397
days may, under the Securities and Exchange Commission's amortized cost rule,
Rule 2a-7 under the 1940 Act, be deemed to have shorter maturities as follows:
(1) A note that is issued or guaranteed by the United States government
or any agency thereof which has a variable rate of interest readjusted no less
frequently than 397 days will be deemed by a Fund to have a maturity equal to
the period remaining until the next readjustment of the interest rate.
(2) A variable rate note, the principal amount of which is scheduled on
the face of the instrument to be paid in one year or less, will be deemed by a
Fund to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
(3) A variable rate note that is subject to a demand feature will be
deemed by a Fund to have a maturity equal to 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.
(4) A floating rate note that is subject to a demand feature will be
deemed by a Fund to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund
is entitled to receive the principal amount of the note either at any time on no
more than thirty days' notice or at specified intervals not exceeding one year
and upon no more than 30 days notice.
Variable and floating rate notes for which no readily available market
exists will be purchased in an amount which, together with securities with legal
or contractual restrictions on resale or for which no readily available market
exists (including repurchase agreements
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providing for settlement more than seven days after notice), exceeds 10% (with
respect to the Money Market and Institutional Money Market Funds) or 15% (with
respect to all Funds other than the Money Market and Institutional Money Market
Funds) of the Fund's net assets only if such notes are subject to a demand
feature that will permit the Fund to demand payment of the principal within
seven days after demand by the Fund. If not rated, such instruments must be
found by the Fund's Adviser, under guidelines established by the Trust's Board
of Trustees, to be of comparable quality to instruments that are rated high
quality. A rating may be relied upon only if it is provided by a nationally
recognized statistical rating organization that is not affiliated with the
issuer or guarantor of the instruments. For a description of the rating symbols
of S&P, Moody's, and Fitch used in this paragraph, see the Appendix. The above
Funds may also invest in Canadian Commercial Paper which is commercial paper
issued by a Canadian corporation or a Canadian counterpart of a U.S. corporation
and in Europaper which is U.S. dollar denominated commercial paper of a foreign
issuer.
Municipal Securities
As a matter of fundamental policy, under normal market conditions, at
least 80% of the total assets of each of the Municipal Money Market Fund, the
Ohio Municipal Money Market Fund, the Municipal Income Fund, the Intermediate
Tax-Free Bond Fund, the Ohio Municipal Bond Fund, the Texas Tax-Free Bond Fund,
the Kentucky Municipal Bond Fund, the Louisiana Municipal Bond Fund, the West
Virginia Tax-Free Bond Fund, the Arizona Tax-Free Bond Fund, and the Tax Exempt
Money Market Fund will be invested in Municipal Securities. Each of the Prime
Money Market, Asset Allocation, Income Bond, Limited Volatility Bond,
Intermediate Bond and Government Bond Funds may also invest in Municipal
Securities if the Adviser determines that such Municipal Securities offer
attractive yields. Municipal Securities are issued to obtain funds for various
public purposes, including the construction of a wide range of public facilities
such as bridges, highways, roads, schools, water and sewer works, and other
utilities. Other public purposes for which Municipal Securities may be issued
include refunding outstanding obligations, obtaining funds for general operating
expenses and obtaining funds to lend to other public institutions and
facilities. In addition, certain debt obligations known as "private activity
bonds" may be issued by or on behalf of municipalities and public authorities to
obtain funds to provide certain water, sewage and solid waste facilities,
qualified residential rental projects, certain local electric, gas and other
heating or cooling facilities, qualified hazardous waste facilities, high-speed
intercity rail facilities, governmentally-owned airports, docks and wharves and
mass commuting facilities, certain qualified mortgages, student loan and
redevelopment bonds and bonds used for certain organizations exempt from federal
income taxation. Certain debt obligations known as "industrial development
bonds" under prior federal tax law may have been issued by or on behalf of
public authorities to obtain funds to provide certain privately operated housing
facilities, sports facilities, industrial parks, convention or trade show
facilities, airport, mass transit, port or parking facilities, air or water
pollution control facilities, sewage or solid waste disposal facilities, and
certain facilities for water supply. Other private activity bonds and industrial
development bonds issued to fund the construction, improvement, equipment or
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repair of privately-operated industrial, distribution, research, or commercial
facilities may also be Municipal Securities, but the size of such issues is
limited under current and prior federal tax law. The aggregate amount of most
private activity bonds and industrial development bonds is limited (except in
the case of certain types of facilities) under federal tax law by an annual
"volume cap." The volume cap limits the annual aggregate principal amount of
such obligations issued by or on behalf of all governmental instrumentalities in
the state. The Tax-Free Funds may not be a desirable investment for "substantial
users" of facilities financed by private activity bonds or industrial
development bonds or for "related persons" of substantial users.
Private activity bonds that are issued by or on behalf of public
authorities to finance various privately-operated facilities are included within
the term "Municipal Securities" as used in the Prospectuses of the Tax-Free
Funds (other than the Ohio Municipal Money Market, Ohio Municipal Bond and
Municipal Money Market Funds) and in this Statement of Additional Information
with respect to such Funds only if the interest paid thereon is both exempt from
federal income tax and not treated as a preference item for individuals for
purposes of the federal alternative minimum tax. Private activity bonds that are
subject to federal income tax and are treated as a preference item for
individuals for purposes of the federal alternative minimum tax are included
within the term Taxable Obligations as used in the Prospectuses of the Tax-Free
Funds (other than the Ohio Municipal Money Market Fund, the Ohio Municipal Bond
Fund and Municipal Money Market Fund). As used in the Prospectuses of the Ohio
Municipal Money Market Fund, the Ohio Municipal Bond Fund and the Municipal
Money Market Fund and in this Statement of Additional Information with respect
to such Funds, the term Municipal Securities includes private activity bonds
that are issued by or on behalf of public authorities to finance privately
operated facilities only if the interest paid thereon is exempt from federal
income tax. Private activity bonds that are subject to federal income tax are
included within the term Taxable Obligations as used in the Prospectuses of the
Ohio Municipal Money Market Fund, the Ohio Municipal Bond Fund, and the
Municipal Money Market Fund.
The two principal classifications of Municipal Securities consist of
"general obligation" and "limited" (or revenue) issues. General obligation bonds
are obligations involving the credit of an issuer possessing taxing power and
are payable from the issuer's general unrestricted revenues and not from any
particular fund or source. The characteristics and method of enforcement of
general obligation bonds vary according to the law applicable to the particular
issuer, and payment may be dependent upon appropriation by the issuer's
legislative body. Limited obligation bonds are payable only from the revenues
derived from a particular facility or class of facilities or, in some cases,
from the proceeds of a special excise or other specific revenue source. Private
activity bonds and industrial development bonds generally are revenue bonds and
thus not payable from the unrestricted revenues of the issuer. The credit and
quality of such bonds is generally related to the credit of the bank selected to
provide the letter of credit underlying the bond. Payment of principal of and
interest on industrial development revenue bonds is the responsibility of the
corporate user (and any guarantor).
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The Funds may also acquire "moral obligation" issues, which are
normally issued by special purpose authorities, and in other tax-exempt
investments including pollution control bonds and tax-exempt commercial paper.
Each Fund may purchase short-term tax-exempt General Obligations Notes, Tax
Anticipation Notes, Bond Anticipation Notes, Revenue Anticipation Notes, Project
Notes, and other forms of short-term tax-exempt loans. Such notes are issued
with a short-term maturity in anticipation of the receipt of tax funds, the
proceeds of bond placements, or other revenues. Project Notes are issued by a
state or local housing agency and are sold by the Department of Housing and
Urban Development. While the issuing agency has the primary obligation with
respect to its Project Notes, they are also secured by the full faith and credit
of the United States through agreements with the issuing authority which provide
that, if required, the federal government will lend the issuer an amount equal
to the principal of and interest on the Project Notes.
There are, of course, variations in the quality of Municipal
Securities, both within a particular classification and between classifications,
and the yields on Municipal Securities depend upon a variety of factors,
including general money market conditions, the financial condition of the
issuer, general conditions of the municipal bond market, the size of a
particular offering, the maturity of the obligations, and the rating of the
issue. The ratings of Moody's and S&P represent their opinions as to the quality
of Municipal Securities. It should be emphasized, however, that ratings are
general and are not absolute standards of quality, and Municipal Securities with
the same maturity, interest rate and rating may have different yields while
Municipal Securities of the same maturity and interest rate with different
ratings may have the same yield. Subsequent to its purchase by a Fund, an issue
of Municipal Securities may cease to be rated or its rating may be reduced below
the minimum rating required for purchase by the Fund. The Fund's Adviser will
consider such an event in determining whether the Fund should continue to hold
the obligations.
Information about the financial condition of issuers of Municipal
Securities may be less available than about corporations having a class of
securities registered under the Securities Exchange Act of 1934.
An issuer's obligations under its Municipal Securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the federal bankruptcy code, and laws, if
any, which may be enacted by Congress or state legislatures extending the time
for payment of principal or interest, or both, or imposing other constraints
upon the enforcement of such obligations. The power or ability of an issuer to
meet its obligations for the payment of interest on and principal of its
Municipal Securities may be materially adversely affected by litigation or other
conditions.
Such litigation or conditions may from time to time have the effect of
introducing uncertainties in the market for tax-exempt obligations or certain
segments thereof, or may materially affect the credit risk with respect to
particular bonds or notes. Adverse economic,
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business, legal or political developments might affect all or a substantial
portion of a Fund's Municipal Securities in the same manner.
From time to time, proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax exemption for
interest on tax exempt bonds, and similar proposals may be introduced in the
future. A recent decision of the United States Supreme Court has held that
Congress has the constitutional authority to enact such legislation. It is not
possible to determine what effect the adoption of such proposals could have on
(i) the availability of Municipal Securities for investment by the Funds, and
(ii) the value of the investment portfolios of the Funds.
The Internal Revenue Code of 1986, as amended (the "Code") imposes
certain continuing requirements on issuers of tax-exempt bonds regarding the
use, expenditure and investment of bond proceeds and the payment of rebates to
the United States of America. Failure by the issuer to comply subsequent to the
issuance of tax-exempt bonds with certain of these requirements could cause
interest on the bonds to become includable in gross income retroactive to the
date of issuance.
The Funds may invest in Municipal Securities either by purchasing them
directly or by purchasing certificates of accrual or similar instruments
evidencing direct ownership of interest payments or principal payments, or both,
on Municipal Securities, provided that, in the opinion of counsel to the initial
seller of each such certificate or instrument, any discount accruing on such
certificate or instrument that is purchased at a yield not greater than the
coupon rate of interest on the related Municipal Securities will to the same
extent as interest on such Municipal Securities be exempt from federal income
tax and state income tax (where applicable) and not treated as a preference item
for individuals for purposes of the federal alternative minimum tax. The Funds
may also invest in Municipal Securities by purchasing from banks participation
interests in all or part of specific holdings of Municipal Securities. Such
participation may be backed in whole or in part by an irrevocable letter of
credit or guarantee of the selling bank. The selling bank may receive a fee from
a Fund in connection with the arrangement. A Fund will not purchase
participation interests unless it receives an opinion of counsel or a ruling of
the Internal Revenue Service that interest earned by it on Municipal Securities
in which it holds such participation interest is exempt from federal income tax
and state income tax (where applicable) and not treated as a preference item for
individuals for purposes of the federal alternative minimum tax.
Demand Features
The Funds may acquire securities that are subject to puts and standby
commitments ("demand features") to purchase the securities at their principal
amount (usually with accrued interest) within a fixed period (usually seven
days) following a demand by the Fund. The demand feature may be issued by the
issuer of the underlying securities, a dealer in the
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securities or by another third party, and may not be transferred separately from
the underlying security.
Swaps, Caps and Floors
All of the Bond Funds (except the Limited Volatility Bond Fund) and the
fixed income portion of the Asset Allocation Fund may enter into swaps, caps,
and floors on various securities (such as U.S. government securities),
securities indexes, interest rates, prepayment rates, foreign currencies or
other financial instruments or indexes, in order to protect the value of the
Fund from interest rate fluctuations and to hedge against fluctuations in the
floating rate market in which the Fund's investments are traded, for both
hedging and non-hedging purposes. While swaps, caps, and floors (sometimes
hereinafter collectively referred to as "swap contracts") are different from
futures contracts (and options on futures contracts) in that swap contracts are
individually negotiated with specific counterparties, the Funds will use swap
contracts for purposes similar to the purposes for which they use options,
futures, and options on futures. Those uses of swap contracts (i.e., risk
management and hedging) present the Funds with risks and opportunities similar
to those associated with options contracts, futures contracts, and options on
futures. See "Futures Contracts and Related Options;" and "Options."
The Funds may enter into these transactions to manage their exposure to
changing interest rates and other market factors. Some transactions may reduce
each Fund's exposure to market fluctuations while others may tend to increase
market exposure.
Swap contracts typically involve an exchange of obligations by two
sophisticated parties. For example, in an interest rate swap, the Fund may
exchange with another party their respective rights to receive interest, such as
an exchange of fixed rate payments for floating rate payments. Currency swaps
involve the exchange of respective rights to make or receive payments in
specified currencies. Mortgage swaps are similar to interest rate swaps in that
they represent commitments to pay and receive interest. The notional principal
amount, however, is tied to a reference pool or pools of mortgages.
Caps and floors are variations on swaps. The purchase of a cap entitles
the purchaser to receive a principal amount from the party selling the cap to
the extent that a specified index exceeds a predetermined interest rate or
amount. The purchase of an interest rate floor entitles the purchaser to receive
payments on a notional principal amount from the party selling the floor to the
extent that a specified index falls below a predetermined interest rate or
amount. Caps and floors are similar in many respects to over-the-counter options
transactions, and may involve investment risks that are similar to those
associated with options transactions and options on futures contracts.
Because swap contracts are individually negotiated, they remain the
obligation of the respective counterparties, and there is a risk that a
counterparty will be unable to meet its
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obligations under a particular swap contract. If a counterparty defaults on a
swap contract with a Fund, the Fund may suffer a loss. To address this risk,
each Fund will usually enter into interest rate swaps on a net basis, which
means that the two payment streams (one from the Fund to the counterparty, one
to the Fund from the counterparty) are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments. Interest
rate swaps do not involve the delivery of securities, other underlying assets,
or principal, except for the purposes of collateralization as discussed below.
Accordingly, the risk of loss with respect to interest rate swaps entered into
on a net basis would be limited to the net amount of the interest payments that
the Fund is contractually obligated to make. If the other party to an interest
rate swap defaults, the Fund's risk of loss consists of the net amount of
interest payments that a Fund is contractually entitled to receive. To protect
against losses related to counterparty default, the Funds may enter into swaps
that require transfers of collateral for changes in market value. In contrast,
currency swaps and other types of swaps may involve the delivery of the entire
principal value of one designated currency or financial instrument in exchange
for the other designated currency or financial instrument. Therefore, the entire
principal value of such swaps may be subject to the risk that the other party
will default on its contractual delivery obligations.
In addition, because swap contracts are individually negotiated and
ordinarily non-transferable, there also may be circumstances in which it would
be impossible for a Fund to close out its obligations under the swap contract
prior to its maturity. Under such circumstances, the Fund might be able to
negotiate another swap contract with a different counterparty to offset the risk
associated with the first swap contract. Unless the Fund is able to negotiate
such an offsetting swap contract, however, the Fund could be subject to
continued adverse developments, even after the Adviser has determined that it
would be prudent to close out or offset the first swap contract.
The Funds will not enter into any mortgage swap, interest rate swap,
cap or floor transaction unless the unsecured commercial paper, senior debt, or
the claims paying ability of the other party thereto is rated in one of the top
two rating categories by at least one NRSRO, or if unrated, determined by the
Adviser to be of comparable quality.
The use of swaps involves investment techniques and risks different
from and potentially greater than those associated with ordinary Fund securities
transactions. If the Adviser is incorrect in its expectations of market values,
interest rates, or currency exchange rates, the investment performance of the
Funds would be less favorable than it would have been if this investment
technique were not used.
The Staff of the Securities and Exchange Commission is presently
considering its position with respect to swaps, caps and floors as senior
securities. Pending a determination by the Staff, the Funds will either treat
swaps, caps and floors as being subject to their senior securities restrictions
or will refrain from engaging in swaps, caps and floors. Once the Staff has
expressed a position with respect to swaps, caps and floors, the Funds intend to
engage in
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swaps, caps and floors, if at all, in a manner consistent with such position. To
the extent the net amount of an interest rate or mortgage swap is held in a
segregated account, consisting of cash or liquid, high grade debt securities,
the Funds and the Adviser believe that swaps do not constitute senior securities
under the Investment Company Act of 1940 and, accordingly, will not treat them
as being subject to each Fund's borrowing restrictions. The net amount of the
excess, if any, of each Fund's obligations over its entitlements with respect to
each interest rate swap will be accrued on a daily basis and an amount of cash
or liquid securities having an aggregate net asset value at least equal to the
accrued excess will be maintained in a segregated account by the Funds'
Custodian.
Structured Instruments
All of the Bond Funds (except the Limited Volatility Bond Fund) and the
fixed income portion of the Asset Allocation Fund may invest, from time to time,
in one or more structured instruments. Structured instruments are debt
securities issued by agencies of the U.S. government (such as Ginnie Mae, Fannie
Mae, and Freddie Mac), banks, corporations, and other business entities whose
interest and/or principal payments are indexed to certain specific foreign
currency exchange rates, interest rates, or one or more other reference indexes.
Structured instruments frequently are assembled in the form of medium-term
notes, but a variety of forms are available and may be used in particular
circumstances.
The terms of such structured instruments provide that their principal
and/or interest payments are adjusted upwards or downwards to reflect changes in
the reference index while the structured instruments are outstanding. In
addition, the reference index may be used in determining when the principal is
redeemed. As a result, the interest and/or principal payments that may be made
on a structured product may vary widely, depending on a variety of factors,
including the volatility of the reference index and the effect of changes in the
reference index on principal and/or interest payment.
While structured instruments may offer the potential for a favorable
rate of return from time to time, they also entail certain risks. Structured
instruments may be less liquid than other debt securities, and the price of
structured instruments may be more volatile. If the value of the reference index
changes in a manner other than that expected by the Adviser, principal and/or
interest payments on the structured instrument may be substantially less than
expected. The Funds will invest only in structured securities that are
consistent with each Fund's investment objective, policies and restrictions and
the Adviser's outlook on market conditions. In some cases, depending on the
terms of the reference index, a structured instrument may provide that the
principal and/or interest payments may be adjusted below zero; however, the
Funds will not invest in structured instruments if the terms of the structured
instrument provide that the Funds may be obligated to pay more than their
initial investment in the structured instrument, or to repay any interest or
principal that has already been collected or paid back. Structured instruments
that are registered under the federal securities laws may be treated as liquid.
In addition, many structured instruments may not be
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registered under the federal securities laws. In that event, a Fund's ability to
resell such a structured instrument may be more limited than its ability to
resell other Fund securities. The Funds will treat such instruments as illiquid,
and will limit their investments in such instruments to no more than 15% of each
Fund's NET assets, when combined with all other illiquid investments of each
Fund. In addition, although structured instruments may be sold in the form of a
corporate debt obligation, they may not have some of the protection against
counterparty default that may be available with respect to publicly traded debt
securities (i.e., the existence of a trust indenture). In that respect, the
risks of default associated with structured instruments may be similar to those
associated with swap contracts. See "Swaps, Caps and Floors."
New Financial Products
New options and futures contracts and other financial products, and
various combinations thereof, continue to be developed and all of the Bond Funds
(except the Limited Volatility Bond Fund) and the fixed income portion of the
Asset Allocation Fund may invest in any such options, contracts and products as
may be developed to the extent consistent with each Fund's investment objective,
policies and restrictions and the regulatory requirements applicable to
investment companies.
These various products may be used to adjust the risk and return
characteristics of each Fund's investments. These various products may increase
or decrease exposure to security prices, interest rates, commodity prices, or
other factors that affect security values, regardless of the issuer's credit
risk. If market conditions do not perform consistent with expectations, the
performance of each Fund would be less favorable than it would have been if
these products were not used. In addition, losses may occur if counterparties
involved in transactions do not perform as promised. These products may expose
the Fund to potentially greater return as well as potentially greater risk of
loss than more traditional fixed income investments.
Restricted Securities
Each of the Equity Funds (except the Equity Index Fund and the
International Equity Index Fund) and each of the Bond Funds (except the Ohio
Municipal Bond Fund) may invest in commercial paper issued in reliance on the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933. Section 4(2) commercial paper is restricted as to disposition under
federal securities law and is generally sold to institutional investors, such as
the Funds, who agree that they are purchasing the paper for investment purposes
and not with a view to public distribution. Any resale by the purchaser must be
in an exempt transaction. Section 4(2) commercial paper is normally resold to
other institutional investors like the Funds through or with the assistance of
the issuer or investment dealers who make a market in Section 4(2) commercial
paper, thus providing liquidity. The Funds believe that Section 4(2) commercial
paper and possibly certain other restricted securities which meet the criteria
for
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liquidity established by the Trustees are quite liquid. The Funds intend,
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial paper,
as determined by the Funds' Adviser, as liquid and not subject to the investment
limitation applicable to illiquid securities. In addition, because Section 4(2)
commercial paper is liquid, the Fund will not subject such paper to the
limitation applicable to restricted securities.
The ability of the Trustees to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange Commission
("SEC") Staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a nonexclusive safe-harbor for
certain secondary market transactions involving securities subject to
restrictions on resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further enhance the
liquidity of the secondary market for securities eligible for resale under Rule
144A. The Funds believe that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities to the Trustees. The
Trustees have directed the Adviser to consider the following criteria in
determining the liquidity of certain restricted securities:
- the frequency of trades and quotes for the security;
- the number of dealers willing to purchase or sell the security and
the number of other potential buyers;
- dealer undertakings to make a market in the security; and
- the nature of the security and the nature of the marketplace
trades.
Ohio Municipal Securities
As used in the Trust's Prospectuses and this Statement of Additional
Information, the term "Ohio Municipal Securities" refers to debt securities
which (i) are issued by or on behalf of the State of Ohio or its respective
authorities, agencies, instrumentalities, and political subdivisions, and (ii)
produce interest which, in the opinion of issuer's counsel at the time of
issuance, is exempt from both federal income tax, and Ohio personal income tax.
Risk Factors Regarding Investments in Ohio Municipal Securities
The economy of Ohio, while becoming increasingly diversified and
increasingly reliant on the service sector, continues to rely in significant
part on durable goods manufacturing, which is largely concentrated in motor
vehicles and equipment, steel, rubber products and household appliances. As a
result, general economic activity in Ohio, as in many other industrial states,
tends to be more cyclical than in some other states and in the nation as a
whole. Agriculture also is an important segment of the Ohio economy, and the
state has instituted several programs to provide financial assistance to
farmers. Although revenue obligations of the state or its political subdivisions
may be payable from a specific source or
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project, and general obligation debt may be payable from a specific tax, there
can be no assurance that future economic difficulties and the resulting impact
on state and local government finances will not adversely affect the market
value of the Ohio Municipal Securities in the Funds of the Trust or the ability
of the respective obligators to make timely payment of interest and principal on
such obligations.
Since the Ohio Municipal Bond Fund and Ohio Municipal Money Market Fund
invest primarily in Ohio Municipal Securities, the value of each Fund's Shares
may be especially affected by factors pertaining to the economy of Ohio and
other factors specifically affecting the ability of issuers of Ohio Municipal
Securities to meet their obligations. As a result, the value of the Shares of
the Ohio Municipal Bond Fund and the Ohio Municipal Money Market Fund may
fluctuate more widely than the value of Shares of a portfolio investing in
securities relating to a number of different states. The ability of Ohio state,
county, or local governments to meet their obligations will depend primarily on
the availability of tax and other revenues to those governments and on their
fiscal conditions generally. The amounts of tax and other revenues available to
issuers of Ohio Municipal Securities may be affected from time to time by
economic, political and demographic conditions within the state. In addition,
constitutional or statutory restrictions may limit a government's power to raise
revenues or increase taxes. The availability of federal, state, and local aid to
issuers of Ohio Municipal Securities may also affect their ability to meet their
obligations. Payments of principal and interest on limited obligation securities
will depend on the economic condition of the facility or specific revenue source
from whose revenues the payments will be made, which in turn could be affected
by economic, political, and demographic conditions in the state. Any reduction
in the actual or perceived ability to meet obligations on the part of either an
issuer of an Ohio Municipal Security or a provider of credit enhancement for
such Security (including a reduction in the rating of its outstanding
securities) would likely affect adversely the market value and marketability of
that Ohio Municipal Security and could adversely affect the values of other Ohio
Municipal Securities as well.
West Virginia Municipal Securities
As used in the Prospectus and this Statement of Additional Information,
the term "West Virginia Municipal Securities" refers to debt securities which
are issued by or on behalf of West Virginia or its respective authorities,
agencies, instrumentalities and political subdivisions and which produce
interest which, in the opinion of counsel for the issuer, is exempt from federal
income tax, is not treated as a preference item for purposes of the federal
alternative minimum tax, and is exempt from West Virginia personal income tax.
Risk Factors Regarding Investments in West Virginia Municipal Securities
West Virginia's economy is heavily dependent upon the coal mining
industry. A reduction in the demand for certain types of coal and increasing
governmental regulation has had an adverse impact upon the industry and upon the
economy of the state. Notwithstanding
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the importance of the coal mining industry on the West Virginia economy, over
the course of the past few years, West Virginia's economy has benefitted from a
developing tourism industry. Tourism directly and indirectly accounts for a
material portion of the West Virginia economy.
In 1989, state taxes were substantially increased by applying sales,
service and use taxes to a vast number of consumer and industrial products and
services that were previously exempt from such tax. In 1993, the state's
gasoline tax was substantially increased.
In 1990, legislation was enacted directing a statewide reappraisal of
real property for ad valorem tax purposes. Implementation of the reappraisal
program was completed in 1994. Generally, implementation has substantially
increased ad valorem taxes of both residential and commercial real property
owners.
Despite the enactment in 1989 and 1990 of legislation designed to
provide a significant increase in revenues to the state, the state experienced a
shortfall in revenues. Even with these measures, the Governor in 1990 imposed a
two-year hiring freeze on state agencies; and in 1992, and again in January,
1993, the Governor imposed spending reductions on most state agencies in order
to bring expenditures in line with revenues.
The increase in taxes in recent years and the 1993 freeze of
expenditures did result in a surplus for the state at the end of its June 30,
1993 fiscal year. The state also had a surplus at the end of its June 30, 1994
fiscal year. However, as in many other states, the state, local governments and
school boards continue to struggle to produce sufficient revenues to fund
operations and support public education.
West Virginia led the nation in unemployment from July, 1991 through
August, 1993. Although unemployment in West Virginia declined from 10.5% in
July, 1993, to 8.7% in July, 1994, West Virginia's unemployment rate is still
well above the 6.1% national rate for July, 1994. High unemployment continues to
reflect the weakness of the West Virginia economy.
Kentucky Municipal Securities
As used in the Prospectus and this Statement of Additional Information,
the term "Kentucky Municipal Securities" refers to debt securities which are
issued by or on behalf of Kentucky or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from federal income tax, is
not treated as a preference item for purposes of the federal alternative minimum
tax, and is exempt from Kentucky personal income tax.
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Risk Factors Regarding Investments in Kentucky Municipal Securities
As of August 31, 1994, Kentucky had an unemployment rate of 4.4%, which
was below the national average of 5.9%. For calendar year 1993, Kentucky's per
capita income ranked 43rd in the nation and was 82% of the national average. The
most current audited financial statement for Kentucky indicates a surplus of
funds in the General Fund of $104.6 million, which was $88.5 million above the
budgeted balance.
Unlike many states, payment on nearly all Kentucky Municipal Securities
depends upon revenue generated by the property financed by the securities; the
securities are not general obligations of the issuer.
Texas Municipal Securities
As used in the Prospectus and this Statement of Additional Information,
the term "Texas Municipal Securities" refers to debt securities which are issued
by or on behalf of Texas or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from federal income tax and
is not treated as a preference item for purposes of the federal alternative
minimum tax.
Risk Factors Regarding Investments in Texas Municipal Securities
Because the Fund invests primarily in obligations issued by Texas
entities, the Fund's performance is partially dependent upon economic conditions
within the State of Texas generally and upon the economic condition of issuing
governments and their instrumentalities in particular. In the late 1980's,
weakness in the oil and gas related and agricultural sectors of the Texas
economy adversely affected consumer spending, financial institutions, utility
demand, and real estate values within the state. Consequently, the state and
many of its local governments had to increase sales, utilities, and ad valorem
tax rates in order to maintain revenue yields. In the past two years, however,
in contrast to the national economy, business activity in Texas has
strengthened, with employment growth occurring in most sectors. In addition,
Texas' major financial institutions have been recapitalized and bank failures
have generally ceased.
Arizona Municipal Securities
As used in the Prospectus and this Statement of Additional Information,
the term "Arizona Municipal Securities" refers to debt securities which are
issued by or on behalf of Arizona or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from federal income tax and
is not treated as a preference item for purposes of the federal alternative
minimum tax.
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Risk Factors Regarding Investments in Arizona Municipal Securities
Arizona's outlook remains uncertain as long as the state does not adopt
a plan regarding long term matching of revenues and expenditures, especially for
education, health care and corrections. Despite severe problems in the real
estate sector, Arizona's growth continues to out pace the nation, for
example: (i) the state's 35% population growth during the 1980's was the third
fastest rate in the nation, next to Alaska and Nevada; (ii) Arizona's current
population growth is over 2% per year, about twice the national average, (iii)
its growth in non-agricultural employment between July 1990-1991 was 1.5%--
seventh fastest in the nation; and (iv) the state's unemployment rate currently
is 7.1%, below the 7.3% U.S. unemployment rate.
Nonetheless, growth has been expensive for Arizona. During the
high-growth 1980's, combined per capita state and local expenditures climbed to
about 105% of the U.S. average from about 95%, according to data from the
Advisory Commission on Intergovernmental Relations. This occurred just after
1980 tax reform removed food from the sales tax base and imposed limits on
property taxes. The resulting reduction in revenues reduced liquidity in the
state treasury. General Fund balances fell to a low of zero in fiscal 1983 from
a high of 21% in 1980. Balancing the budget has been a challenge ever since,
requiring numerous mid-year corrections and special sessions of the legislature.
Although growth-generated revenues picked up during the mid-decade boom, growth
in entitlements, federally mandated programs, education, and corrections still
outstripped revenue inflow. When growth started to slow in 1986, the pressure
intensified. Since fiscal 1985, the state managed five successive years of
shortfalls with internal borrowing, tax accelerations, one-time adjustments, and
budget cuts. After considerable cuts in many departments, fiscal 1991 closed
with an estimated 2% balance, and fiscal 1992 had a General Fund balance of $5
million. The forecast for fiscal 1993 is for a balanced budget.
Louisiana Municipal Securities
As used in the Prospectus and this Statement of Additional Information,
the term "Louisiana Municipal Securities" refers to debt securities which are
issued by or on behalf of Louisiana or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from federal income tax and
is not treated as a preference item for purposes of the federal alternative
minimum tax.
Risk Factors Regarding Investments in Louisiana Municipal Securities
Louisiana's general obligation bonds are currently rated Baa1 by
Moody's investors service, inc. ("Moody's") and A minus by Standard and Poor's
Rating Group ("S&P"). Louisiana's ratings reflect an ongoing recovery process
from the severe financial problems which developed after oil prices declined in
the mid-to-late 1980's.
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Also, both rating agencies have commended the State for enacting constitutional
reforms in the Fall of 1993 that curb borrowing and require that non-recurring
revenues be applied to debt reduction. However, Louisiana remains one of the
weakest states in terms of its credit fundamentals. While ratings of individual
cities, parishes, agencies and special districts vary, most Louisiana issuers
have been affected to some degree by Louisiana's economy.
Through the oil boom of the late 1970s and early 1980s, Louisiana's
labor force and employment grew steadily, as did its financial position.
by June 30, 1981, the General Fund had run several years of operating surpluses,
bringing the ending fund balance to $839.5 million, a sizeable 16% of
operating expenditures. When the oil industry weakened, economic growth slowed
and operating deficits occurred, Louisiana's undesignated General Fund
deficit reached $512 million in fiscal 1988 (ended June 30) and the fund
balance was a negative $377 million.
To address its deficits, Louisiana created the Louisiana Recovery
District in 1988, which sold $979 million revenue bonds secured by (i) the
revenues derived from the Recovery District's 1% statewide sales and use tax,
and (ii) all funds and accounts held under the Recovery District's general bond
resolution and all investment earnings on such funds and accounts. As of
December 31, 1994, the principal amount of all these bonds (including bonds
issued to defease certain portions of the original bond issue) was $486,795
million. Article VI, Section 30.1 of the State Constitution, effective November
3, 1994, prohibits the Recovery District from issuing additional bonds except to
refund bonds at a lower effective interest rate. All bonds of the Recovery
District shall be retired no later than the end of the fiscal year 1998-1999.
During the period from fiscal year 1987-1988 through fiscal year
1993-1994, Louisiana experienced operating budget deficits in three of
the seven fiscal years. The operating deficit problem was exacerbated by the
highly dependent nature of Louisiana's budget on mineral revenues and
the dramatic fluctuations in oil prices over the last decade.
Louisiana began fiscal year 1988-1989 with a balance of $271
million in the General Fund and ended the year with an operating surplus
which, when combined with prior year adjustments of $384 million, provided the
state with an ended balance in the General Fund of $655 million. Fiscal
year ended 1989-1990 ended with a small operating surplus of $47 million which,
when added to the $655 million balance from the prior fiscal year,
resulted in an accumulated surplus of $702 million as of June 30, 1990.
In fiscal year 1990-1991, Louisiana ended the fiscal year with an
accumulated surplus in the General Fund of $417.98 million. In fiscal year
1991-1992, state operations resulted in a $487 million deficit which, after
adjustment, resulted in an undesignated
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fund balance deficit of $83 million. This shortfall was eliminated by utilizing
a set aside against the total balance available for appropriations.
Louisiana ended fiscal year 1992-1993 with a positive undesignated
balance in its General Fund of $101 million. At the end of fiscal year
1993-1994, there was an operating surplus of $129 million which, after including
the prior year's fund balance and reserve changes, resulted in a
positive undesignated unreserved General Fund balance of $212.9 million. The
State forecasts for fiscal year 1995-1996 indicate a potential revenue
shortfall of $192 million in order to continue State operations in fiscal
year 1995-1996 at current levels.
It should be noted that the General Fund could be impacted by
certain pending Medicaid issues. Currently, Louisiana is eligible to
receive up to $1.217 billion in Medicaid disproportionate share payments for
hospitals. In the past, Louisiana has used a portion of the amounts paid
to the public hospitals in the State to return to the Medicaid program to help
finance this health care.
The 1993 amendments to the federal disproportionate share law
severely restrict the State's ability to continue to help finance health
care in this manner. It is estimated that a total of approximately $940 million
in disproportionate share funding will be paid out in State fiscal year
1995, compared to the total capped amount available to Louisiana of $1.271
billion. Thus, the 1993 amendments reduced Louisiana's disproportionate
share fund by over $300 million. In fiscal year 1996, the estimated loss of
disproportionate share funding is over $750 million.
On December 31, 1994, Louisiana submitted a proposed "Section 1115
Waiver" to the federal government to significantly change its Medicaid program
to allow more flexibility and to address the potential financing problem.
Preliminary meetings with Health and Human Services indicate that the federal
government is interested in developing a joint solution to Louisiana's health
care funding crisis and is working with the State on the waiver. The waiver
proposal provides for a phase-in of a managed care program with emphasis on
primary and preventive services through a capitated payment system which should
provide for more stability and controlled growth in the Medicaid program. The
State has received a letter from U.S. Secretary of Health and Human Services,
Donna Shalala, advising that they hope to reach a final agreement with 120 days.
The Health Care Financing Administration ("HCFA") has recently notified
Louisiana that it has questions concerning the provider fee legislation enacted
in 1993. If HCFA disallows the provider fee, there could be a negative $112
million effect as of June 30, 1994. The State is expected to aggressively object
to any disallowance by HCFA.
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Economically, Louisiana will continue to be affected by world energy
markets. Approximately 15% of the nation's crude oil and approximately 28% of
its natural gas are produced in Louisiana. In the past the State has estimated
that up to 25% of its economy is directly or indirectly related to energy. This
is despite the fact that only 5.5% of employment is in oil and gas extraction,
chemicals and allied products and petroleum refining. Oil and oil related jobs
also tend to be at relatively high wages, magnifying their economic effect.
Similarly, although severance taxes and royalties accounted for almost 4.3% of
Operating revenues for fiscal year 1993-1994, compared with almost 25% ten years
ago, energy related activity affects individual and corporate taxes, which
together with sales taxes account for 21.3% of general revenues. Unemployment
declined in Louisiana from 12% in 1987 to 6.2% in 1990. This was due in part to
increased employment but also to out-migration of population and a decline in
labor force. Louisiana's jobless rate has since risen to 7.4% as of December 31,
1994. The comparable national unemployment rate was 6.8%. In addition to oil and
gas, major contributors to Louisiana's economy include chemical production,
shipping, agriculture and tourism.
Louisiana's debt burden is well above that of other states, while
wealth and income indicators are below the national average. In 1993, for
example, the most recent year for which data is available, Louisiana's per
capita personal income was 80% of the United States average. According to
Moody's, Louisiana's state-level tax supported debt is the sixth highest as a
percentage of personal income and eighth highest on a per-capita basis.
Municipal obligations are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors, such
as the Federal Bankruptcy Code, and laws, if any, which may be enacted by
Congress or state legislatures extending the time for payment of principal or
interest, or both, or imposing other constraints upon enforcement of such
obligations or upon municipalities to levy taxes. There is also the possibility
that as a result of litigation or other conditions the power or ability of any
one or more issuers to pay when due principal or interest on its or their
municipal obligations may be materially affected.
INVESTMENT RESTRICTIONS
Unless otherwise specifically noted, the following investment
restrictions may be changed with respect to a particular Fund only by a vote of
a majority of the outstanding Shares of that Fund. See "ADDITIONAL INFORMATION--
Miscellaneous" in this Statement of Additional Information.
None of the Funds may:
1. Purchase securities on margin, sell securities short, or participate
in a joint or joint and several basis in any securities trading account, except,
in the case of the Municipal
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Bond Funds, for use of short-term credit necessary for clearance of purchases of
portfolio securities.
2. Underwrite the securities of other issuers except to the extent that
a Fund may be deemed to be an underwriter under certain securities laws in the
disposition of "restricted securities."
3. Purchase or sell commodities or commodity contracts (including
futures contracts), except that for bona fide hedging and other permissible
purposes: (i) the Equity, Bond and International Equity Index Funds may purchase
or sell financial futures contracts and may purchase call or put options on
financial futures contracts, and (ii) the International Equity Index Fund may
purchase or sell foreign currency futures contracts and foreign currency forward
contacts, and may purchase put or call options on foreign currency futures
contracts and on foreign currencies on appropriate U.S. exchanges, and may
purchase or sell foreign currency on a spot basis.
4. Purchase participation or other direct interests in oil, gas or
mineral exploration or development programs (although investments by all Funds
other than the U.S. Treasury Securities Money Market, Treasury Money Market,
Treasury Only Money Market and Government Money Market Funds in marketable
securities of companies engaged in such activities are not hereby precluded).
5. Invest in any issuer for purposes of exercising control or
management.
6. Purchase securities of other investment companies except as
permitted by the 1940 Act and the rules and regulations thereunder.
7. Purchase or sell real estate (however, each Fund except the Money
Market Funds may, to the extent appropriate to its investment objective,
purchase securities secured by real estate or interests therein or securities
issued by companies investing in real estate or interests therein).
8. Borrow money or issue senior securities, except that each Fund may
borrow from banks or enter into reverse repurchase agreements for temporary
purposes in amounts up to 10% of the value of its total assets at the time of
such borrowing; or mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of the Fund's total assets at
the time of its borrowing. A Fund will not purchase securities while its
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding.
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In addition, the U.S. Treasury Securities Money Market, the Prime Money
Market and the Institutional Money Market Funds may not:
1. Buy common stocks or voting securities.
In addition, the U.S. Treasury Securities Money Market, the Prime Money
Market, and the Government Money Market Funds may not:
1. Buy state, municipal, or private activity bonds.
The following investment restrictions are non-fundamental except as
noted otherwise and therefore can be changed by the Board of Trustees without
prior shareholder approval.
No Fund may:
1. Purchase or retain securities of any issuer if the officers or
Trustees of the Trust or the officers or directors of its Adviser owning
beneficially more than one-half of 1% of the securities of such issuer together
own beneficially more than 5% of such securities.
2. Invest more than 5% of a Fund's total assets in the securities of
issuers which together with any predecessors have a record of less than three
years continuous operation. (This restriction shall not apply to investments in
asset-backed securities and other mutual funds authorized for purchase by such
Fund, as described in its Prospectus. For purposes of this restriction, an
"Asset-Backed Security" means a debt obligation issued by a limited-purpose
entity whose primary business activity is acquiring and holding financial
assets.) (This restriction is fundamental with respect to the Ohio Municipal
Money Market Fund.)
3. Invest in illiquid securities in an amount exceeding, in the
aggregate 15% of the Fund's net assets (10% of net assets for a Fund that is a
Money Market Fund). An illiquid security is a security which cannot be disposed
of promptly (within seven days) and in the usual course of business without a
loss, and includes repurchase agreements maturing in excess of seven days, time
deposits with a withdrawal penalty, non-negotiable instruments and instruments
for which no market exists. (This restriction is fundamental with respect to the
Ohio Municipal Money Market Fund.)
The Equity Funds, the Municipal Bond Funds, and the Institutional Money Market
Funds may not:
1. Acquire securities that are subject to restrictions on resale
because they are not registered under the Securities Act of 1933, if
such investment would exceed 5% of the Fund's total assets.
Each of the Asset Allocation and Intermediate Bond Funds may not:
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1. Invest more than 15% of its net assets in securities with legal or
contractual restrictions on resale. However, this restriction shall not
apply to securities eligible for resale to institutional buyers under
Rule 144A of the Securities and Exchange Commission or to securities
that become a part of the Fund's assets through merger, exchange or
recapitalization involving securities already held in a Fund.
None of the Money Market Funds or Institutional Money Market Funds may:
1. Write or purchase call options.
2. Write or purchase put options except that each of the Ohio Municipal
Money Market, Municipal Money Market and Tax-Exempt Money Market Funds
may acquire puts with respect to Municipal Securities in its portfolio
and sell those puts in conjunction with a sale of those Municipal
Securities.
The Municipal Income Fund, Ohio Municipal Money Market Fund, Municipal Money
Market Fund and the Tax-Exempt Money Market Fund may not:
1. Write or sell puts, calls, straddles, spreads or combinations
thereof except that a Fund may acquire puts with respect to Municipal
Securities in its portfolio and sell those puts in conjunction with a
sale of those Municipal Securities.
The Government ARM Fund may not:
1. Purchase any securities which would cause more than 25% of the total
assets of the Fund to be invested in the securities of one or more
issuers conducting their principal business activities in the same
industry, provided that this limitation does not apply to investments
in obligations issued or guaranteed by the U.S. government or its
agencies and instrumentalities and repurchase agreements involving such
securities. For purposes of this limitation (i) utility companies will
be divided according to their services, for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry; and (ii) wholly-owned finance companies will be considered to
be in the industries of their parents if their activities are primarily
related to financing the activities of their parents.
Additionally, although not a matter controlled by their fundamental
investment policies or restrictions (and therefore subject to change without
Shareholder approval), the Equity Funds and the Bond Funds will not, so long as
their Shares are registered under the securities laws of the State of Texas and
such restrictions are required as a consequence of such registration, (1) invest
more than 5% of any Fund's net assets in warrants; provided that, of this 5%, no
more than 2% will be in warrants that are not listed on the New York Stock
Exchange or the American Stock Exchange or (2) invest more than 15% of any
Fund's net assets in securities which are not readily marketable. For purposes
of restriction (1) in the
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preceding sentence, warrants acquired by a Fund in units or attached to other
securities may be deemed to be without value.
Additionally, although not a matter controlled by their fundamental
investment policies or restrictions (and therefore subject to change without
Shareholder approval), the Equity Funds, the Bond Funds, the Municipal Money
Market Fund, the U.S. Treasury Securities Money Market Fund, the Prime Money
Market Fund, the Intermediate Tax-Free Bond Fund, the Municipal Income Fund, and
the Texas Tax-Free Bond Fund will not, so long as their Shares are registered
under the securities laws of the State of Texas and such restrictions are
required as a consequence of such registration, (1) purchase participations or
other direct interests in oil, gas, or mineral explorations or development
programs and oil, gas or mineral leases, or (2) purchase or sell real estate or
real estate limited partnership interests.
Additionally, although not a matter controlled by their fundamental
investment policies or restrictions (and therefore subject to change without
Shareholder approval), each of the Funds may, so long as their Shares are
registered under the securities laws of the State of California and such
restrictions are required as a consequence of such registration, purchase
securities of other open-end investment companies, provided that the adviser
will waive its fee on that portion of the assets placed in such open-end
investment companies.
Additionally, although not a matter controlled by their fundamental
investment policies or restrictions (and therefore subject to change without
Shareholder approval), so long as its Shares are registered under the securities
laws of the State of Arkansas and such restrictions are required as a
consequence of such registration, (1) none of the Money Market Funds, the
Institutional Money Market Funds or the Bond Funds may acquire securities that
are subject to restrictions on resale because they are not registered under the
Securities Act of 1933, if such investment would exceed 10% of such Fund's net
assets; and (2) none of the International Equity Index Fund, the Equity Index
Fund, the Tax Exempt Money Market Fund or the Government Money Market Fund will
invest in puts, calls, straddles, spreads or any combination thereof if such
investment would exceed 5% of such Fund's total assets.
Additionally, although not a matter controlled by its fundamental
investment policies or restrictions (and therefore subject to change without
Shareholder approval), so long as its Shares are registered under the securities
laws of the State of Ohio, and such restriction is required as a consequence of
such registration, none of the Intermediate Tax-Free Bond Fund or the
Institutional Money Market Funds will acquire securities which are restricted as
to disposition, in excess of fifteen percent (15%) of such Fund's net assets.
PORTFOLIO TURNOVER
The portfolio turnover rate for each Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the year by the monthly
average value of the portfolio securities. The calculation excludes all
securities whose maturities at the time of
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acquisition were one year or less. Thus, for regulatory purposes, the portfolio
turnovers with respect to the Money Market Funds were zero for the period from
the commencement of their respective operations to June 30, 1995 and are
expected to remain zero, and the portfolio turnover rate with respect to the
Institutional Money Market Funds is expected to be zero.
The portfolio turnover rates of the Funds for the fiscal years ended
June 30, 1995 and 1994 were as follows:
THE ONE GROUP(R)
PORTFOLIO TURNOVER
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JUNE 30,
--------------------------
FUND 1995 1994
- -----------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Securities Money Market 0%** 0%**
Prime Money Market 0%** 0%**
Municipal Money Market 0%** 0%**
Ohio Municipal Money Market 0%** 0%**
Income Equity 4.03% 22.69%
Disciplined Value 176.66% 56.33%
Growth Opportunities 132.63% 70.67%
Equity Index 2.71% 11.81%
Large Company Value 203.13% 111.72%
Asset Allocation 115.36% 56.55%
International Equity Index 4.67% 7.74%
Large Company Growth 14.22% 9.04%
Income Bond 262.25% 131.04%
Limited Volatility Bond 76.43% 30.61%
Intermediate Tax-Free Bond 199.76% 105.98%
Municipal Income 66.02% 101.48%
Ohio Municipal Bond 77.69% 16.77%
Government Bond 106.14% 377.78%
Government ARM 2.91% 242.20%
Intermediate Bond 99.71%*** 85.62%
Treasury Only Money Market 0%** 0%**
Government Money Market 0%** 0%**
Kentucky Municipal Bond 19.75%**** ****
Institutional Prime Money Market NA* NA*
Treasury Money Market NA* NA*
Tax-Exempt Money Market NA* NA*
Arizona Tax-Free Bond NA* NA*
Texas Tax-Free Bond NA* NA*
W. Virginia Tax-Free Bond NA* NA*
Louisiana Municipal Bond NA* NA*
Value Growth NA* NA*
Gulf South Growth NA* NA*
</TABLE>
- ---------------------
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* As of June 30, 1995, the Fund had not commenced operations.
** Turnover rate is not applicable to money market funds.
*** Portfolio turnover rate for the period from November 1, 1994 to June 30,
1995.
**** Portfolio turnover rate for the period from January 20, 1995 to June
30, 1995 for Class A and Fiduciary Class shares and from March 16, 1995
(commencement of operations) to June 30, 1995 for Class B shares. For
the period from February 1, 1994 to January 19, 1995 the portfolio
turnover rate was 10.00% and for the period from March 12, 1993 to
January 31, 1994 the portfolio turnover rate was 5.00%.
The high portfolio turnover rates for the fiscal year ended June 30, 1995
for the Disciplined Value Fund, Growth Opportunities Fund, Large Company Value
Fund, Asset Allocation Fund, Income Bond Fund, Intermediate Tax-Free Bond,
Government Bond Fund, and Intermediate Bond Fund resulted from various factors,
including some or all of the following: investment strategies, decreasing
interest rates, unusually high market volatility and significant growth of the
Fund. Portfolio turnover may vary greatly from year to year as well as within a
particular year, and may also be affected by cash requirements for redemptions
of Shares and by requirements which enable the Trust to receive certain
favorable tax treatments. Portfolio turnover will not be a limiting factor in
making portfolio decisions.
ADDITIONAL TAX INFORMATION CONCERNING ALL FUNDS OF THE TRUST
It is the policy of each Fund of the Trust to meet the requirements
necessary to qualify as a "regulated investment company" under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). By following such
policy, each Fund expects to eliminate or reduce to a nominal amount the federal
income taxes to which it may be subject.
In order to qualify as a regulated investment company, each Fund of the
Trust must, among other things, (1) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock or securities, foreign currencies or
other income (including gains from options, futures or forward contracts)
derived with respect to its business of investing in stock, securities or
currencies, (2) derive less than 30% of its gross income from the sale or other
disposition of stock, securities, options, futures, forward contracts, and
certain foreign currencies (or certain options, futures, or forward contracts on
foreign currencies) held for less than three months, and (3) diversify its
holdings so that at the end of each quarter of its taxable year (i) at least 50%
of the market value of the Fund's assets is represented by cash or cash items,
United States government securities, securities of other regulated investment
companies, and other securities limited, in respect of any one issuer, to an
amount not greater than 5% of the value of the Fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
United States government securities or the securities of other regulated
investment companies) or of two or more issuers that the Fund controls and that
are engaged in the same, similar, or related trades or businesses. These
requirements may restrict the degree to which the Fund may engage in short-term
trading and limit the range of the Fund's investments. If a
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Fund of the Trust qualifies as a regulated investment company, it will not be
subject to federal income tax on the part of its income distributed to
Shareholders, provided the Fund distributes during its taxable year at least (a)
90% of its taxable net investment income (very generally, dividends, interest,
certain other income, and the excess, if any, of net short-term capital gain
over net long-term loss), and (b) 90% of the excess of (i) its tax-exempt
interest income (if any) less (ii) certain deductions attributable to that
income. Each Fund of the Trust intends to make sufficient distributions to
Shareholders to qualify for this special tax treatment.
If a Fund failed to qualify as a regulated investment company receiving
special tax treatment in any taxable year, the Fund would be subject to tax on
its taxable income at corporate rates, and all distributions from earnings and
profits, including any distributions of net tax-exempt income and net long-term
capital gains, would be taxable to Shareholders as ordinary income. In addition,
the Fund could be required to recognize unrealized gains, pay substantial taxes
and interest and make substantial distributions before requalifying as a
regulated investment company and being accorded special tax treatment.
Regulated investment companies that do not distribute in each calendar
year (regardless of whether they otherwise have a non-calendar taxable year) an
amount equal to 98% of their "ordinary income" (as defined) for the calendar
year, plus 98% of their capital gain net income (as defined) for the one-year
period ending on October 31 of such calendar year, plus any undistributed
amounts from the previous year are subject to a non-deductible excise tax equal
to 4% of the undistributed amounts. For purposes of the excise tax, a Fund is
treated as having distributed any amount on which it is subject to income tax
for any taxable year ending in such calendar year. Each Fund of the Trust
intends to make sufficient distributions to avoid liability for the excise tax.
Shareholders of the Funds will generally pay federal income tax on
distributions received from the Funds. Dividends that are attributable to a
Fund's net investment income will be taxed to shareholders as ordinary income.
Distributions of net capital gain that are designated by a Fund as capital gain
dividends will generally be taxable to a Shareholder receiving such
distributions as long-term capital gain regardless of how long the Shareholder
has held its shares. Distributions in excess of a Fund's current and accumulated
"earnings and profits" will be treated by a Shareholder receiving such
distributions as a return of capital to the extent of such Shareholder's basis
in its Shares in the Fund, and thereafter as capital gain. A return of capital
is not taxable, but reduces a Shareholder's basis in its shares. Shareholders
not subject to tax on their income generally will not be required to pay tax on
amounts distributed to them. The sale, exchange or redemption of Fund shares by
a Shareholder may give rise to a taxable gain or loss to that Shareholder. In
general, any gain or loss realized upon a taxable disposition of shares will be
treated as long-term capital gain or loss if the Shareholder has held the shares
for more than 12 months, and otherwise as short-term capital gain or loss.
However, if a Shareholder sells shares at a loss within six months of purchase,
any loss will be disallowed for Federal income tax purposes to the extent of any
exempt-
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interest dividends received on such shares. In addition, any loss (not already
disallowed as provided in the preceding sentence) realized upon a taxable
disposition of shares held for six months or less will be treated as long-term
to the extent of any long-term capital gain distributions received by the
Shareholder with respect to the shares. All or a portion of any loss realized
upon a taxable disposition of Fund shares will be disallowed if other Fund
shares are purchased within 30 days before or after the disposition. In such a
case, the basis of the newly purchased shares will be adjusted to reflect the
disallowed loss.
Certain investment and hedging activities of the Funds, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, foreign currencies, and foreign securities will be subject
to special tax rules. In a given case, these rules may accelerate income to the
Fund, defer losses to the Fund, cause adjustments in the holding periods of the
Fund's securities, convert short-term capital losses into long-term capital
losses, or otherwise affect the character of the Fund's income. These rules
could therefore affect the amount, timing and character of distributions to
Shareholders. Income earned as a result of these transactions would, in general,
not be eligible for the dividends-received deduction or for treatment as exempt-
interest dividends when distributed to Shareholders. The Fund will endeavor to
make any available elections pertaining to such transactions in a manner
believed to be in the best interest of the Fund.
Certain securities purchased by the Funds (such as STRIPS, CUBES, TRS,
TIGRS, and CATS), as defined in the Description of Permitted Investments in the
Funds' Prospectuses, are sold at original issue discount and thus do not make
periodic cash interest payments. A Fund will be required to include as part of
its current income for tax purposes the imputed interest on such obligations
even though the Fund has not received any interest payments on such obligations
during that period. Because each Fund distributes substantially all of its net
investment income to its Shareholders (including such imputed interest), the
Fund may have to sell portfolio securities in order to generate the cash
necessary for the required distributions. Such sales may occur at a time when
the Adviser would not have chosen to sell such securities and may result in a
taxable gain or loss.
A Fund will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends or of gross proceeds from
redemptions paid to any individual Shareholder who has provided to the Fund
either an incorrect tax identification number or no number at all, or who is
subject to withholding by the Internal Revenue Service for failure properly to
report payments of interest or dividends. This withholding, known as backup
withholding, is not an additional tax, and any amounts withheld may be credited
against the Shareholder's ultimate U.S. tax liability.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting purchasers of Shares of a Fund of the Trust.
Further tax information regarding the Tax-Free Funds and the International
Equity Index Fund is included in following sections of this Statement of
Additional Information. No attempt is made to present herein a
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complete explanation of the federal income tax treatment of each Fund or its
Shareholders, and this discussion is not intended as a substitute for careful
tax planning. Accordingly, prospective purchasers of Shares of a Fund are urged
to consult their tax advisers with specific reference to their own tax
situation, including the potential application of state, local and (if
applicable) foreign taxes.
The foregoing discussion and the discussion below regarding the
Tax-Free Funds and the International Equity Index Fund are based on tax laws and
regulations which are in effect on the date of this Statement of Additional
Information; such laws and regulations may be changed by legislative, judicial
or administrative action, and such changes may be retroactive.
ADDITIONAL TAX INFORMATION CONCERNING THE TAX-FREE FUNDS
The Code permits a regulated investment company which has invested, at
the close of each quarter of its taxable year, at least 50% of its assets in
tax-free Municipal Securities and other securities the interest on which is
exempt from the regular federal income tax to pay exempt-interest dividends to
its Shareholders.
The policy of each Tax-Free Fund is to distribute each year as
exempt-interest dividends substantially all the Fund's net exempt interest
income. An exempt-interest dividend is any dividend or part thereof (other than
a capital gain dividend) paid by a Tax-Free Fund and designated as an
exempt-interest dividend in a written notice mailed to Shareholders after the
close of the Fund's taxable year, which does not exceed, in the aggregate, the
net interest income from Municipal Securities and other securities the interest
on which is exempt from the regular federal income tax received by the Fund
during the taxable year. The percentage of the total dividends paid for any
taxable year which qualifies as federal exempt-interest dividends will be the
same for all Shareholders receiving dividends from a Tax-Free Fund during such
year, regardless of the period for which the Shares were held.
Exempt-interest dividends may generally be treated by a Tax-Free Fund's
Shareholders as items of interest excludable from their gross income under
Section 103(a)(1) of the Code. However, each Shareholder of a Tax-Free Fund is
advised to consult his or her tax adviser with respect to whether such
Shareholder may be treated as a "substantial user" or a "related person" to such
user under Section 147(a) with respect to facilities financed through any of the
tax-exempt obligations held by the Fund. "Substantial user" is defined under
U.S. Treasury Regulations to include a non-exempt person who regularly uses a
part of such facilities in his trade or business and (a)(i) whose gross revenues
derived with respect to the facilities financed by the issuance of bonds are
more than 5% of the total revenues derived by all users of such facilities or
(ii) who occupies more than 5% of the usable area of the facility or (b) for
whom such facilities or a part thereof were specifically constructed,
reconstructed or acquired. "Related persons" includes certain related natural
persons, affiliated corporations, partners and partnerships.
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Dividends attributable to interest on certain private activity bonds
issued after August 7, 1986 must be included in alternative minimum taxable
income for purposes of determining liability (if any) for the alternative
minimum tax applicable to individuals and the alternative minimum tax applicable
to corporations. In the case of corporations, all tax-exempt interest dividends
will be taken into account in determining adjusted current earnings for the
purpose of computing the alternative minimum tax imposed on corporations (as
defined for federal income tax purposes).
Each Tax-Free Fund may at times purchase Municipal Securities (or other
securities the interest on which is exempt from the regular federal income tax)
at a discount from the price at which they were originally issued. For federal
income tax purposes, some or all of the market discount will be included in the
Fund's ordinary income and will be taxable to shareholders as such when it is
distributed to them.
Each Tax-Free Fund may acquire rights regarding specified portfolio
securities under puts. See "Puts." The policy of each Tax-Free Fund is to limit
its acquisition of puts to those under which the Fund will be treated for
federal income tax purposes as the owner of the Municipal Securities acquired
subject to the put and the interest on the Municipal Securities will be
tax-exempt to the Fund. Although the Internal Revenue Service has issued a
published ruling that provides some guidance regarding the tax consequences of
the purchase of puts, there is currently no guidance available from the Internal
Revenue Service that definitively establishes the tax consequences of many of
the types of puts that the Funds could acquire under the 1940 Act. Therefore,
although a Tax-Free Fund will only acquire a put after concluding that it will
have the tax consequences described above, the Internal Revenue Service could
reach a different conclusion from that of the Fund.
The foregoing is only a summary of some of the important tax
considerations generally affecting purchasers of Shares of a Tax-Free Fund.
Additional tax information concerning all Funds of the Trust is contained in the
immediately preceding section of this Statement of Additional Information. No
attempt is made to present a complete explanation of the federal income tax
treatment of each Tax-Free Fund or its Shareholders, and this discussion is not
intended as a substitute for careful tax planning. Accordingly, prospective
purchasers of Shares of a Tax-Free Fund are urged to consult their tax advisers
with specific reference to their own tax situation, including the potential
application of state, local and foreign taxes.
ADDITIONAL TAX INFORMATION CONCERNING THE INTERNATIONAL EQUITY INDEX FUND
Transactions of the International Equity Index Fund in foreign
currencies, foreign currency denominated debt securities and certain foreign
currency options, future contracts and forward contracts (and similar
instruments) may result in ordinary income or loss to the Fund for federal
income tax purposes which will be taxable to the Shareholders as such when it is
distributed to them.
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Gains from foreign currencies (including foreign currency options,
foreign currency futures and foreign currency forward contracts) will constitute
qualifying income for purposes of the 90% test. However, future Treasury
regulations may exclude from qualifying income foreign currency gains not
directly related to the Trust's business of investing in stock or securities
(and may further define those foreign currency transactions that are not
directly related).
Investment by the International Equity Index Fund in certain "passive
foreign investment companies" could subject the Fund to a U.S. federal income
tax or other charge on proceeds from the sale of its investment in such a
company or other distributions from such a company, which tax cannot be
eliminated by making distributions to International Equity Index Fund
Shareholders. If the International Equity Index Fund elects to treat a passive
foreign investment company as a "qualified electing fund," different rules would
apply, although the International Equity Index Fund does not expect to make such
an election. Rather, the Fund intends to avoid such tax or other charge by
making an election to mark such investments to market annually.
FOREIGN TAX CREDIT
If more than 50% of the International Equity Index Fund's total assets
at year end consist of the debt and equity securities of foreign corporations,
the Fund intends to elect to permit its Shareholders who are U.S. citizens to
claim a foreign tax credit or deduction on their U.S. income tax returns for
their pro rata share of foreign taxes paid by the Fund. In that case,
Shareholders will be required to include in gross income their pro rata share of
foreign taxes paid by the Fund. Each Shareholder may then claim a foreign tax
credit or a tax deduction that would offset some or all of the increased tax
liability. Generally, a credit for foreign taxes is subject to the limitation
that it may not exceed the Shareholder's U.S. tax attributable to his or her
total foreign source taxable income. For this purpose, the source of the income
to the International Equity Index Fund flows through to the Fund's Shareholders.
Gains to the International Equity Index Fund from the sale of securities
generally will be treated as derived from U.S. sources and certain currency
fluctuation gains, including fluctuation gains from foreign currency denominated
debt securities, receivables and payables, will be treated as ordinary income
derived from U.S. sources. With limited exceptions, the foreign tax credit is
allowed to offset only 90% of the alternative minimum tax imposed on
corporations and individuals. Because of these limitations, Shareholders may be
unable to claim a credit for the full amount of their proportionate share of the
foreign taxes paid by the International Equity Index Fund.
The foregoing is only a general description of the treatment of foreign
source income or foreign taxes under the United States federal income tax laws.
Because the availability of a credit or deduction depends on the particular
circumstances of each Shareholder, Shareholders are advised to consult their own
tax advisers.
B-56
<PAGE> 262
VALUATION
VALUATION OF THE MONEY MARKET AND INSTITUTIONAL MONEY MARKET FUNDS
The Money Market and Institutional Money Market Funds have elected to
use the amortized cost method of valuation pursuant to Rule 2a-7 under the 1940
Act. This involves valuing an instrument at its cost initially and thereafter
assuming a constant amortization to maturity of any discounts or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. This method may result in periods during which value, as
determined by amortized cost, is higher or lower than the price each Fund would
receive if it sold the instrument. The value of securities in the Funds can be
expected to vary inversely with changes in prevailing interest rates.
Pursuant to Rule 2a-7, the Money Market and Institutional Money Market
Funds will maintain a dollar-weighted average portfolio maturity appropriate to
their objective of maintaining a stable net asset value per Share, provided that
no Fund will purchase any security with a remaining maturity of more than 397
days (securities subject to repurchase agreements and certain variable or
floating rate instruments may bear longer maturities) nor maintain a
dollar-weighted, average portfolio maturity which exceeds 90 days. The Trust's
Board of Trustees has also undertaken to establish procedures reasonably
designed, taking into account current market conditions and a Fund's investment
objective, to stabilize the net asset value per Share of the Money Market Funds
for purposes of sales and redemptions at $1.00. These procedures include review
by the Trustees, at such intervals as they deem appropriate, to determine the
extent, if any, to which the net asset value per Share of each Fund calculated
by using available market quotations deviates from $1.00 per Share. In the event
such deviation exceeds one half of one percent, the Rule requires that the Board
promptly consider what action, if any, should be initiated. If the Trustees
believe that the extent of any deviation from a Fund's $1.00 amortized cost
price per Share may result in material dilution or other unfair results to new
or existing investors, they will take such steps as they consider appropriate to
eliminate or reduce to the extent reasonably practicable any such dilution or
unfair results. These steps may include selling portfolio instruments prior to
maturity, shortening the average portfolio maturity, withholding or reducing
dividends, reducing the number of a Fund's outstanding Shares without monetary
consideration, or utilizing a net asset value per Share determined by using
available market quotations.
VALUATION OF THE EQUITY FUNDS, THE BOND FUNDS AND THE MUNICIPAL BOND FUNDS
Except as noted below, investments of the Asset Allocation Fund, Equity
Funds, Bond Funds, and Municipal Bond Funds of the Trust in securities the
principal market for which is a securities exchange are valued at their market
values based upon the latest available sales price or, absent such a price, by
reference to the latest available bid and asked prices in the principal market
in which such securities are normally traded. Except as noted below, investments
of the International Equity Index Fund in securities the principal market for
which is a securities
B-57
<PAGE> 263
exchange are valued at the closing mid-market price on that exchange on the day
of computation. With regard to each of the above-mentioned Funds, securities the
principal market for which is not a securities exchange are valued at the mean
of their latest bid and ask quotations in such principal market. Securities and
other assets for which quotations either (1) are not readily available or (2) in
the case of the International Equity Index Fund are determined by that Fund's
Adviser or Sub-Adviser to not accurately reflect their value are valued at their
fair value as determined in good faith under consistently applied procedures
established by and under the general supervision of the Trustees of the Trust.
Short-term securities are valued at either amortized cost or original cost plus
accrued interest, which approximates current value.
The value of a foreign security is determined in its national currency
as of the close of trading on the foreign exchange or other principal market on
which it is traded, which value is then converted into its U.S. dollar
equivalent at the foreign exchange closing mid-market rate reported in the
Financial Times as the closing rate for that date. When an occurrence
subsequent to the time a value of a foreign security was so established is
likely to have changed the value, then the fair value of those securities will
be determined by consideration of other factors by or under the direction of the
Trustees of the Trust or their delegates.
Securities for which market quotations are readily available will be
valued on the basis of quotations provided by dealers in such securities or
furnished by a pricing service. Securities for which market quotations are not
readily available and other assets will be valued at fair value using methods
determined in good faith by the Investment Adviser under the supervision of the
Trustees and may include yield equivalents or a pricing matrix.
ADDITIONAL INFORMATION REGARDING THE CALCULATION
OF PER SHARE NET ASSET VALUE
The net asset value of each Fund is determined and its Fiduciary Class,
Class A, Class B and Service Class Shares are priced as of the times specified
in each Fund's Prospectus. The net asset value per Share of each Fund's
Fiduciary Class, Class A, Class B and Service Class Shares is calculated by
determining the value of the respective Class's proportional interest in the
securities and other assets of the Fund, less (i) such Class's proportional
share of general liabilities and (ii) the liabilities allocable only to such
Class, and dividing such amount by the number of Shares of the Class
outstanding. The net asset value of a Fund's Fiduciary Class, Class A, Class B
and Service Class Shares may differ from each other due to the expense of the
Distribution and Shareholders Services Plan fee applicable to a Fund's Class A,
Class B and Service Class Shares.
B-58
<PAGE> 264
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
All of the classes of Shares in each Fund are sold on a continuous
basis by The One GROUP Services Company (the "Distributor"), and the
Distributor has agreed to use appropriate efforts to solicit all purchase
orders.
Fiduciary Class Shares in a Fund may be purchased, through procedures
established by the Distributor, by institutional investors, including affiliates
of BANC ONE CORPORATION and any bank, depository institution, insurance company,
pension plan or other organization authorized to act in fiduciary, advisory,
agency, custodial or similar capacities.
Class A and Class B Shares may be purchased by any investor that does
not meet the purchase eligibility criteria, described above, with respect to
Fiduciary Shares. In addition to purchasing Class A and Class B Shares directly
from the Distributor, an investor may purchase Class A and Class B Shares
through a financial institution, such as a bank, savings and loan association,
insurance company (each a "Shareholder Servicing Agent") that has established a
Shareholder servicing agreement with the Distributor, or through a broker-dealer
that has established a dealer agreement with the Distributor. Questions
concerning the eligibility requirements for each class of the Trust's Shares may
be directed to the Distributor at 1-800-480-4111.
Service Class Shares are available only in the Prime Money Market and
U.S. Treasury Securities Money Market Funds. This class of shares is available
to broker-dealers, other financial intermediaries, banks and other depository
institutions requiring special administrative and accounting services
(e.g., sweep processing).
As described in each Prospectus for each of the Equity and Bond Funds,
and in the Multiple Class Plan, under certain circumstances, Class A Shares of a
Fund may be purchased free of the sales charge applicable to such Class A
Shares. No sales charge is imposed on Class A Shares of the Funds: (i) issued
through reinvestment of dividends and capital gains distributions; (ii) acquired
through the exercise of exchange privileges where a comparable sales charge has
been paid for exchanged Shares; (iii) purchased by officers, directors or
trustees, retirees and employees (and their spouses and immediate family
members) of the Trust, of BANC ONE CORPORATION and its subsidiaries and
affiliates, of the Distributor and its subsidiaries and affiliates, or of an
investment sub-adviser of a Fund of the Trust and such sub-adviser's
subsidiaries and affiliates; (iv) sold to affiliates of BANC ONE CORPORATION and
certain accounts (other than Individual Retirement Accounts) for which financial
organizations, including any bank, depository institution, insurance company,
pension plan or other organization are authorized to act in fiduciary, advisory,
agency, custodial or similar capacities, or purchased by investment advisers,
financial planners or other intermediaries who have a dealer arrangement with
the Distributor, who place trades for their own accounts or for the accounts of
their clients and who charge a management, consulting or other fee for their
services, as well as clients of such investment advisers, financial planners or
B-59
<PAGE> 265
other intermediaries who place trades for their own accounts if the accounts are
linked to the master account of such investment adviser, financial planner or
other intermediary; (v) purchased with proceeds from the recent redemption of
Fiduciary Class Shares of a Fund of the Trust or acquired in an exchange of
Fiduciary Class Shares of a Fund for Class A Shares of the same Fund; (vi)
purchased with proceeds from the recent redemption of Shares of a mutual Fund
(other than a Fund of the Trust) for which a sales charge was paid; (vii)
purchased in an Individual Retirement Account with the proceeds of a
distribution from an employee benefit plan, provided that, at the time of
distribution, the employee benefit plan had plan assets invested in a Fund of
the Trust; (viii) purchased with Trust assets; (ix) purchased in accounts as to
which a bank or broker-dealer charges an asset allocation fee, provided the bank
or broker-dealer has an agreement with the Distributor; or (x) directly
purchased with the proceeds of a distribution on a bond for which a Banc One
Corporation affiliate bank or trust company is the Trustee or Paying Agent.
An investor relying upon any of the categories of waivers of the sales
charge must qualify for such waiver in advance of the purchase with the
Distributor or the financial institution or intermediary through which Shares
are purchased by the investor.
The waiver of the sales charge under circumstances (v), (vi), and (vii)
above applies only if the purchase is made within 60 days of the redemption and
if conditions imposed by the Distributor are met. The waiver policy with respect
to the purchase of Shares through the use of proceeds from a recent redemption
or distribution as described in clauses (v), (vi), and (vii) above will not be
continued indefinitely and may be discontinued at any time without notice.
Investors should call the Distributor at 1-800-480-4111 to determine whether
they are eligible to purchase Shares without paying a sales charge through the
use of proceeds from a recent redemption or distribution as described above, and
to confirm continued availability of these waiver policies prior to initiating
the procedures described in clauses (v), (vi), and (vii).
Fiduciary Class Shareholders of a Fund may exchange their Shares for
Class A Shares of the same Fund or for Class A Shares or Fiduciary Class Shares
of another Fund of the Trust. Class A Shareholders may exchange their Shares for
Fiduciary Class Shares of a Fund or for Fiduciary Class or Class A Shares of
another Fund or the Trust, if the Shareholder is eligible to purchase such
Shares. The exchange privilege may be exercised only in those states where the
Shares of the Fund or such other Fund may be legally sold. All exchanges
discussed herein are made at the net asset value of the exchanged Shares, except
as provided below. The Trust does not impose a charge for processing exchanges
of Shares. If a Shareholder seeks to exchange Class A Shares of a Fund that does
not impose a sales charge for Class A Shares of a Fund that does, or the Fund
being exchanged into has a higher sales charge, the Shareholder will be required
to pay a sales charge in the amount equal to the difference between the sales
charge applicable to the Fund into which the Shares are being exchanged and any
sales charge previously paid for the exchanged Shares, including any sales
charges incurred on any earlier exchanges of the Shares (unless such sales
charge is otherwise waived as provided above). The exchange of Fiduciary Class
Shares for Class A Shares also
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<PAGE> 266
will require payment of the sales charge unless the sales charge is waived, as
provided above. If a Shareholder (no longer eligible to purchase Fiduciary
Shares) purchases Class A Shares of a Fund, the Shareholder will be subject to
Distribution and Shareholder Services Plan Fees.
Class B Shareholders of a Fund may exchange their Shares for Class B
Shares of any other Fund of the Trust on the basis of the net asset value of the
exchanged Class B Shares, without the payment of any Contingent Deferred Sales
Charge that might otherwise be due upon redemption of the outstanding Class B
Shares. The newly acquired Class B Shares will be subject to the higher
Contingent Deferred Sales Charge of either the Fund from which the Shares were
exchanged or the Fund into which the Shares were exchanged. With respect to
outstanding Class B Shares as to which previous exchanges have taken place,
"higher Contingent Deferred Sales Charge" shall mean the higher of the
Contingent Deferred Sales Charge applicable to either the Fund the Shares are
exchanging into or any other Fund from which the Shares previously have been
exchanged. For purposes of computing the Contingent Deferred Sales Charge that
may be payable upon a disposition of the newly acquired Class B Shares, the
holding period for outstanding Class B Shares of the Fund from which the
exchange was made is "tacked" to the holding period of the newly acquired Class
B Shares. For purposes of calculating the holding period applicable to the newly
acquired Class B Shares, the newly acquired Class B Shares shall be deemed to
have been issued on the date of receipt of the Shareholder's order to purchase
the outstanding Class B Shares of the Fund from which the initial exchange was
made.
Effective January 1, 1996, Service Class Shareholders may not exchange
their Service Class Shares for Shares of any other class, nor may Shares of any
other class be exchanged for Service Class Shares.
Shares of the Institutional Money Market Funds may be purchased by
commercial and retail institutional investors, including affiliates of BANC ONE
CORPORATION, that have opened an account with the Transfer Agent either directly
or through a Shareholder Servicing Agent, by persons whose individual net worth,
or joint net worth with that person's spouse, at the time of his or her purchase
exceeds $1,000,000, or by persons whose individual annual income, or joint
annual income with that person's spouse, at the time of his or her purchase
exceeds $200,000.
The Trust may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Securities and Exchange Commission, (b) the Exchange is closed for other
than customary weekend and holiday closings, (c) the Securities and Exchange
Commission has by order permitted such suspension, or (d) an emergency exists as
determined by the Securities and Exchange Commission.
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<PAGE> 267
The Trust may redeem Shares involuntarily if redemption appears
appropriate in light of the Trust's responsibilities under the 1940 Act. (See
"Valuation of the Money Market and Institutional Money Market Funds and the
Municipal Money Market Fund" above.)
MANAGEMENT OF THE TRUST
TRUSTEES & OFFICERS
Overall responsibility for management of the Trust rests with the Board
of Trustees of the Trust, who are elected by the Shareholders of the Trust.
There are currently four Trustees, all of whom are not "interested persons" of
the Trust within the meaning of that term under the 1940 Act. The Trustees, in
turn, elect the officers of the Trust to supervise actively its day-to-day
operations.
The Trustees of the Trust, their addresses, and principal occupations
during the past five years are set forth below.
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST DURING PAST 5 YEARS
- ---------------- ---------------- --------------------
<S> <C> <C>
Peter C. Marshall Trustee From November, 1993 to present,
DCI Marketing, Inc. President, DCI Marketing, Inc.; from
2727 W. Good Hope Road 1992 to November, 1993, Vice
Milwaukee, WI 53209 President-Finance and Treasurer, DCI
Marketing, Inc.; from August, 1987 to
1992, has served as an officer in the
corporate finance group of Blunt, Ellis
& Loewi and its successor corporation,
Kemper Securities, Inc.
Charles I. Post Trustee From July, 1986 to present, has been
7615 4th Avenue West self-employed as a consultant.
Bradenton, FL 34209
John S. Randall Trustee Since 1972, has been self-employed
3005 North Lake Drive as a management consultant.
Milwaukee, WI 53211
Frederick W. Ruebeck Trustee From June, 1988 to present, has been
Eli Lilly & Company Director of Investments, Eli Lilly
Lilly Corporate Center and Company.
307 East McCarty
Indianapolis, IN 46285
</TABLE>
- ----------------
B-62
<PAGE> 268
The Trustees of the Trust receive fees and expenses for each meeting of
the Board of Trustees attended. No officer or employee of the Distributor
currently acts as a Trustee of the Trust.
The Compensation Table below sets forth the estimated total
compensation to the Trustees from the Trust and the operational funds of The One
Group(R) for the Trust's fiscal year ended June 30, 1995.
COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
PENSION OR
AGGREGATE RETIREMENT ESTIMATED TOTAL
NAME OF COMPENSATION BENEFITS ACCRUED ANNUAL COMPENSATION
PERSON, FROM THE AS PART OF FUND BENEFITS UPON FROM THE FUND
POSITION TRUST EXPENSES RETIREMENT COMPLEX(2)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peter C. Marshall, $31,750 N/A N/A $34,500
Chairman
- -----------------------------------------------------------------------------------------------
Charles I. Post, $31,000 N/A N/A $33,750
Trustee
- -----------------------------------------------------------------------------------------------
John S. Randall, $29,500 N/A N/A $32,250
Trustee
- -----------------------------------------------------------------------------------------------
Frederick W. Ruebeck, $30,750 N/A N/A $33,500
Trustee
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Figures are for the Trust's fiscal year ended June 30, 1995.
(2) "Fund Complex" comprises the 23 operational funds of The One Group(R) as
well as the 4 funds of The One Group(R) Investment Trust.
The officers of the Trust receive no compensation directly from the Trust
for performing the duties of their offices. The officers of the Trust, their
addresses, and principal occupations during the past five years are shown below.
B-63
<PAGE> 269
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST DURING PAST 5 YEARS
- ---------------- ---------------- --------------------
<S> <C> <C>
Mark Dillon President From 1993 to present, Vice-President
The One Group Services Company of BISYS Fund Services, Inc. and
3435 Stelzer Road President of The One GROUP Services
Columbus, Ohio 43219 Company; from 1986 to 1993,
Vice-President of the Winsbury
Company
Mark Redman Vice President From February 1989 to present,
BISYS Fund Services employee of the Winsbury Company
3435 Stelzer Road
Columbus, Ohio 43219
George O. Martinez Secretary From March 1995 to present, Senior
BISYS Fund Services, Inc. Vice President and Director of Legal
3435 Stelzer Road and Compliance Services, BISYS Fund
Columbus, OH 43219 Services, Inc.; from June 1989 -
March 1995, Vice President and
Associate General Counsel, Alliance
Capital Management
Alaina J. Metz Assistant Secretary From June 1995 to present, Chief
BISYS Fund Services, Inc. Administrator, Administration and
3435 Stelzer Road Regulatory Services, BISYS Fund
Columbus, Ohio 43219 Services, Inc.; from May 1989 - June
1995, Supervisor, Mutual Fund Legal
Department, Alliance Capital
Management.
Terrance R. Dolan Treasurer Manager - Segmentation and Analysis
Banc One Corporation since 1995; Controller, Banc One
100 East Broad Street Columbus, Trust Corp., 1994-1995; Senior
OH 43271-0251 Manager, Ernst & Young, 1983 - 1994
</TABLE>
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<PAGE> 270
INVESTMENT ADVISER
Banc One Investment Advisors Corporation
Investment advisory services to each of the Trust's Funds are provided
by Banc One Investment Advisors Corporation (the "Adviser"). The Adviser makes
the investment decisions for the assets of the Fund and continuously reviews,
supervises and administers the Fund's investment program, subject to the
supervision of, and policies established by, the Trustees of the Trust. The
Trust's Shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of any bank affiliate of the Adviser and are
not insured by the FDIC or issued or guaranteed by the U.S. government or any of
its agencies.
The Adviser is an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, a bank holding company incorporated in the state of Ohio. BANC ONE
CORPORATION has affiliate banking organizations in Arizona, Colorado, Illinois,
Indiana, Kentucky, Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin. In
addition, BANC ONE CORPORATION has several affiliates that engage in data
processing, venture capital, investment and merchant banking, and other
diversified services including trust management, investment management,
brokerage, equipment leasing, mortgage banking, consumer finance, and insurance.
On a consolidated basis, BANC ONE CORPORATION had assets of over $88 billion as
of September 30, 1995.
The Adviser represents a consolidation of the investment advisory
staffs of a number of bank affiliates of BANC ONE CORPORATION, which have
considerable experience in the management of open-end management investment
company portfolios, including The One Group(R) (formerly, the Helmsman Fund)
since 1985.
Prior to January 11, 1993, investment advisory services were provided
to the Income Equity, Disciplined Value, Growth Opportunities, and Large Company
Value Funds by Bank One, Milwaukee, NA ("Bank One, Milwaukee"). Prior to January
11, 1993, investment advisory services were provided to the Money Market Funds,
the Institutional Money Market Funds, the Bond Funds, and the Intermediate
Tax-Free Bond Fund by Bank One, Indianapolis, NA ("Bank One, Indianapolis").
Prior to January 11, 1993, investment advisory services were provided to the
International Equity Index, Equity Index, and the Ohio Municipal Bond Funds by
Bank One, Columbus, NA ("Bank One, Columbus"). Prior to January 11, 1993,
investment sub-advisory services were also provided to the Large Company Value
Fund by Bank One, Columbus. Prior to January, 1994, investment advisory services
were provided to the predecessor funds of Intermediate Bond Fund and Large
Company Growth Fund, Sun Eagle Intermediate Fixed Income Fund and Sun Eagle
Equity Growth Fund, respectively, by Bank One, Arizona, NA. Prior to January 20,
1995, investment advisory services were provided to the predecessor Fund of the
Kentucky Municipal Bond Fund, the Trademark Kentucky Municipal Bond Fund, by
Liberty National Bank and Trust Company of Kentucky.
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<PAGE> 271
During the fiscal years ended June 30, 1995, 1994 and 1993, the Funds
of the Trust paid the following investment advisory fees to the Adviser (except
as noted above) and the Adviser voluntarily waived investment advisory fees as
follows:
THE ONE GROUP(R)
ADVISORY--NET
FISCAL YEAR ENDED JUNE 30,
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
FUND NET WAIVED NET WAIVED NET WAIVED
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities Money Market $2,258,214 $1,956,704 $1,605,856 $1,134,557 $ 886,491 $ 683
Prime Money Market $3,991,856 $2,887,240 $2,660,254 $2,092,557 $2,138,010 $1,287,301
Municipal Money Market $ 964,943 $ 834,690 $ 618,798 $ 489,886 $ 396,701 $ 264,497
Ohio Municipal Money Market $ 163,752 $ 112,517 $ 52,130 $ 103,823 $ 0 $ 41,035
Income Equity $1,466,342 $ 7,338 $1,467,442 $ 107,348 $ 870,090 $ 230,842
Disciplined Value $3,306,317 $ 0 $2,365,739 $ 151,852 $ 866,513 $ 255,751
Growth Opportunities $3,024,214 $ 6,973 $2,338,599 $ 141,253 $ 942,144 $ 343,790
Equity Index $ 167,195 $ 396,281 $ 281,951 $ 123,050 $ 98,521 $ 142,784
Large Company Value $1,730,555 $ 0 $ 993,450 $ 85,726 $ 434,287 $ 192,015
Asset Allocation $ 214,418 $ 68,226 $ 178,798 $ 84,284 $ 18,840 $ 23,037
International Equity Index $1,036,935 $ 0 $ 507,696 $ 0 $ 0 $ 106,033
Large Company Growth (Sun Eagle:
Equity Growth)** $2,515,585 $ 0 $ 318,079 $ 226,900 $ 0 $ 332,399
Income Bond $1,662,030 $1,317,284 $1,774,670 $1,543,297 $1,333,615 $1,266,099
Limited Volatility Bond $1,155,274 $1,393,194 $1,275,561 $1,428,366 $1,116,416 $1,070,204
Intermediate Tax-Free Bond $ 499,312 $ 699,036 $ 523,644 $ 599,746 $ 426,563 $ 533,401
Municipal Income $ 572,498 $ 246,244 $ 365,946 $ 166,864 $ 12,541 $ 35,411
Ohio Municipal Bond $ 299,400 $ 302,235 $ 328,834 $ 314,126 $ 196,856 $ 193,288
Government Bond $1,251,932 $ 38,861 $ 611,976 $ 21,496 $ 27,682 $ 30,024
Government ARM $ 277,435 $ 208,134 $ 848,254 $ 299,477 $ 77,667 $ 120,712
Intermediate Bond (Sun Eagle:
Intermediate Fixed Income Fund)** $ 239,603 $ 597,220 $ 0 $ 353,976 $ 0 $ 256,297
Treasury Only Money Market $ 181,522 $ 16,794 $ 82,477 $ 53,130 $ 0 $ 23,970
Government Money Market $ 478,342 $ 101,302 $ 129,862 $ 290,296 $ 0 $ 8,817
Kentucky Municipal Bond
(Trademark Kentucky Municipal Bond)*** $ 53,481 $ 59,433 $ 263,106**** $ 8,528**** $ 215,477***** $ 91,761*****
Institutional Prime Money Market NA* NA* NA* NA* NA* NA*
Treasury Money Market NA* NA* NA* NA* NA* NA*
Tax-Exempt Money Market NA* NA* NA* NA* NA* NA*
Arizona Tax-Free Bond NA* NA* NA* NA* NA* NA*
Texas Tax-Free Bond NA* NA* NA* NA* NA* NA*
W. Virginia Tax-Free Bond NA* NA* NA* NA* NA* NA*
Louisiana Municipal Bond na* na* na* na* na* na*
Value Growth na* na* na* na* na* na*
Gulf South Growth na* na* na* na* na* na*
</TABLE>
- ---------------------------
* As of June 30, 1995, the Fund had not commenced operations.
** In the fiscal year ended June 30, 1993, the Adviser was Bank One,
Arizona, N.A.
*** In the fiscal years ended June 30, 1993 and 1994, and from July 1, 1994
through January 19, 1995, the Adviser was Liberty National Bank and
Trust Company of Kentucky.
**** Fees for the period from February 1, 1994 through January 19, 1995.
***** Fees for the fiscal year ended January 31, 1994.
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<PAGE> 272
All investment advisory services are provided to the Funds by the
Adviser pursuant to an investment advisory agreement dated January 11, 1993 (the
"Investment Advisory Agreement"). The Investment Advisory Agreement (and the
Sub-Investment Advisory Agreement described immediately following, collectively,
the "Advisory and Sub-Advisory Agreements") will continue in effect as to a
particular Fund from year to year, if such continuance is approved at least
annually by the Trust's Board of Trustees or by vote of a majority of the
outstanding Shares of such Fund (as defined under "ADDITIONAL
INFORMATION--Miscellaneous" in this Statement of Additional Information), and a
majority of the Trustees who are not parties to the respective investment
advisory agreements or interested persons (as defined in the Investment Company
Act of 1940) of any party to the respective investment advisory agreements by
votes cast in person at a meeting called for such purpose. The Advisory and
Sub-Advisory Agreements were renewed by the Trust's Board of Trustees at their
quarterly meeting on August 17, 1995. The Advisory and Sub-Advisory Agreements
are terminable as to a particular Fund at any time on 60 days' written notice
without penalty by the Trustees, by vote of a majority of the outstanding Shares
of that Fund, or by the Fund's Adviser or Sub-Adviser as the case may be. The
Advisory and Sub-Advisory Agreements also terminate automatically in the event
of any assignment, as defined in the 1940 Act.
The Advisory and Sub-Advisory Agreements each provide that the
respective Adviser or Sub-Adviser shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Trust in connection with the
performance of the respective investment advisory agreements, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser or Sub-Adviser in the
performance of its duties, or from reckless disregard by it of its duties and
obligations thereunder.
Goldman Sachs Asset Management, formerly the investment Sub-Adviser to
the Government ARM Fund, received $38,737 in sub-advisory fees from the Adviser
for the fiscal year ended June 30, 1993, $417,950 in sub-advisory fees from the
Adviser for the fiscal year ended June 30, 1994, and $176,570 in sub-advisory
fees from the Adviser for the fiscal year ended June 30, 1995.
Boston International Advisors, Inc.
Boston International Advisors serves as investment Sub-Adviser to the
International Equity Index Fund pursuant to an agreement with the Adviser dated
January 11, 1993. The principal executive officers of Boston International
Advisors, Inc. ("Boston International"), Messrs. Lyle H. Davis, Norman H. Meltz,
and David A. Umstead, each own more than 25 percent of the outstanding voting
securities of Boston International. Boston International Advisors, Inc. received
$0 in sub-advisory fees from the Adviser for the fiscal year ended June 30,
1993, $113,644 in sub-advisory fees from the Adviser for the fiscal year ended
June 30, 1994 and $161,906 in sub-advisory fees from the Adviser for the fiscal
year ended June 30, 1995.
B-67
<PAGE> 273
GLASS-STEAGALL ACT
In 1971 the United States Supreme Court held in Investment Company
Institute v. Camp that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a Fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its Shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment adviser, transfer
agent, and custodian to such an investment company. In 1981, the United States
Supreme Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to registered closed-end investment companies. In the Board
of Governors case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisers to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act. In addition, state securities laws on this issue
may differ from the interpretations of federal law expressed herein and banks
and financial institutions may be required to register as dealers pursuant to
state law.
In the Investment Advisory Agreement with the Trust, the Adviser has
represented to the Trust that it possesses the legal authority to perform the
investment advisory services contemplated by the agreement and described in the
Prospectuses and this Statement of Additional Information without violation of
applicable statutes and regulations. Future changes in either federal or state
statutes and regulations relating to the permissible activities of banks or bank
holding companies and the subsidiaries or affiliates of those entities, as well
as further judicial or administrative decisions or interpretations of present
and future statutes and regulations, could prevent or restrict the Adviser from
continuing to perform such services for the Trust. Depending upon the nature of
any changes in the services which could be provided by the Adviser, the Board of
Trustees of the Trust would review the Trust's relationship with the Adviser and
consider taking all action necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of BANC ONE CORPORATION subsidiary banks or
their correspondent banks in connection with customer purchases of Shares of the
Trust, these banks might be required to alter materially or discontinue the
services offered by them to customers. It is not anticipated, however, that any
change in the Trust's method of operations would affect its net asset value per
Share or result in financial losses to any customer.
B-68
<PAGE> 274
PORTFOLIO TRANSACTIONS
Pursuant to the Advisory and Sub-Advisory Agreements, the respective
Adviser and Sub-Advisers determine, subject to the general supervision of the
Board of Trustees of the Trust and in accordance with each Fund's investment
objective and restrictions, which securities are to be purchased and sold by
each such Fund and which brokers are to be eligible to execute its portfolio
transactions. Purchases and sales of portfolio securities with respect to the
Money Market Funds, the Bond Funds, and (to a varying degree) the Asset
Allocation Fund usually are principal transactions in which portfolio securities
are purchased directly from the issuer or from an underwriter or market maker
for the securities. Purchases from underwriters of portfolio securities include
a commission or concession paid by the issuer to the underwriter and purchases
from dealers serving as market makers may include the spread between the bid and
asked price. Transactions on stock exchanges (other than certain foreign stock
exchanges) involve the payment of negotiated brokerage commissions. Transactions
in the over-the-counter market are generally principal transactions with
dealers. With respect to the over-the-counter market, the Trust, where possible,
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better price and execution are available
elsewhere. While the Trust's Advisers generally seek competitive spreads or
commissions, the Trust may not necessarily pay the lowest spread or commission
available on each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various
dealers is determined by each Adviser and Sub-Adviser with respect to the Funds
it serves based on its best judgment and in a manner deemed fair and reasonable
to Shareholders. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price. Subject to this consideration,
dealers who provide supplemental investment research to an Adviser or
Sub-Adviser of the Trust may receive orders for transactions by the Trust.
Information so received is in addition to and not in lieu of services required
to be performed by such Adviser or Sub-Adviser and does not reduce the advisory
fees payable to such Adviser. Such information may be useful to such Adviser or
Sub-Adviser in serving both the Trust and other clients and, conversely,
supplemental information obtained by the placement of business of other clients
may be useful to such Adviser in carrying out its obligations to the Trust.
The Trust will not execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with its Advisers or their
affiliates except as may be permitted under the 1940 Act, and will not give
preference to correspondents of BANC ONE CORPORATION subsidiary banks with
respect to such transactions, securities, savings deposits, repurchase
agreements, and reverse repurchase agreements.
During the Trust's fiscal year ended June 30, 1993, the Trust paid
brokerage commissions to SEI Financial Services Company, the former Distributor
for the Trust, for brokerage services provided. The Income Equity Fund, the
Disciplined Value Fund, the Growth Opportunities Fund, and the Large
Company Growth Fund paid SEI Financial Services Company $16,480, $103,796,
$15,502 and $21,636, respectively, in brokerage
B-69
<PAGE> 275
commissions during the Trust's fiscal year ended June 30, 1993. During the
Trust's fiscal year ended June 30, 1994, the Trust paid no brokerage commissions
to SEI Financial Services Company for brokerage services provided.
During the Trust's fiscal year ended June 30, 1993, the Trust paid
brokerage commissions to Goldman Sachs Asset Management ("Goldman") for
brokerage services provided. The Asset Allocation Fund, Disciplined Value Fund,
Growth Opportunities Fund and Large Company Value Fund paid $32, $5,889, $2,632
and $1,879 respectively, to Goldman in brokerage commissions.
During the Trust's fiscal year ended June 30, 1994, the Trust paid
brokerage commissions to Goldman for brokerage services provided. The Asset
Allocation Fund, Disciplined Value Fund, Growth Opportunities Fund and Large
Company Value Fund paid $419, $11,504, $17,688 and $9,208 respectively, to
Goldman in brokerage commissions.
During the Trust's fiscal year ended June 30, 1995, the Trust paid
brokerage commissions to Goldman for brokerage services provided as follows:
<TABLE>
<CAPTION>
FUND COMMISSIONS PAID
---- ----------------
<S> <C>
Income Equity $ 700
Disciplined Value $81,124
Growth Opportunities $47,160
Large Company Value $47,640
Equity Index $ 6,741
Asset Allocation $ 6,677
Government ARM $ 531
Large Company Growth $ 3,381
</TABLE>
During the Trust's fiscal year ended June 30, 1995, the percentage of
the Trust's aggregate brokerage commissions paid to Goldman was 2.98% and the
percentage of the Trust's aggregate dollar amount of transactions involving the
payment of commissions effected through Goldman was .043%.
In the fiscal years ended June 30, 1995, 1994 and 1993, each of the
Funds of the Trust that paid brokerage commissions and the amounts paid for each
year were as follows:
B-70
<PAGE> 276
THE ONE GROUP(R)
BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------------
FUND 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Equity $ 102,275 $ 129,736 $ 96,544
- --------------------------------------------------------------------------------
Disciplined Value $2,572,895 $ 615,999 $ 883,961
- --------------------------------------------------------------------------------
Growth Opportunities $1,242,481 $ 810,546 $ 712,330
- --------------------------------------------------------------------------------
Equity Index $ 21,858 $ 79,617 $ 4,550
- --------------------------------------------------------------------------------
Large Company Value $1,783,768 $ 539,937 $ 297,999
- --------------------------------------------------------------------------------
Asset Allocation $ 42,796 $ 34,662 $ 13,677
- --------------------------------------------------------------------------------
International Equity $ 223,386 $ 120,976 $ 0
Index
- --------------------------------------------------------------------------------
Large Company Growth $ 442,672 $ 169,455 $ 72,220
================================================================================
Government ARM $ 531 $ 0 $ 0
- --------------------------------------------------------------------------------
</TABLE>
Investment decisions for each Fund of the Trust are made independently
from those for the other Funds or any other investment company or account
managed by the Trust's Adviser or Sub-Advisers. Any such other investment
company or account may also invest in the same securities as the Trust. When a
purchase or sale of the same security is made at substantially the same time on
behalf of a given Fund and another Fund, investment company or account (or, in
the case of the International Equity Index Fund, another account), the
transaction will be averaged as to price, and available investments allocated as
to amount, in a manner which the Adviser or Sub-Adviser of the given Fund
believes to be equitable to the Fund(s) and such other investment company or
account. In some instances, this investment procedure may adversely affect the
price paid or received by a Fund or the size of the position obtained by a Fund.
To the extent permitted by law, the Trust's Adviser and Sub-Advisers may
aggregate the securities to be sold or purchased by it for a Fund with those to
be sold or purchased by it for other Funds or for other investment companies or
accounts in order to obtain best execution. As provided by the Investment
Advisory and Sub-Advisory Agreements, in making investment recommendations for
the Trust, the Trust's Adviser and Sub-Advisers will not inquire or take into
consideration whether an issuer of securities proposed for purchase or sale by
the Trust is a customer of such Adviser or Sub-Advisers or their parents or
subsidiaries or affiliates and, in dealing with its commercial customers, each
Adviser and Sub- Adviser and its parent, subsidiaries, and affiliates will not
inquire or take into consideration whether securities of such customers are held
by the Trust.
B-71
<PAGE> 277
ADMINISTRATOR
The One Group Services Company serves as Administrator (the
"Administrator") to each Fund of the Trust pursuant to a Management and
Administration Agreement with the Trust (the "Administration Agreement"). The
Board of Trustees of the Trust approved The One Group Services Company) as the
sole Administrator for each Fund beginning December 1, 1995. The Administrator
assists in supervising all operations of each Fund to which it serves as
Administrator (other than those performed under the respective investment
advisory agreements and Custodian and Transfer Agency Agreements for that Fund).
Under the Administration Agreement, the Administrator has agreed to
price the portfolio securities of each Fund it serves and to compute the net
asset value and net income of such Funds on a daily basis, to maintain office
facilities for the Trust, to maintain each such Fund's financial accounts and
records, and to furnish the Trust statistical and research data, data
processing, clerical, accounting, and bookkeeping services, and certain other
services required by the Trust with respect to each such Fund. The Administrator
prepares annual and semi-annual reports to the Securities and Exchange
Commission, prepares federal and State tax returns, prepares filings with State
securities commissions, and generally assists in all aspects of the Trust's
operations other than those performed under the investment advisory agreements,
and Custodian and Transfer Agency Agreements. Under the Administration
Agreement, the Administrator may delegate all or any part of its
responsibilities thereunder.
The Adviser also serves as Sub-Administrator to each Fund of the Trust,
pursuant to an agreement between the Administrator and the Adviser. Pursuant to
this agreement, the Adviser performs many of the Administrator's duties, for
which the Adviser receives a fee paid by the Administrator.
The Trust paid fees for administrative services to 440 Financial and to
SEI Financial Management, previous Administrators of the Trust, to The Winsbury
Company, the prior Administrator to the predecessor funds of the Large Company
Growth and Intermediate Bond Funds, and to Federated Administrative Services,
the prior Administrator to the predecessor Fund of the Kentucky Municipal Bond
Fund, for the fiscal years ended June 30, 1995, 1994 and 1993 as follows:
B-72
<PAGE> 278
THE ONE GROUP(R)
ADMINISTRATOR--NET
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30, 1995
- ----------------------------------------------------------------------------------------------------------------------
FUND 440 ADVISER** FEDERATED
- ----------------------------------------------------------------------------------------------------------------------
net waived net waived net waived
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities Money Market $1,731,370 $ 122,233 $ 176,604 $0 NA NA
Prime Money Market $2,897,503 $ 111,313 $ 304,170 $0 NA NA
Municipal Money Market $ 699,142 $ 92,641 $ 75,012 $0 NA NA
Ohio Municipal Money Market $ 82,050 $ 61,415 $ 11,806 $0 NA NA
Income Equity $ 308,619 $ 0 $ 27,163 $0 NA NA
Disciplined Value $ 687,537 $ 0 $ 65,713 $0 NA NA
Growth Opportunities $ 631,524 $ 0 $ 59,053 $0 NA NA
Equity Index $ 90,704 $ 195,567 $ 30,329 $0 NA NA
Large Company Value $ 317,839 $ 27,527 $ 48,604 $0 NA NA
Asset Allocation $ 62,570 $ 4,439 $ 6,304 $0 NA NA
International Equity Index $ 285,929 $ 0 $ 31,831 $0 NA NA
Large Company Growth $ 495,980 $ 0 $ 76,459 $0 NA NA
Income Bond $ 763,202 $ 6,504 $ 67,577 $0 NA NA
Limited Volatility Bond $ 653,915 $ 2,136 $ 60,084 $0 NA NA
Intermediate Tax-Free Bond $ 305,651 $ 0 $ 31,017 $0 NA NA
Municipal Income $ 198,808 $ 79,249 $ 28,635 $0 NA NA
Ohio Municipal Bond $ 124,734 $ 32,085 $ 13,946 $0 NA NA
Government Bond $ 414,276 $ 14,952 $ 53,984 $0 NA NA
Government ARM $ 68,313 $ 72,059 $ 8,546 $0 NA NA
Intermediate Bond $ 208,925 $ 0 $ 26,063 $0 NA NA
Treasury Only Money Market $ 86,438 $ 0 $ 33,470 $0 NA NA
Government Money Market $ 273,911 $ 23,414 $ 88,367 $0 NA NA
Kentucky Municipal Bond $ 24,352*** $ 1,554*** $ 6,155*** $0*** $77,852*** $0****
Institutional Prime Money Market NA* NA* NA* NA* NA NA
Treasury Money Market NA* NA* NA* NA* NA NA
Tax-Exempt Money Market NA* NA* NA* NA* NA NA
Arizona Tax-Free Bond NA* NA* NA* NA* NA NA
Texas Tax-Free Bond NA* NA* NA* NA* NA NA
W. Virginia Tax-Free Bond NA* NA* NA* NA*(1) NA NA
Louisiana Municipal Bond na* na* na* na* na* na
Value Growth na* na* na* na* na* na
Gulf South Growth na* na* na* na* na* na
</TABLE>
- -------------------------------------
* As of June 30, 1995, the Fund had not commenced operations.
** These are fees paid by 440 to the Adviser pursuant to the
Sub-Administration Agreement for the period from April 1, 1995 through
June 30, 1995.
*** These fees are paid from January 20, 1995 through June 30, 1995.
**** These fees are paid from February 1, 1994 through January 19, 1995.
B-73
<PAGE> 279
THE ONE GROUP(R)
ADMINISTRATOR--NET
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30, 1994
- ----------------------------------------------------------------------------------------------------------------------------------
FUND 440 SEI WINSBURY FEDERATED
- ----------------------------------------------------------------------------------------------------------------------------------
net waived net waived *net waived net waived
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Securities Money Market $ 784,527 $ 145,627 $291,772 $120,358 NA NA NA NA
Prime Money Market $1,198,953 $ 259,937 $586,109 $267,864 NA NA NA NA
Municipal Money Market $ 297,555 $ 62,779 $114,253 $ 61,144 NA NA NA NA
Ohio Municipal Money Market $ 41,436 $ 21,037 $ 6,987 $ 19,013 NA NA NA NA
Income Equity $ 218,261 $ 8,246 $115,876 $ 21,790 NA NA NA NA
Disciplined Value $ 389,399 $ 5,841 $157,726 $ 30,050 NA NA NA NA
Growth Opportunities $ 363,523 $ 8,369 $168,296 $ 30,159 NA NA NA NA
Equity Index $ 139,191 $ 13,656 $ 40,299 $ 36,379 NA NA NA NA
Large Company Value $ 150,681 $ 1,293 $ 79,477 $ 16,782 NA NA NA NA
Asset Allocation $ 35,653 $ 8,115 $ 9,104 $ 16,053 NA NA NA NA
International Equity Index $ 116,426 $ 476 $ 39,564 $ 0 NA NA NA NA
Large Company Growth $ 73,974 $ 901 NA NA $44,593 $0 NA NA
Income Bond $ 497,328 $ 65,405 $234,878 $143,075 NA NA NA NA
Limited Volatility Bond $ 403,410 $ 59,568 $199,661 $107,428 NA NA NA NA
Intermediate Tax-Free Bond $ 169,440 $ 19,827 $ 73,417 $ 55,558 NA NA NA NA
Municipal Income $ 129,864 $ 14,224 $ 39,346 $ 18,232 na na na na
Ohio Municipal Bond $ 97,895 $ 14,926 $ 43,502 $ 26,271 NA NA NA NA
Government Bond $ 168,602 $ 6,771 $ 59,555 $ 6,230 NA NA NA NA
Government ARM $ 195,828 $ 15,187 $115,709 $ 29,093 NA NA NA NA
Intermediate Bond $ 55,677 $ 19,323 NA NA $48,000 $0 NA NA
Treasury Only Money Market $ 33,500 $ 35,403 $ 0 $ 18,868 NA NA NA NA
Government Money Market $ 164,560 $ 92,943 $ 2,467 $ 78,512 NA NA NA NA
Institutional Prime Money Market NA* NA* NA* NA* NA NA NA NA
Treasury Money Market NA* NA* NA* NA* NA NA NA NA
Tax-Exempt Money Market NA* NA* NA* NA* NA NA NA NA
Arizona Tax-Free Bond NA* NA* NA* NA* NA NA NA NA
Kentucky Municipal Bond NA* NA* NA* NA* NA NA $62,930** $0**
Texas Tax-Free Bond NA* NA* NA* NA* NA NA NA NA
W. Virginia Tax-Free Bond NA* NA* NA* NA* NA NA NA NA
Louisiana Municipal Bond na* na* na* na* na na na na
Value Growth na* na* na* na* na na na na
Gulf South Growth na* na* na+ na* na na na na
</TABLE>
- ---------------------
* As of June 30, 1994, the Fund had not commenced operations.
** For the fiscal year ended January 31, 1994.
B-74
<PAGE> 280
THE ONE GROUP(R)
ADMINISTRATOR--NET
<TABLE>
<CAPTION>
Fiscal Year Ended June 30, 1993
FUND SEI WINSBURY Federated
- ----------------------------------------------------------------------------------------------------
net waived net waived net waived
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities $ 530,939 $276,000 NA NA NA NA
Money Market
Prime Money Market $1,345,450 $416,441 NA NA NA NA
Municipal Money Market $ 226,649 $113,780 NA NA NA NA
Ohio Municipal Money Market $ 0 $ 24,000 NA NA NA NA
Income Equity $ 244,061 $ 23,467 NA NA NA NA
Disciplined Value $ 244,003 $ 28,527 NA NA NA NA
Growth Opportunities $ 265,386 $ 46,986 NA NA NA NA
Equity Index $ 61,060 $ 83,605 NA NA NA NA
Large Company Value $ 122,106 $ 29,884 NA NA NA NA
Asset Allocation $ 6,143 $ 5,137 NA NA NA NA
International Equity Index $ 0 $ 26,832 NA NA NA NA
Large Company Growth (Sun $55,972 $10,508 NA NA
Eagle: Equity Growth)
Income Bond $ 572,013 $208,000 NA NA NA NA
Limited Volatility Bond $ 474,782 $180,931 NA NA NA NA
Intermediate Tax-Free Bond $ 173,876 $114,189 NA NA NA NA
Municipal Income $ 4,800 $ 14,033 na na na na
Ohio Municipal Bond $ 58,491 $ 58,348 NA NA NA NA
Government Bond $ 6,860 $ 15,869 NA NA NA NA
Government ARM $ 23,341 $ 40,563 NA NA NA NA
Intermediate Bond (Sun Eagle:
Intermediate Fixed Income) $57,631 $10,715 NA NA
Treasury Only Money Market $ 0 $ 15,000 NA NA NA NA
Government Money Market $ 0 $ 5,511 NA NA NA NA
Institutional Prime Money NA* NA* NA NA NA NA
Market
Treasury Money Market NA* NA* NA NA NA NA
Tax-Exempt Money Market NA* NA* NA NA NA NA
Arizona Tax-Free Bond NA* NA* NA NA NA NA
Kentucky Municipal Bond NA* NA* NA NA NA NA
Texas Tax-Free Bond NA* NA* NA NA NA NA
W. Virginia Tax-Free Bond NA* NA* NA NA NA NA
Louisiana Municipal Bond na* na* na na na na
Value Growth na* na* na na na na
Gulf South Growth na* na* na na na na
</TABLE>
_______________________
*As of June 30, 1993, the Fund had not commenced operations.
B-75
<PAGE> 281
Unless sooner terminated, the Administration Agreement between the
Trust and The One Group Services Company will continue in effect through
November 30, 1996. The Administration Agreement thereafter shall be renewed
automatically for successive one year terms, unless written notice not to renew
is given by the non-renewing party to the other party at least sixty days prior
to the expiration of the then-current term. The Administration Agreement will be
reviewed and ratified at least annually by the Trust's Board of Trustees,
provided that the Administration Agreement is also reviewed and ratified by the
majority of the Trust's Trustees who are not parties to the Administration
Agreement or interested persons (as defined in the 1940 Act) of any party to the
Administration Agreement, by vote cast in person at a meeting called for the
purpose of reviewing and ratifying the Administration Agreement. The
Administration Agreement is terminable with respect to a particular Trust only
upon mutual agreement of the parties to the Administration Agreement and for
cause (as defined in the Administration Agreement) by the party alleging cause,
on not less than sixty days' notice by the Trust's Board of Trustees or by The
One Group Services Company.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered by
the Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or
negligence in the performance of its duties, or from the reckless disregard by
it of its obligations and duties thereunder.
EXPENSES
If total expenses borne by any one of the Funds in any fiscal year
exceed expense limitations imposed by applicable State securities regulations,
the Fund's Adviser and the Administrator will reimburse that Fund by the amount
of such excess in proportion to their respective fees. As of the date of this
Prospectus, under the most restrictive State expense limitation applicable to
the Trust, the annual expenses of the Trust may not exceed the total of two and
one-half percent (2.5%) of the first thirty million dollars ($30,000,000) of the
Trust's average net assets, plus two percent (2.0%) of the next seventy million
dollars ($70,000,000) of the Trust's average net assets, plus one and one-half
percent (1.5%) of the remaining amount of the Trust's average net assets. Any
expense reimbursements will be estimated daily and reconciled and paid on a
monthly basis. Fees charged to customers by certain entities in connection with
investments in a Fund on a customer's behalf are not included within Fund
expenses for purposes of any such expense limitation.
DISTRIBUTOR
The One Group Services Company serves as Distributor to each Fund of
the Trust pursuant to its Distribution Agreement with the Trust (the
"Distribution Agreement"). The Board of Trustees of the Trust approved The One
Group Services Company as the sole
B-76
<PAGE> 282
Distributor beginning November 1, 1995. Unless otherwise terminated, the
Distribution Agreement will continue in effect until November 30, 1996 and will
continue from year to year if approved at least annually (i) by the Trust's
Board of Trustees or by the vote of a majority of the outstanding Shares of the
Funds (see "ADDITIONAL INFORMATION--Miscellaneous," in this Statement of
Additional Information) that are parties to the Distribution Agreement, and (ii)
by the vote of a majority of the Trustees of the Trust who are not parties to
the Distribution Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval. The
agreement may be terminated in the event of its assignment, as defined in the
1940 Act. The One Group Services Company is a broker-dealer registered with
the Securities and Exchange Commission, and is a member of the National
Association of Securities Dealers, Inc.
DISTRIBUTION PLAN
The operation and fees with respect to Class A Shares, Class B Shares,
and Service Class Shares of the Trust payable under the Trust's Distribution and
Shareholder Services Plans, to which Class A Shares, Class B Shares, and Service
Class Shares of each Fund of the Trust are subject, are described in each such
Fund's Prospectuses and in the Multiple Class Plan.
The Distribution and Shareholder Services Plan with respect to Class A
Shares (the "Distribution Plan") was initially approved on July 28, 1989 by the
Trust's Board of Trustees, including a majority of the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the Distribution Plan (the "Independent
Trustees"). The Distribution Plan originally applied to the single class of
Shares of each Fund of the Trust that existed prior to the offering of the
Funds' Shares as four separate classes. An amendment to the Distribution Plan
was approved by the Independent Trustees on October 21, 1991, and became
effective on February 7, 1992. Such amendment limited fees under the
Distribution Plan only to the Class A Shares of each Fund. The Distribution Plan
was amended again on February 11, 1993 in order to make Retirement Class Shares
(now the Service Class Shares) subject to distribution fees. A Distribution and
Shareholder Services Plan (the "Class B Distribution Plan") for Class B Shares
was initially approved on August 12, 1993 by the Independent Trustees. Prior to
February 7, 1992, distribution fees were waived with respect to every Fund of
the Trust except the U.S. Treasury Securities Money Market Fund and the Prime
Money Market Fund.
During the fiscal year ending June 30, 1995, the distribution fees paid
by the Class A, Class B and Service Class Shares (formerly Retirement Class
Shares) of the Trust to 440 Financial Distributors, the previous Distributor to
the Trust and to Federated Administrative Services, the distributor to the
predecessor Fund of the Kentucky Municipal Bond Fund, the Trademark Kentucky
Municipal Bond Fund, were as follows:
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<PAGE> 283
THE ONE GROUP(R)
DISTRIBUTION FEES PAID FOR THE FISCAL YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
FUND DISTRIBUTOR CLASS A CLASS B SERVICE
CLASS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Securities Money Market 440 FINL: $165,554 NA $0
Prime Money Market 440 FINL: $308,616 NA $1945
Municipal Money Market 440 FINL: $114,203 NA NA
Ohio Municipal Money Market 440 FINL: $92,912 NA NA
Income Equity 440 FINL: $30,869 $23,390 NA
Disciplined Value 440 FINL: $28,652 $86,002 NA
Growth Opportunities 440 FINL: $22,185 $18,133 NA
Equity Index 440 FINL: $4,497 $5,409 NA
Large Company Value 440 FINL: $3,830 $4,118 NA
Asset Allocation 440 FINL: $6,814 $25,292 NA
International Equity Index 440 FINL: $7,942 $30,893 NA
Large Company Growth 440 FINL: $22,628 $23,053 NA
Income Bond 440 FINL: $12,910 $10,601 NA
Limited Volatility Bond 440 FINL: $33,826 $17,985 NA
Intermediate Tax-Free Bond 440 FINL: $12,639 $7,500 NA
Municipal Income 440 FINL: $25,788 $60,312 NA
Ohio Municipal Bond 440 FINL: $32,350 $23,036 NA
Government Bond 440 FINL: $9,731 $11,816 NA
Government ARM 440 FINL: $30,219 $774 NA
Intermediate Bond* 440 FINL: $5,122 $192 NA
Treasury Only Money Market 440 FINL: $0 $0 NA
Government Money Market 440 FINL: $0 $0 NA
Kentucky Municipal Bond Federated:**** $0 $0 NA
440 FINL:** $10,217 $90
Treasury Money Market 440 FINL: NA*** NA*** NA***
Tax-Exempt Money Market 440 FINL: NA*** NA*** NA***
Arizona Tax-Free Bond 440 FINL: NA*** NA*** NA***
Texas Tax-Free Bond 440 FINL: NA*** NA*** NA***
W. Virginia Tax-Free Bond 440 FINL: NA*** NA*** NA***
Louisiana Municipal Bond 440 finl: na*** na*** na***
Value Growth 440 finl: na*** na*** na***
Gulf South Growth 440 finl: na*** na*** na***
</TABLE>
* These are fees paid from November 30, 1994 through June 30, 1995.
** These are fees paid from January 20, 1995 through June 30, 1995.
*** As of June 30, 1995, the Fund had not commenced operations.
**** These are fees paid from February 1, 1994 through January 19, 1995.
B-78
<PAGE> 284
In accordance with Rule 12b-1 under the 1940 Act, the Distribution Plan
and Class B Distribution Plan may be terminated with respect to the Class A
Shares, Class B Shares or Service Class Shares of any Fund by a vote of a
majority of the Independent Trustees, or by a vote of a majority of the
outstanding Class A Shares, Class B Shares or Service Class Shares,
respectively, of that Fund. The Distribution Plan and Class B Distribution Plan
may be amended by vote of the Trust's Board of Trustees, including a majority of
the Independent Trustees, cast in person at a meeting called for such purpose,
except that any change in the Distribution Plan or Class B Distribution Plan
that would materially increase the distribution fee with respect to the Class A
Shares, Class B Shares or Service Class Shares of a Fund requires the approval
of that Fund's Class A, Class B or Service Class Shareholders, respectively. The
Trust's Board of Trustees will review on a quarterly and annual basis written
reports of the amounts received and expended under the Distribution Plan
(including amounts expended by the Distributor to Participating Organizations
pursuant to the Servicing Agreements entered into under the Distribution Plan)
indicating the purposes for which such expenditures were made.
CUSTODIAN AND TRANSFER AGENT
Cash and securities owned by the Funds of the Trust are held by State
Street Bank and Trust Company ("State Street") as Custodian. State Street serves
the respective Funds as Custodian pursuant to a Custodian Agreement with the
Trust (the "Custodian Agreement"). Under the Custodian Agreement, State Street
(i) maintains a separate account or accounts in the name of each Fund; (ii)
makes receipts and disbursements of money on behalf of each Fund; (iii) collects
and receives all income and other payments and distributions on account of the
Funds' portfolio securities; (iv) responds to correspondence from security
brokers and others relating to its duties; and (v) makes periodic reports to the
Trust's Board of Trustees concerning the Trust's operations. State Street may,
at its own expense, open and maintain a sub-custody account or accounts on
behalf of the Trust, provided that State Street shall remain liable for the
performance of all of its duties under the Custodian Agreement.
Bank One Trust Company, N.A. serves as Sub-Custodian in connection with
the Trust's securities lending activities, pursuant to an agreement between
State Street and Bank One Trust Company. Bank One Trust Company receives a fee
paid by the Trust.
Rules adopted under the 1940 Act permit the Trust to maintain its
securities and cash in the custody of certain eligible banks and securities
depositories. The Trust intends to select foreign custodians or sub-custodians
to maintain foreign securities of the International Equity Index Fund pursuant
to such rules, following a consideration of a number of factors, including, but
not limited to, the reliability and financial stability of the institution; the
ability of the institution to perform custodial services for the Trust; the
reputation of the institution in its national market; the political and economic
stability of the country in which the institution
B-79
<PAGE> 285
is located; and the risks of potential nationalization or expropriation of Trust
assets. In addition, the 1940 Act requires that foreign bank sub-custodians,
among other things have Shareholder equity in excess of $200 million, have no
lien on the Trust's assets and maintain adequate and accessible records.
State Street Bank & Trust ("State Street") serves as Transfer Agent and
Dividend Disbursing Agent for each Fund pursuant to Transfer Agency Agreements
with the Trust (the "Transfer Agency Agreement"). Under the Transfer Agency
Agreements, State Street has agreed (i) to issue and redeem Shares of the Trust;
(ii) to address and mail all communications by the Trust to its Shareholders,
including reports to Shareholders, dividend and distribution notices, and proxy
material for its meetings of Shareholders; (iii) to respond to correspondence or
inquiries by Shareholders and others relating to its duties; (iv) to maintain
Shareholder accounts and certain sub-accounts; and (v) to make periodic reports
to the Trust's Board of Trustees concerning the Trust's operations.
EXPERTS
The financial statements of the Trust for the fiscal year ended June
30, 1995 appearing in this Statement of Additional Information have been audited
by Coopers & Lybrand L.L.P., independent accountants, as set forth in their
reports appearing elsewhere herein, and are included in reliance upon such
reports and on the authority of such firm as experts in auditing and accounting.
The financial statements for the predecessor funds of the Intermediate
Bond Fund and Large Company Growth Fund, Sun Eagle Intermediate Fixed Income
Fund and Sun Eagle Equity Growth Fund, respectively, for the fiscal year ended
June 30, 1993 and for the period from February 28, 1992 (commencement of
operations of each Fund) to June 30, 1992 appearing in this Statement of
Additional Information have been audited by KPMG Peat Marwick LLP, independent
accountants, and are included in reliance upon the authority of such firm as
experts in auditing and accounting.
The financial statements for the predecessor Fund of the Kentucky
Municipal Bond Fund, the Trademark Kentucky Municipal Bond Fund, for the period
from February 1, 1994 to January 19, 1995, and for the period from March 12,
1993 (commencement of operations) to January 31, 1994 appearing in this
Statement of Additional Information have been audited by KPMG Peat Marwick LLP,
independent accountants, and are included in reliance upon the authority of such
firm as experts in auditing and accounting.
The law firm of Ropes & Gray, One Franklin Square, 1301 K Street, N.W.,
Suite 800 East, Washington, D.C. 20005 are counsel to the Trust. From time to
time, Ropes & Gray have rendered legal services to Bank One, Milwaukee and Bank
One, Wisconsin Trust Company, NA.
B-80
<PAGE> 286
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES
The Trust is a Massachusetts Business Trust. The Trust's Declaration of
Trust was filed with the Secretary of State of the Commonwealth of Massachusetts
on May 23, 1985 and authorizes the Board of Trustees to issue an unlimited
number of Shares, which are units of beneficial interest, without par value. The
Trust's Declaration of Trust authorizes the Board of Trustees to establish one
or more series of Shares of the Trust, and to classify or reclassify any series
into one or more classes by setting or changing in any one or more respects the
preferences, designations, conversion, or other rights, restrictions, or
limitations as to dividends, conditions of redemption, qualifications, or other
terms applicable to the Shares of such class, subject to those matters expressly
provided for in the Declaration of Trust, as amended, with respect to the Shares
of each series of the Trust. The Trust presently includes thirty-two
series of Shares, which represent interests in the Prime Money Market Fund, the
U.S. Treasury Securities Money Market Fund, the Municipal Money Market Fund, the
Ohio Municipal Money Market Fund, the Income Equity Fund, the Disciplined Value
Fund, the Growth Opportunities Fund, the Value Growth Fund, the Gulf
South Growth Fund, the Large Company Value Fund, the Large Company Growth
Fund, the International Equity Index Fund, the Equity Index Fund, the Asset
Allocation Fund, the Income Bond Fund, the Limited Volatility Bond Fund, the
Intermediate Bond Fund, the Government Bond Fund, the Government ARM Fund, the
Municipal Income Fund, the Intermediate Tax-Free Bond Fund, the
Ohio Municipal Bond Fund, the Texas Tax-Free Bond Fund, the West Virginia Tax-
Free Bond Fund, the Kentucky Municipal Bond Fund, the Louisiana Municipal
Bond Fund, the Arizona Tax-Free Bond Fund, the Treasury Money Market Fund,
the Treasury Only Money Market Fund, the Government Money Market Fund, the Tax
Exempt Money Market Fund and the Institutional Prime Money Market Fund (these
five Funds being called, collectively, the "Institutional Money Market Funds").
The Funds of the Trust (other than the Institutional Money Market Funds, the
U.S. Treasury Securities Money Market Fund and the Prime Money Market Fund)
offer Shares in three separate classes: Fiduciary Shares, Class A Shares and
Class B Shares. The U.S. Treasury Securities Money Market Fund and the Prime
Money Market Fund offer Fiduciary Shares, Class A Shares and Service Class
Shares. See the relevant Prospectus for those Funds for more details.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Trust's Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Trust,
Shares of a Fund are entitled to receive the assets available for distribution
belonging to the Fund, and a proportionate distribution, based upon the relative
asset values of the respective Funds, of any general assets not belonging to any
particular Fund which are available for distribution.
B-81
<PAGE> 287
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding Shares of
each Fund affected by the matter. For purposes of determining whether the
approval of a majority of the outstanding Shares of a Fund will be required in
connection with a matter, a Fund will be deemed to be affected by a matter
unless it is clear that the interests of each Fund in the matter are identical,
or that the matter does not affect any interest of the Fund. Under Rule 18f-2,
the approval of an investment advisory agreement or any change in investment
policy would be effectively acted upon with respect to a Fund only if approved
by a majority of the outstanding Shares of such Fund. However, Rule 18f-2 also
provides that the ratification of independent public accountants, the approval
of principal underwriting contracts, and the election of Trustees may be
effectively acted upon by Shareholders of the Trust voting without regard to
series.
Class A Shares, Class B Shares and Service Class Shares of a Fund have
exclusive voting rights with respect to matters pertaining to the Fund's
Distribution Plan.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, holders of units of beneficial interest in a
business trust may, under certain circumstances, be held personally liable as
partners for the obligations of the trust. However, the Trust's Declaration of
Trust provides that Shareholders shall not be subject to any personal liability
for the obligations of the Trust, and that every written agreement, obligation,
instrument, or undertaking made by the Trust shall contain a provision to the
effect that the Shareholders are not personally liable thereunder. The
Declaration of Trust provides for indemnification out of the trust property of
any Shareholder held personally liable solely by reason of his being or having
been a Shareholder. The Declaration of Trust also provides that the Trust shall,
upon request, assume the defense of any claim made against any Shareholder for
any act or obligation of the Trust, and shall satisfy any judgment thereon.
Thus, the risk of a Shareholder incurring financial loss on account of
Shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations.
The Declaration of Trust states further that no Trustee, officer, or
agent of the Trust shall be personally liable in connection with the
administration or preservation of the assets of the trust or the conduct of the
Trust's business; nor shall any Trustee, officer, or agent be personally liable
to any person for any action or failure to act except for his own bad faith,
willful misfeasance, gross negligence, or reckless disregard of his duties. The
Declaration of Trust also provides that all persons having any claim against the
Trustees or the Trust shall look solely to the assets of the trust for payment.
B-82
<PAGE> 288
CALCULATION OF PERFORMANCE DATA
Each Money Market Fund and the Treasury Only and Government Money
Market Funds' yield was computed with respect to each class of Shares by
determining the percentage net change, excluding capital changes, in the value
of an investment in one Share of the particular class of the Fund over the base
period, and multiplying the net change by 365/7 (or approximately 52 weeks). The
effective yield of each class of each Fund represents a compounding of the yield
by adding 1 to the number representing the percentage change in value of the
investment during the base period, raising that sum to a power equal to 365/7,
and subtracting 1 from the result. No performance data is available with respect
to the Tax Exempt Money Market, Treasury Money Market and Institutional Prime
Money Market Funds because those Funds had not commenced operations as of June
30, 1995.
The tax equivalent yields for the classes of the Municipal Money
Market, Ohio Municipal Money Market, and Tax Exempt Money Market Funds are
computed by dividing that portion of the Fund's yield (with respect to a
particular class) which is tax-exempt by 1 minus a stated income tax rate and
adding the product to that portion, if any, of the yield of the Fund (with
respect to a particular class) that is not tax-exempt. The tax equivalent yields
for the classes of the Municipal Money Market Fund contained in the preceding
paragraph were computed based on an assumed effective federal income tax rate of
39.6%. No such data was provided for the Tax Exempt Money Market Fund because it
had not commenced operations as of June 30, 1995. The tax equivalent effective
yield for the classes of the Municipal Money Market Fund, Ohio Municipal Money
Market Fund, and Tax Exempt Money Market Funds are computed by dividing that
portion of the effective yield of the Fund (with respect to a particular class)
which is tax-exempt by 1 minus a stated income tax rate and adding the product
to that portion, if any, of the effective yield of the Fund (with respect to a
particular class) that is not tax-exempt.
Performance information showing a Fund's total return and/or 30-day
yield with respect to a particular class may be presented from time to time in
advertising and sales literature regarding the Equity Funds, the Bond Funds, and
the Municipal Bond Funds. A 30-day yield is calculated by dividing the net
investment income per-share earned during the 30-day base period by the maximum
offering price per share on the last day of the period, according to the
following formula:
a-b
30-Day Yield = 2[( ----- +1)(6)-1]
cd
In the above formula, "a" represents dividends and interest earned by a
particular class during the 30-day base period; "b" represents expenses accrued
to a particular class for the 30-day base period (net of reimbursements); "c"
represents the average daily number of Shares of a particular class outstanding
during the 30-day base period that were entitled to receive
B-83
<PAGE> 289
dividends; and "d" represents the maximum offering price per share of a
particular class on the last day of the 30-day base period.
From time to time the tax equivalent 30-day yield of a particular class
of a Municipal Bond Fund may be presented in advertising and sales literature.
The tax equivalent 30-day yield will be computed by dividing that portion of a
Fund's yield (respecting a particular class) which is tax-exempt by 1 minus a
stated income tax rate and adding the product to that portion, if any, of the
yield of the Fund (respecting a particular class) that is not tax-exempt. The
tax equivalent 30-day yields for a Municipal Bond Fund (respecting a particular
class) will, unless otherwise noted, be computed based on an assumed effective
federal income tax rate of 31%. No tax equivalent 30-day yield information is
available for the West Virginia Tax-Free Bond, Texas Tax-Free Bond, Arizona
Tax-Free Bond and Louisiana Municipal Bond Funds because they had not
commenced operations as of June 30, 1995.
A Fund's respective cumulative total return and average annual total
return was determined by calculating the change in the value of a hypothetical
$1,000 investment in a particular class of the Fund for each of the periods
shown. Cumulative total return for a particular class of a Fund is computed by
determining the rate of return over the applicable period that would equate the
initial amount invested to the ending redeemable value of the investment. The
cumulative return is calculated as the total dollar increase or decrease in the
value of an account assuming reinvestment of all distributions divided by the
original initial investment. The average annual return for a particular class of
a Fund is computed by determining the average annual compounded rate of return
over the applicable period that would equate the initial amount invested to the
ending redeemable value of the investment. The ending redeemable value includes
dividends and capital gain distributions reinvested at net asset value. The
resulting percentages indicated the positive or negative investment results that
an investor would have experienced from changes in share price and reinvestment
of dividends and capital gains distributions.
Performance information showing a Fund's and/or particular Class's
distribution rate may be presented from time to time in advertising and sales
literature regarding the Bond Funds and Equity Funds. The distribution rate is
calculated as follows:
a
---
distribution yield = (b) * 365
-------------
c
In the formula, "a" represents dividends distributed by a particular
class during that period; "b" represents month end offer price or NAV for a
particular class; "c" represents the number of days in the period being
calculated. "365" is the number of days in a year, used to annualize the
distribution yield.
B-84
<PAGE> 290
Performance will fluctuate from time to time and is not necessarily
representative of future results. Accordingly, a Fund's performance may not
provide for comparison with bank deposits or other investments that pay a fixed
return for a stated period of time. Performance is a function of a Fund's
quality, composition, and maturity, as well as expenses allocated to the Fund.
Fees imposed upon customer accounts at a bank, with regard to Fiduciary Class
Shares and Service Class Shares, or a Participating Organization, with regard to
Class A and Class B Shares, will reduce a Fund's effective yield to customers.
Performance data for the Funds through June 30, 1995 (calculated as
described above) is as follows:
<TABLE>
<CAPTION>
THE ONE GROUP FAMILY OF MUTUAL FUNDS PERFORMANCE REPORT JUNE 30, 1995
______________________________________________ ________________________________________________________
| |
MONEY MARKET PORTFOLIOS | Fiduciary Class Shares are offered to institutional |
______________________________________________ | investors and personal investment clients and are |
| not subject to a sales load or distribution fees. |
|________________________________________________________|
Inception 7-Day Investors may request more complete information and a prospectus,
FIDUCIARY: Date Yield which includes important information regarding expenses and fees,
- ---------------------------------------------- about any of the Funds listed by writing to 440 Financial Distributors, Inc.
<S> <C> <C> at 440 Lincoln Street, Worcester, MA 01653 or by calling The One Group at
U.S. Treasury Securities 09/09/85 5.62% 1-800-343-1113. Investors should read the prospectus carefully before investing.
- ----------------------------------------------
Prime 08/01/85 5.85%
- ----------------------------------------------
Municipal 06/04/87 3.79%
- ----------------------------------------------
Ohio Municipal 06/09/93 3.75%
- ----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
________________________________________________________________________________________________________________________________
BOND AND MUNICIPAL BOND PORTFOLIOS TOTAL RETURN -- FIDUCIARY SHARES
________________________________________________________________________________________________________________________________
Ave. Annual Total Return
06/30/95
Inception Latest Latest Year to ------------------------ 30-Day
FIDUCIARY: Date Month* Quarter* Date* 1 Year* 3 Year*** 1 Yr. 5 Yr. Life** SEC Yield*
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income Bond 07/02/87 0.59% 6.14% 10.77% 11.29% 6.38% 11.29% 8.40% 7.46% 6.52%
- --------------------------------------------------------------------------------------------------------------------------------
Limited Volatility Bond 09/04/90 0.40% 3.37% 7.07% 7.96% 5.61% 7.96% NA 7.57% 5.97%
- --------------------------------------------------------------------------------------------------------------------------------
Intermediate Tax-Free 09/04/90 -0.88% 1.68% 6.91% 6.75% 5.39% 6.75% NA 6.94% 4.88%
- --------------------------------------------------------------------------------------------------------------------------------
Ohio Municipal Bond 07/02/91 -0.69% 1.90% 6.88% 6.07% 5.76% 6.07% NA 6.95% 4.74%
- --------------------------------------------------------------------------------------------------------------------------------
Tax Free Bond 02/09/93 -0.32% 1.83% 6.66% 6.46% NA 6.46% NA 4.54% 6.10%
- --------------------------------------------------------------------------------------------------------------------------------
Government Bond 02/08/93 0.63% 5.70% 11.27% 12.04% NA 12.04% NA 5.17% 6.23%
- --------------------------------------------------------------------------------------------------------------------------------
Government ARM 02/02/93 0.90% 1.49% 3.68% 5.14% NA 5.14% NA 3.87% 6.23%
- --------------------------------------------------------------------------------------------------------------------------------
Intermediate Bond 02/28/92 0.56% 4.95% 9.49% 10.15% 6.56% 10.15% NA 6.82% 6.40%
- --------------------------------------------------------------------------------------------------------------------------------
Kentucky Municipal Bond 02/20/93 -0.52% 2.30% 8.61% 6.69% NA 6.69% NA 3.87% 4.74%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
________________________________________________________________________________________________________________________________
EQUITY PORTFOLIOS TOTAL RETURN -- FIDUCIARY SHARES
________________________________________________________________________________________________________________________________
Ave. Annual Total Return
06/30/95
Inception Latest Latest Year to ------------------------ 30-Day
FIDUCIARY: Date Month* Quarter* Date* 1 Year* 3 Year*** 1 Yr. 5 Yr. Life** SEC Yield*
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Disciplined Value 03/02/89 1.83% 5.57% 12.68% 16.03% 11.09% 16.03% 10.15% 10.15% 2.26%
- --------------------------------------------------------------------------------------------------------------------------------
Income Equity 07/02/87 0.52% 6.00% 17.13% 21.04% 11.72% 21.04% 10.99% 9.73% 2.70%
- --------------------------------------------------------------------------------------------------------------------------------
Equity Index 07/02/91 2.36% 9.52% 20.06% 25.79% 12.69% 25.79% NA 12.55% 2.59%
- --------------------------------------------------------------------------------------------------------------------------------
Large Company Value 03/01/91 1.74% 7.65% 20.26% 23.42% 10.20% 23.42% NA 10.94% 2.55%
- --------------------------------------------------------------------------------------------------------------------------------
Blue Chip 10/01/90 0.38% 6.71% 15.81% 16.90% 5.38% 16.90% NA 10.14% 1.40%
- --------------------------------------------------------------------------------------------------------------------------------
Small Company Growth 03/02/89 4.98% 7.95% 15.50% 19.75% 13.21% 19.75% 12.91% 14.83% 0.16%
- --------------------------------------------------------------------------------------------------------------------------------
International Equity Index 10/28/92 -0.57% 4.11% 4.89% 4.20% NA 4.20% NA 14.05% NA
- --------------------------------------------------------------------------------------------------------------------------------
Asset Allocation 04/05/93 1.34% 6.84% 14.09% 16.06% NA 16.06% NA 7.01% 3.81%
- --------------------------------------------------------------------------------------------------------------------------------
Large Company Growth 02/28/92 1.48% 7.33% 16.16% 21.85% 14.47% 21.85% NA 12.64% 1.52%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
________________________________________________________________________________________________________________________________
INDICES
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
S & P 500 Index 2.32% 9.55% 20.21% 26.07% 12.94% 26.07% 12.09% NA NA
- --------------------------------------------------------------------------------------------------------------------------------
Lehman Bros. Agg. Bond Index 0.73% 6.09% 11.44% 12.55% NA 12.55% NA NA NA
- --------------------------------------------------------------------------------------------------------------------------------
Donoghue's Money Fund Ave. 5.46% 7-day yield at 6/27/95
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The One Group is a family of registered, open end mutual funds. Banc One
Investment Advisors Corporation, a registered investment advisor and an indirect
subsidiary of BANC ONE CORPORATION, serves as an investment advisor to The One
Group, for which is receives advisory fees. Shares of The One Group are not
deposits or obligations of, and are not guaranteed by BANC ONE CORPORATION or
its bank or non-bank affiliates. Investments in The One Group Family of Mutual
Funds involve investment risks including possible loss of the principal amount
invested. Shares of The One Group are not insured or guaranteed by the Federal
Deposit Insurance Corporation (FDIC) or by any other governmental agency or
government sponsored agency of the Federal Government or any state.
The explanatory notes on the back page provide important information about
calculations used in developing this performance report.
<TABLE>
<CAPTION>
______________________________________________
MONEY MARKET PORTFOLIOS
______________________________________________
Inception 7-Day Class A and Class B Shares are offered to the general public. Two class of "retail"
CLASS A: Date Yield shares offer investors a choice when purchasing shares. Class A Shares are offered
- ---------------------------------------------- with a maximum 4.50% sales charge at the time of purchase. In addition, a maximum
<S> <C> <C> annual 12b-1 distribution plan fee of 0.25% is charged against the net assets of
U.S. Treasury Securities the Class. Class B Shares are sold with a maximum 5.00% contingent deferred sales
02/18/92 5.37% charge. In addition, a maximum annual 12b-1 fee of 1.00% is charged against the
- ---------------------------------------------- net assets of the Class. The contingent deferred sales charge is a declining charge
Prime which is assessed if shares are redeemed prior to sixth anniversary of the purchase
02/18/92 5.60% for all funds except the Government ARM, Limited Volatility and Short-Term Global
- ---------------------------------------------- Funds for which the charge is minimal for redemption prior to the fourth
Municipal anniversary.
02/18/92 3.54%
- ----------------------------------------------
Ohio Municipal
01/26/93 3.50%
- ----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
________________________________________________________________________________________________________________________________
BOND AND MUNICIPAL BOND PORTFOLIOS TOTAL RETURN -- CLASS A SHARES
________________________________________________________________________________________________________________________________
Ave. Annual Total Return
06/30/95
Inception Latest Latest Year to ------------------------------ 30-Day
CLASS A: Date Month* Quarter* Date* 1 Year* 1 Yr. 5 Yr. Life of Fund** SEC Yield*
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income Bond 02/18/92 0.58% 6.08% 10.76% 10.90% 10.90% NA 6.65% 5.97%
with sales charge -3.95% 1.32% 5.78% 5.86% 5.86% NA 5.21%
- --------------------------------------------------------------------------------------------------------------------------------
Limited Volatility Bond 02/18/92 0.38% 3.30% 6.94% 7.67% 7.67% NA 5.84% 5.54%
with sales charge -2.67% 0.20% 3.76% 4.43% 4.43% NA 4.88%
- --------------------------------------------------------------------------------------------------------------------------------
Intermediate Tax-Free 02/18/92 -0.99% 1.54% 6.80% 6.49% 6.49% NA 5.52% 4.42%
with sales charge -5.46% -3.04% 2.00% 1.73% 1.73% NA 4.08%
- --------------------------------------------------------------------------------------------------------------------------------
Ohio Municipal Bond 02/18/92 -0.70% 1.84% 6.74% 5.79% 5.79% NA 6.20% 4.29%
with sales charge -5.18% -2.74% 1.96% 1.03% 1.03% NA 4.74%
- --------------------------------------------------------------------------------------------------------------------------------
Tax Free Bond 02/23/93 -0.33% 1.78% 6.65% 6.21% 6.21% NA 4.23% 5.58%
with sales charge -4.80% -2.83% 1.87% 1.39% 1.39% NA 2.23%
- --------------------------------------------------------------------------------------------------------------------------------
Government Bond 03/05/93 0.61% 5.65% 11.05% 11.84% 11.84% NA 4.25% 5.71%
with sales charge -3.90% 0.94% 6.05% 6.81% 6.81% NA 2.20%
- --------------------------------------------------------------------------------------------------------------------------------
Government ARM 03/10/93 0.05% 1.41% 3.57% 4.84% 4.84% NA 3.58% 5.78%
with sales charge -3.00% -1.59% 0.48% 1.74% 1.74% NA 2.22%
- --------------------------------------------------------------------------------------------------------------------------------
Intermediate Bond 11/30/94 0.54% 4.88% 9.34% NA NA NA NA 5.87%
with sales charge -3.96% 0.15% 4.39% NA NA NA NA
- --------------------------------------------------------------------------------------------------------------------------------
Kentucky Municipal Bond 01/20/93 -0.54% 2.23% 8.57% 6.48% 6.48% NA 3.49% 4.28%
with sales charge -5.00% -2.34% 3.93% 1.91% 1.91% NA 1.63%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
________________________________________________________________________________________________________________________________
EQUITY PORTFOLIOS TOTAL RETURN -- CLASS A SHARES
________________________________________________________________________________________________________________________________
Ave. Annual Total Return
06/30/95
Inception Latest Latest Year to ------------------------------ 30-Day
CLASS A: Date Month* Quarter* Date* 1 Year* 1 Yr. 5 Yr. Life of Fund** SEC Yield*
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Disciplined Value 02/18/92 1.81% 5.58% 12.53% 15.43% 15.43% NA 10.05% 1.92%
with sales charge -2.75% 0.85% 7.46% 10.27% 10.27% NA 8.56%
- --------------------------------------------------------------------------------------------------------------------------------
Income Equity 02/19/92 0.50% 5.94% 16.93% 20.79% 20.79% NA 10.43% 2.37%
with sales charge -4.03% 1.15% 11.63% 15.37% 15.37% NA 8.93%
- --------------------------------------------------------------------------------------------------------------------------------
Equity Index 02/18/92 2.27% 9.37% 19.83% 25.43% 23.43% NA 11.19% 2.30%
with sales charge -2.35% 4.43% 14.41% 19.75% 19.75% NA 9.67%
- --------------------------------------------------------------------------------------------------------------------------------
Large Company Value 02/18/92 1.79% 7.74% 19.84% 22.64% 22.64% NA 8.90% 2.23%
with sales charge -2.80% 2.87% 14.48% 17.10% 17.10% NA 7.40%
- --------------------------------------------------------------------------------------------------------------------------------
Blue Chip Equity 02/18/92 0.36% 6.67% 15.73% 16.71% 16.71% NA 4.55% 1.10%
with sales charge -4.14% 1.90% 10.50% 11.46% 11.46% NA 3.12%
- --------------------------------------------------------------------------------------------------------------------------------
Small Company Growth 02/18/92 4.97% 7.84% 15.34% 19.50% 19.50% NA 7.61% -0.07%
with sales charge 0.27% 3.00% 10.16% 14.13% 14.13% NA 6.15%
- --------------------------------------------------------------------------------------------------------------------------------
International Equity Index 04/23/93 -0.64% 3.96% 4.74% 3.87% 3.87% NA 8.34% NA
with sales charge -5.11% -0.71% 0.00% -0.82% -0.82% NA 6.07%
- --------------------------------------------------------------------------------------------------------------------------------
Asset Allocation 04/02/93 1.32% 6.77% 13.94% 15.76% 15.76% NA 6.76% 3.39%
with sales charge -3.23% 1.95% 8.84% 10.61% 10.61% NA 4.59%
- --------------------------------------------------------------------------------------------------------------------------------
Large Company Growth 02/22/94 1.42% 7.23% 15.93% 21.52% 21.52% NA 14.65% 1.24%
with sales charge -3.12% 2.40% 10.68% 16.02% 16.02% NA 10.77%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
________________________________________________________________________________________________________________________________
BOND AND MUNICIPAL BOND PORTFOLIOS TOTAL RETURN -- CLASS B SHARES
________________________________________________________________________________________________________________________________
Ave. Annual Total Return
06/30/95
Inception Latest Latest Year to ---------------------------- 30-Day
Date Month* Quarter* Date* 1 Year* 1 Yr. 5 Yr. Life of Fund** SEC Yield
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income Bond 01/14/94 0.51% 6.00% 10.39% 10.63% 10.63% N/A 3.25% 5.60%
with deferred sales charge -4.49% 1.00% 5.39% 6.63% 6.63% N/A 0.63%
- -------------------------------------------------------------------------------------------------------------------------------
Limited Volatility Bond 01/14/94 0.43% 3.27% 6.66% 7.18% 7.18% N/A 3.56% 5.21%
with deferred sales charge -2.57% 0.27% 3.66% 4.18% 4.18% N/A 1.56%
- -------------------------------------------------------------------------------------------------------------------------------
Intermediate Tax-Free 01/14/94 -0.95% 1.45% 6.50% 5.89% 5.89% N/A 0.79% 3.93%
with deferred sales charge -5.89% -3.55% 1.50% 1.89% 1.89% N/A -1.83%
- -------------------------------------------------------------------------------------------------------------------------------
Ohio Municipal Bond 01/14/94 -0.74% 1.59% 6.49% 5.17% 5.17% N/A 0.65% 3.83%
with deferred sales charge -5.69% -3.41% 1.49% 1.17% 1.17% N/A -1.97%
- -------------------------------------------------------------------------------------------------------------------------------
Tax Free Bond 01/14/94 -0.40% 1.61% 6.32% 5.58% 5.58% N/A 2.38% 5.18%
with deferred sales charge -5.36% -3.39% 1.32% 1.58% 1.58% N/A -0.24%
- -------------------------------------------------------------------------------------------------------------------------------
Government Bond 01/14/94 0.56% 5.49% 10.73% 11.20% 11.20% N/A 3.85% 5.32%
with deferred sales charge -4.44% 0.49% 5.73% 7.20% 7.20% N/A 1.20%
- -------------------------------------------------------------------------------------------------------------------------------
Government ARM 01/14/94 0.02% 1.33% 3.39% 4.77% 4.77% N/A 3.19% 5.47%
with deferred sales charge -2.97% -1.67% 0.39% 1.77% 1.77% N/A 1.18%
- -------------------------------------------------------------------------------------------------------------------------------
Intermediate Bond 11/29/94 0.62% 5.09% 8.22% N/A N/A N/A 8.45% 5.52%
with deferred sales charge -4.38% 0.09% 3.22% N/A N/A N/A 3.45%
- -------------------------------------------------------------------------------------------------------------------------------
Kentucky Municipal Bond 03/23/95 -0.47% 2.35% N/A N/A N/A N/A 2.63% 3.84%
with deferred sales charge -5.43% -2.65% N/A N/A N/A N/A -2.37%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
________________________________________________________________________________________________________________________________
EQUITY PORTFOLIOS TOTAL RETURN -- CLASS B SHARES
________________________________________________________________________________________________________________________________
Ave. Annual Total Return
06/30/95
Inception Latest Latest Year to ---------------------------- 30-Day
CLASS B: Date Month* Quarter* Date* 1 Year* 1 Yr. 5 Yr. Life of Fund** SEC Yield
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Disciplined Value 01/14/94 1.75% 5.32% 12.10% 14.92% 14.92% N/A 6.21% 1.27%
with deferred sales charge -3.25% 0.32% 7.10% 10.92% 10.92% N/A 3.52%
- -------------------------------------------------------------------------------------------------------------------------------
Income Equity 01/14/94 0.37% 5.74% 16.56% 19.91% 19.91% N/A 10.63% 1.79%
with deferred sales charge -4.63% 0.74% 11.56% 15.91% 15.91% N/A 8.00%
- -------------------------------------------------------------------------------------------------------------------------------
Equity Index 01/14/94 2.28% 9.24% 19.48% 24.58% 24.58% N/A 11.80% 1.63%
with deferred sales charge -2.72% 4.24% 14.48% 20.58% 20.58% N/A 9.17%
- -------------------------------------------------------------------------------------------------------------------------------
Large Company Value 01/14/94 1.65% 7.42% 18.34% 22.28% 22.28% N/A 12.04% 1,64%
with deferred sales charge -3.35% 2.42% 13.34% 18.28% 18.28% N/A 9.42%
- -------------------------------------------------------------------------------------------------------------------------------
Blue Chip Equity 01/14/94 0.37% 6.42% 15.36% 15.86% 15.86% N/A 5.84% 0.43%
with deferred sales charge -4.63% 1.42% 10.36% 11.86% 11.86% N/A 3.15%
- -------------------------------------------------------------------------------------------------------------------------------
Small Company Growth 01/14/94 4.92% 7.66% 14.96% 18.47% 18.47% N/A 5.24% -0.80%
with deferred sales charge -0.08% 2.66% 9.96% 14.47% 14.47% N/A 2.54%
- -------------------------------------------------------------------------------------------------------------------------------
International Equity Index 01/14/94 -0.65% 3.78% 4.33% 3.17% 3.17% N/A 4.42% N/A
with deferred sales charge -5.62% -1.22% -0.67% -0.83% -0.83% N/A 1.71%
- -------------------------------------------------------------------------------------------------------------------------------
Asset Allocation 01/14/94 1.26% 6.57% 13.50% 14.90% 14.90% N/A 5.44% 2.82%
with deferred sales charge -3.74% 1.57% 8.50% 10.90% 10.90% N/A 2.75%
- -------------------------------------------------------------------------------------------------------------------------------
Large Company Growth 01/14/94 1.31% 6.99% 15.50% 20.65% 20.65% N/A 13.23% 0.62%
with deferred sales charge -3.69% 1.99% 10.50% 16.65% 16.65% N/A 10.80%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
______________________________________________
MONEY MARKET PORTFOLIOS
______________________________________________ The One Group offers shares of the Institutional Money Market Funds
only to certain institutional investors on behalf of certain of their customers.
Inception 7-Day
Date Yield Service Class Shares are offered to investors in retirement plans other
- ---------------------------------------------- than Individual Retirement Accounts. An annual 12b-1 distribution plan fee
<S> <C> <C> of 0.55% is charged against the net assets of the Class.
Treasury Only Money Market
Institutional Shares 04/16/93 5.61%
- ----------------------------------------------
Government Money Market
Institutional Shares 06/14/93 5.81%
- ----------------------------------------------
<FN>
*Total returns for the month, quarter, year to date and 1 year, 7-day yields and 30-day SEC yields are calculated as of 6/30/95.
Average annual returns for 1 year, 5 years and life of funds are calculated as oindividual stock and fixed income price
and return information.
B-85
<PAGE> 291
Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H. 15), may also be used. Also current rate information on municipal
debt obligations of various durations, as reported daily by the Bond Buyer, may
also be used. The Bond Buyer is published daily and is an industry-accepted
source for current municipal bond market information.
Comparative information on the Consumer Price Index may also be
included. This Index, as prepared by the U.S. Bureau of Labor Statistics, is the
most commonly used measure of inflation. It indicates the cost fluctuations of a
representative group of consumer goods. It does not represent a return on
investment.
The Equity, Bond and Municipal Bond Funds may quote actual total return
performance from time to time in advertising and other types of literature
compared to results reported by the Dow Jones Industrial Average.
The Dow Jones Industrial Average is an industry-accepted unmanaged
index of generally conservative securities used for measuring general market
performance. The performance reported will reflect the reinvestment of all
distributions on a quarterly basis and market price fluctuations. The index does
not take into account any brokerage commissions or other fees. Comparative
information on the Consumer Price Index may also be included.
The Equity Funds, the Bond Funds and the Municipal Bond Funds may also
promote the yield and/or total return performance and use comparative
performance information computed by and available from certain industry and
general market research and publications, such as Lipper Analytical Services,
Inc.; they may also use indices such as the Standard & Poor's 400
Composite Stock Index, the Standard & Poor's 500 Composite Stock
Index, the Standard & Poor's 600 Composite Stock Index, the Russell
2000, or the Morgan Stanley International European, Asian and Far East Gross
Domestic Product Index for performance comparison. Statistical and performance
information compiled and maintained by CDA Technologies, Inc. and Interactive
Data Corporation may also be used.
The Bond Funds and the Asset Allocation Fund may quote actual yield
and/or total return performance in advertising and other types of literature
compared to indices or averages of alternative financial products available to
prospective investors. The performance comparisons may include the average
return of various bank instruments, some of which may carry certain return
guarantees offered by leading banks and thrifts as monitored by Bank Rate
Monitor, and those of corporate bond and government security price indices
of various durations. Comparative information on the Consumer Price Index may
also be included.
The Bond Funds and the Asset Allocation Fund may also use comparative
performance information computed by and available from certain industry and
general market research and publications, as well as statistical and performance
information, compiled and maintained by CDA Technologies, Inc. and Interactive
Data Corporation.
B-86
<PAGE> 292
The Bond Funds and the Asset Allocation Fund may also use current
interest rate and yield information on government debt obligations of various
durations, as reported weekly by the Federal Reserve (Bulletin H. 15). In
addition, current rate information on municipal debt obligations of various
durations, as reported daily by the Bond Buyer, may also be used.
MISCELLANEOUS
The Trust is not required to hold a meeting of Shareholders for the
purpose of electing Trustees except that (i) the Trust is required to hold a
Shareholders' meeting for the election of Trustees at such time as less than a
majority of the Trustees holding office have been elected by Shareholders and
(ii) if, as a result of a vacancy on the Board of Trustees, less than two-thirds
of the Trustees holding office have been elected by the Shareholders, that
vacancy may only be filled by a vote of the Shareholders. In addition, Trustees
may be removed from office by a written consent signed by the holders of Shares
representing two-thirds of the outstanding Shares of the Trust at a meeting duly
called for the purpose, which meeting shall be held upon the written request of
the holders of Shares representing not less than 20% of the outstanding Shares
of the Trust. Except as set forth above, the Trustees may continue to hold
office and may appoint successor Trustees.
As used in the Trust's Prospectuses and in this Statement of Additional
Information, "assets belonging to a Fund" means the consideration received by
the Trust upon the issuance or sale of Shares in that Fund, together with all
income, earnings, profits, and proceeds derived from the investment thereof,
including any proceeds from the sale, exchange, or liquidation of such
investments, and any funds or payments derived from any reinvestment of such
proceeds, and any general assets of the Trust not readily identified as
belonging to a particular Fund that are allocated to that Fund by the Trust's
Board of Trustees. The Board of Trustees may allocate such general assets in any
manner it deems fair and equitable. It is anticipated that the factor that will
be used by the Board of Trustees in making allocations of general assets to
particular Funds will be the relative net asset values of the respective Funds
at the time of allocation. Assets belonging to a particular Fund are charged
with the direct liabilities and expenses in respect of that Fund, and with a
share of the general liabilities and expenses of the Trust not readily
identified as belonging to a particular Fund that are allocated to that Fund in
proportion to the relative net asset values of the respective Funds at the time
of allocation. The timing of allocations of general assets and general
liabilities and expenses of the Trust to particular Funds will be determined by
the Board of Trustees of the Trust and will be in accordance with generally
accepted accounting principles. Determinations by the Board of Trustees of the
Trust as to the timing of the allocation of general liabilities and expenses and
as to the timing and allocable portion of any general assets with respect to a
particular Fund are conclusive. For information regarding the allocations of
Class Expenses to particular classes of a Fund, see the respective Prospectus of
the Fund under "MANAGEMENT-Expenses."
B-87
<PAGE> 293
As used in the Trust's Prospectuses and in this Statement of Additional
Information, a "vote of a majority of the outstanding Shares" of the Trust, a
particular Fund, or a particular class of Shares of a Fund, means the
affirmative vote of the lesser of (a) more than 50% of the outstanding Shares of
the Trust, such Fund, or such class of Shares of such Fund, or (b) 67% or more
of the Shares of the Trust, such Fund, or such class of Shares of such Fund
present at a meeting at which the holders of more than 50% of the outstanding
Shares of the Trust, such Fund, or such class of Shares of such Fund are
represented in person or by proxy.
The Trust is registered with the Securities and Exchange Commission as
a management investment company. Such registration does not involve supervision
by the Commission of the management or policies of the Trust.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Securities and
Exchange Commission. Copies of such information may be obtained from the
Commission upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any STATE in which such
offering may not lawfully be made. No salesman, dealer, or other person is
authorized to give any information or make any representation other than those
contained in the Prospectus and Statement of Additional Information.
As of November 6, 1995, BANC ONE CORPORATION, 100 East Broad Street,
Columbus, Ohio 43271-0152 (an Ohio Corporation) through Bank Subsidiaries,
acting on behalf of their underlying accounts, held of record substantially all
of the Fiduciary Class Shares of the Trust, and possessed voting or investment
power as follows:
</TABLE>
<TABLE>
<CAPTION>
FUND PERCENT OF BENEFICIAL OWNERSHIP
<S> <C>
Large Company Growth Fund 73.48%
Disciplined Value Fund 79.50%
Growth Opportunities Fund 79.48%
Income Bond Fund 85.52%
Intermediate Tax-Free Bond Fund 93.06%
Prime Money Market Fund 94.38%
</TABLE>
B-88
<PAGE> 294
<TABLE>
<S> <C>
U.S. Treasury Securities Money Market Fund 98.47%
Municipal Money Market Fund 86.55%
Income Equity Fund 89.74%
Equity Index Fund 45.42%
Large Company Value Fund 69.56%
Ohio Municipal Bond Fund 97.99%
Limited Volatility Bond Fund 97.54%
International Equity Fund 77.42%
Asset Allocation Fund 91.52%
Ohio Municipal Money Market Fund 72.25%
Municipal Income 96.92%
Kentucky Municipal Bond Fund 99.06%
Government Bond Fund 93.69%
Government ARM Fund 70.32%
Intermediate Bond Fund 94.24%
</TABLE>
As a result, BANC ONE CORPORATION may be deemed to be a "controlling person" of
the Fiduciary Class Shares of each of the aforementioned Funds under the
Investment Company Act of 1940.
In addition, as of November 6, 1995, the following persons were the
beneficial owners of more than 25% of the outstanding Shares of the following
class of Shares of the following Funds:
B-89
<PAGE> 295
25% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
440 Financial Group 401K Income Bond Fund 25.14% Record
c/o Ann Sheputa Class A
440 Lincoln Street
Worcester, MA 01653-0002
Donaldson Lufkin Jenrette Kentucky Municipal 25.94% Record
Securities Corporation Inc. Bond Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
Strafe & Co. Treasury Only Money 60.25% Record
c/o Bank One Trust Co. Market Fund
Attn: Mutual Funds
100 E. Broad Street
Columbus, OH 43215-3607
Clark & Co. US Government Money 46.72% Record
c/o Bank One Wisconsin Money Fund
P.O. Box 1631
Waukesha, WI 53187-1631
Bank One Texas NA US Government Money 27.62% Record
1717 Main Street Market Fund
Dallas, TX 75201-4605
Strafe & Co. Disciplined Value Fund 29.21% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Strafe & Co. Income Bond Fund 25.92% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Clark & Co. Income Bond Fund 26.07% Record
c/o Bank One Wisconsin Fiduciary Class
101 West Broadway
Waukesha, WI 53186-4833
Clark & Co. Intermediate Tax-Free 51.04% Record
101 West Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Class
Clark & Co. Prime Money Market 39.50% Record
c/o Bank One Wisconsin Fund
P.O. Box 1631 Fiduciary Class
Waukesha, WI 53187-1631
</TABLE>
B-90
<PAGE> 296
25% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Prime Money Market 54.88% Record
Bank One Ohio Trust Co., NA Fund
Department 0393 S.T.I.F. Fiduciary Class
Columbus, OH 43271
Clark & Co. US Treasury Securities 28.85% Record
c/o Bank One Wisconsin Money Market Fund
P.O. Box 1631 Fiduciary Class
Waukesha, WI 53187-1631
Strafe & Co (N) US Treasury Securities 50.13% Record
Bank One Ohio Trust Co., NA Money Market Fund
Department 0393 S.T.I.F. Fiduciary Class
Columbus, OH 43271
Clark & Co. Municipal Money 33.66% Record
c/o Bank One Wisconsin Market Fund
P.O. Box 1631 Fiduciary Class
Waukesha, WI 53187-1631
Strafe & Co. (D) Municipal Money 52.89% Record
Bank One Ohio Trust Co., NA Market Fund
Department 0393 S.T.I.F. Fiduciary Class
Columbus, OH 43271
Strafe & Co. Income Equity Fund 26.01% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Strafe & Co. Equity Index Fund 25.12% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Strafe & Co. Ohio Municipal Bond 92.22% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Clark & Co. Limited Volatility Bond 27.34% Record
101 W. Broadway Fund
P.O. Box 1631 Fiduciary Class
Waukesha, WI 53187-1631
Bank One Wisconsin TR CO NA Asset Allocation Fund 52.30% Record
101 West Broadway Fiduciary Class
Waukesha, WI 53186-4833
</TABLE>
B-91
<PAGE> 297
25% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Ohio Municipal Money 72.25% Record
c/o Bank One Trust Co. Market Fund
Attn: Mutual Funds Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Clark & Co. Municipal Income Fund 59.91% Record
101 West Broadway Fiduciary Class
Waukesha, WI 53186-4833
Loutrag Kentucky Municipal 85.90% Record
Attn: Mutual Fund Clerk Bond
P.O. Box 32590 Fiduciary Class
Louisville, KY 40232-2590
Clark & Co. Intermediate Bond Fund 31.71% Record
101 West Broadway Fiduciary Class
Waukesha, WI 53186-4833
Strafe & Co. Intermediate Bond Fund 27.72% Record
Attn: Mutual Funds Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
440 Financial Group 401K International Equity 42.53% Record
c/o Ann Sheputa Index Fund
440 Lincoln Street Class A
Worcester, MA 01653-0002
Donaldson Lufkin Jenrette Government ARM Fund 77.48% Record
Securities Corporation Inc. Class A
P.O. Box 2052
Jersey City, NJ 07303-2052
440 Financial Group 401K Large Company Value 49.53% Record
c/o Ann Sheputa Fund
440 Lincoln Street Class A
Worcester, MA 01653-0002
Strafe & Co. Government ARM Fund 28.51% Record
Attn: Mutual Funds 0393 Fiduciary Fund
100 E. Broad Street
Columbus, OH 43215-3607
Clark & Co. International Equity 26.90% Record
101 West Broadway Index Fund
Waukesha, WI 53186-4833 Fiduciary Fund
Clark & Co. Government Bond Fund 25.33% Record
101 West Broadway Fiduciary Fund
Waukesha, WI 53186-4833
</TABLE>
B-92
<PAGE> 298
25% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Government Bond Fund 26.68% Record
Attn: Mutual Funds 0393 Fiduciary Fund
100 E. Broad Street
Columbus, OH 43215-3607
Banc One Securities Savings Plan Equity Index Fund 29.88% Beneficial
c/o Cathi Jarvis Fiduciary Fund
235 West Schrock Road
Westerville, OH 43081
</TABLE>
As a result, the aforementioned persons may be deemed to be "controlling
persons" of the class of Shares of the Fund in which they own such Shares under
the Investment Company Act of 1940. The table below indicates record and
beneficial owners of over 5% of any class of Shares of any Fund of the Trust.
B-93
<PAGE> 299
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dolores E. Jarvis Kentucky Municipal 9.18% Beneficial
8901 Bingham Drive Bond Fund
Louisville, KY 40242-3308 Class B
Clem R. Jarvis Kentucky Municipal 9.18% Beneficial
8901 Bingham Drive Bond Fund
Louisville, KY 40242-3308 Class B
Donaldson Lufkin Jenrette Kentucky Municipal 25.94% Record
Securities Corporation Inc. Bond Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Kentucky Municipal 9.17% Record
Securities Corporation Inc. Bond Fund
P.O. Box 2052 Class B
Jersey City, NJ -7303-2052
Donaldson Lufkin Jenrette Kentucky Municipal 15.55% Record
Securities Corporation Inc. Bond Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Kentucky Municipal 11.25% Record
Securities Corporation Inc. Bond Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Intermediate Tax-Free 8.13% Record
Securities Corporation Inc. Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
Katherine M. Lee Intermediate Tax-Free 21.23% Beneficial
Pamela K. Adams JT WROS Fund
7740 E. Gainey Ranch Rd. Class B
Scottsdale, AZ 85258-1618
Rhoady R. Lee Intermediate Tax-Free 12.38% Beneficial
Katherine M. Lee JT WROS Fund
7740 E. Gainey Ranch Rd. Class B
Scottsdale, AZ 85258-1618
Donald Lufkin Jenrette Intermediate Tax-Free 6.21% Record
Securities Corporation Inc. Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
B-94
</TABLE>
<PAGE> 300
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
State Street Bank & Trust Co. Government ARM 10.92% Beneficial
Cust For the IRA of Fund
Bill G. Howard Class B
P.O. Box 75255
Oklahoma City, OK 73147-0255
Donaldson Lufkin Jenrette Government ARM 5.86% Record
Securities Corporation Inc. Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Government ARM 8.51% Record
Securities Corporation Inc. Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Government ARM 20.31% Record
Securities Corporation Inc. Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Government ARM 11.60% Record
Securities Corporation Inc. Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Government ARM 5.09% Record
Securities Corporation Inc. Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Government ARM 21.89% Record
Securities Corporation Inc. Fund
P.O. Box 2052 Class B
Jersey City, NJ 07303-2052
Cara L. Remley Pod Intermediate Bond 5.25% Beneficial
Sueann Hoffman Fund
10401 N. Cave Creek Road, Lot 219 Class B
Phoenix, AZ 85020-1630
440 Financial Group 401K Large Company 8.83% Record
c/o Ann Sheputa Growth Fund
440 Lincoln Street Class A
Worcester, MA 01653-0002
</TABLE>
B-95
<PAGE> 301
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
440 Financial Group 401K Disciplined Value 14.56% Record
c/o Ann Sheputa Fund
440 Lincoln Street Class A
Worcester, MA 01653-0002
440 Financial Group 401K Growth Opportunities 21.47% Record
c/o Ann Sheputa Fund
440 Lincoln Street Class A
Worcester, MA 01653-0002
440 Financial Group 401K Income Bond Fund 25.14% Record
c/o Ann Sheputa Class A
440 Lincoln Street
Worcester, MA 01653-0002
Donaldson Lufkin Jenrette Income Bond Fund 5.47% Record
Securities Corporation Inc. Class A
P.O. Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Limited Volatility 8.92% Record
Securities Corporation Inc. Bond Fund
P.O. Box 2052 Class A
Jersey City, NJ 07303-2052
440 Financial Group 401K Limited Volatility 15.59% Record
c/o Ann Sheputa Bond Fund
440 Lincoln Street Class A
Worcester, MA 01653-0002
Robert Stanley Jr. Intermediate Tax-Free 12.63% Beneficial
Virginia R. Stanley JT TEN Fund
P.O. Box 15583 Class A
Phoenix, AZ 85060-5583
Jacob E. Heneger Intermediate Tax-Free 12.47% Beneficial
7249 N. Central Ave. Fund
Phoenix, AZ 85020-4850 Class A
Benedict Inc. US Treasury Securities 6.39% Beneficial
P.O. Box 315 Money Market
Mc Arthur, OH 45651 Class A
Tom Lang Company Inc. US Treasury Securities 5.74% Beneficial
P.O. Box 19261 Money Market
Springfield, IL 62794-9261 Class A
</TABLE>
B-96
<PAGE> 302
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
EXABYTE Municipal Money 15.42% Beneficial
Attn: Bob Stover Market Fund
1685 38th Street Class A
Boulder, CO 80301-2601
Joseph B. Udvare Trustee Municipal Money 15.06% Beneficial
Udvare Revocable Trust Agreement Market Fund
5301 N. 25th Place Class A
Phoenix, AZ 85016-3629
440 Financial Group 401K Income Equity Fund 7.36% Record
c/o Ann Sheputa Class A
440 Lincoln Street
Worcester, MA 01653-0002
Ann Sheputa Equity Index Fund 21.08% Record
c/o 440 Financial Group 401K Class A
440 Lincoln Street
Worcester, MA 01653-0002
Donaldson Lufkin Jenrette Equity Index Fund 6.76% Record
Securities Corporation Inc. Class A
P.O. Box 2052
Jersey City, NJ -7303-2052
440 Financial Group 401K Large Company Value 49.53% Record
c/o Ann Sheputa Fund
440 Lincoln Street Class A
Worcester, MA 01653-0002
Donaldson Lufkin Jenrette Ohio Municipal Bond 8.09% Record
Securities Corporation Inc. Fund
P.O. Box 2052 Class A
Jersey City, NJ 07303-2052
Clark & Co. Treasury Only Money 9.68% Record
c/o Bank One Wisconsin Market Fund
P.O. Box 1631
Waukesha, WI 53187-1631
Bank One Texas NA Treasury Only Money 19.49% Record
1717 Main Street Market Fund
Dallas, TX 75201-4605
Strafe & Co. Treasury Only Money 60.25% Record
c/o Bank One Trust Co. Market Fund
Attn: Mutual Funds
100 E. Broad Street
Columbus, OH 43215-3607
</TABLE>
B-97
<PAGE> 303
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. US Government 46.72% Record
c/o Bank One Wisconsin Money Market Fund
P.O. Box 1631
Waukesha, WI 53187-1631
Bank One Texas NA US Government 27.62% Record
1717 Main Street Money Market Fund
Dallas, TX 75201-4605
Bank One Trust Company NA US Government 10.76% Record
Omnibus-Corporate Cash Sweep Acct Money Market Fund
235 West Schrock Road
Attn: Cash Management DB3
Westerville, OH 43081-3607
Strafe & Co. US Government 14.90% Record
c/o Bank One Trust Co. Money Market Fund
Attn: Mutual Funds
100 E. Broad Street
Columbus, OH 43215-3607
Clark & Co. Large Company 16.60% Record
101 West Broadway Growth Fund
Waukesha, WI 53186-4833 Fiduciary Class
Bank One Wisconsin TR CO NA Large Company 11.89% Record
101 West Broadway Growth Fund
Waukesha, WI 53186-4833 Fiduciary Class
Loutrag Large Company 9.11% Record
Attn: Mutual Fund Clerk Growth Fund
P.O. Box 32590 Fiduciary Class
Louisville, KY 40232-2590
Loucourt Co Large Company 8.41% Record
P.O. Box 32590 Growth Fund
Louisville, KY 40232-2590 Fiduciary Class
Strafe & Co. Large Company 8.68% Record
Attn: Mutual Funds 0393 Growth Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Strafe & Co. Large Company 18.79% Record
Attn: Mutual Funds 0393 Growth Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
</TABLE>
B-98
<PAGE> 304
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Disciplined Value 21.35% Record
101 West Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Class
Bank One Wisconsin TR CO NA Disciplined Value 20.03% Record
101 West Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Class
Strafe & Co. Disciplined Value 8.91% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Strafe & Co. Disciplined Value 29.21% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Clark & Co. Growth Opportunites 21.44% Record
101 West Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Class
Bank One Wisconsin TR CO NA Growth Opportunites 19.01% Record
101 West Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Class
Strafe & Co./Cash Div Cash Growth Opportunites 22.28% Record
c/o Bank One Trust Co. Fund
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Strafe & Co. Growth Opportunites 16.75% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Clark & Co. Income Bond Fund 26.07% Record
c/o Bank One Wisconsin Fiduciary Class
P.O. Box 1631
Waukesha, WI 53187-1631
Bank One Wisconsin TR CO NA Income Bond Fund 11.24% Record
101 West Broadway Fiduciary Class
Waukesha, WI 53186-4833
</TABLE>
B-99
<PAGE> 305
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Income Bond Fund 22.02% Record
c/o Bank One Trust Co. Fiduciary Class
Attn: Mutual Funds
100 E. Broad Street
Columbus, OH 43215-3607
Strafe & Co. Income Bond Fund 25.92% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Clark & Co. Intermediate Tax-Free 51.04% Record
101 West Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Class
Strafe & Co. Intermediate Tax-Free 9.14% Record
Attn: Bank One Trust Fund
235 West Schrock Road Fiduciary Class
Westerville, OH 43081-2874
Strafe & Co. Intermediate Tax-Free 24.00% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Strafe & Co. Intermediate Tax-Free 8.88% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Clark & Co. Prime Money Market 39.50% Record
c/o Bank One Wisconsin Fund
P.O. Box 1631 Fiduciary Class
Waukesha, WI 53187-1631
Strafe & Co. Prime Money Market 54.88% Record
Bank One Ohio Trust Co., NA Fund
Department 0393, S.T.I.F. Fiduciary Class
Columbus, OH 43271
Clark & Co. US Treasury Securities 28.85% Record
c/o Bank One Wisconsin Money Market Fund
P.O. Box 1631 Fiduciary Class
Waukesha, WI 53187-1631
</TABLE>
B-100
<PAGE> 306
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Bank One Trust Company NA US Treasury Securities 19.49% Record
Omnibus-Corporate Cash Sweep Acct Money Market Fund
Attn: Cash Management DB3 Fiduciary Class
235 W. Schrock Road
Westerville, OH 43081-2874
Strafe & Co. (N) US Treasury Securities 50.13% Record
Bank One Ohio Trust Co., NA Money Market Fund
Department 0393 S.T.I.F. Fiduciary Class
Columbus, OH 43271
Clark & Co. Municipal Money 33.66% Record
c/o Bank One Wisconsin Market Fund
P.O. Box 1631 Fiduciary Class
Waukesha, WI 53187-1631
Strafe & Co. (D) Municipal Money 52.89% Record
Bank One Ohio Trust Co., NA Market Fund
Department 0393 S.T.I.F. Fiduciary Class
Columbus, OH 43217
Clark & Co. Income Equity Fund 24.36% Record
c/o Bank One Wisconsin Fiduciary Class
P.O. Box 1631
Waukesha, WI 53187-1631
Bank One Wisconsin TR CO NA Income Equity Fund 15.83% Record
101 West Broadway Fiduciary Class
Waukesha, WI 53186-4833
440 Financial Group 401K Income Equity Fund 5.91% Record
c/o Ann Sheputa Fiduciary Class
440 Lincoln Street
Worcester, MA 01653-0002
Strafe & Co. Income Equity Fund 8.81% Record
Attn: Bank One Trust Fiduciary Class
235 West Schrock Road
Westerville, OH 43081-2874
Strafe & Co. Income Equity Fund 26.01% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Strafe & Co. Income Equity Fund 14.73% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
</TABLE>
B-101
<PAGE> 307
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Large Company Value 18.10% Record
c/o Bank One Wisconsin Fund
101 West Broadway Fiduciary Class
Waukesha, WI 53186-4833
Bank One Wisconsin TR CO NA Large Company Value 12.44% Record
101 West Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Class
Strafe & Co. Large Company Value 22.53% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Strafe & Co. Large Company Value 16.49% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Strafe & Co. Ohio Municipal Bond 92.22% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Strafe & Co. Ohio Municipal Bond 5.77% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Clark & Co. International Equity 26.90% Record
101 West Broadway Index Fund
Waukesha, WI 53186-4833 Fiduciary Class
Bank One Wisconsin Trust NA International Equity 15.41% Record
101 West Broadway Index Fund
Waukesha, WI 53186-4833 Fiduciary Class
Strafe & Co. International Equity 10.71% Record
Attn: Mutual Funds 0393 Index Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Strafe & Co. International Equity 24.40% Record
Attn: Mutual Funds 0393 Index Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Clark & Co. Limited Volatility 6.18% Record
235 W. Schrock Road Bond Fund
Westerville, Ohio 43081-2874 Fiduciary Class
</TABLE>
B-102
<PAGE> 308
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Limited Volatility 27.34% Record
101 West Broadway Bond Fund
P.O. Box 1631 Fiduciary Class
Waukesha, WI 53187-1631
Bank One Wisconsin Trust NA Limited Volatility 8.78% Record
101 West Broadway Bond Fund
Waukesha, WI 53186-4833 Fiduciary Class
Strafe & Co. Limited Volatility 6.26% Record
Attn: Bank One Trust Bond Fund
235 West Schrock Road Fiduciary Class
Westerville, OH 43081-2874
Strafe & Co. Limited Volatility 24.04% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Strafe & Co. Limited Volatility 24.94% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Clark & Co. Equity Index Fund 6.23% Record
101 West Broadway Fiduciary Class
Waukesha, WI 53186-4833
Bank One Wisconsin TR CO NA Equity Index Fund 8.10% Record
101 West Broadway Fiduciary Class
Waukesha, WI 53186-4833
440 Financial Group 401K Equity Index Fund 7.77% Record
c/o Ann Sheputa Fiduciary Class
440 Lincoln Street
Worcester, MA 01653-0002
Strafe & Co. Equity Index Fund 5.97% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Strafe & Co. Equity Index Fund 25.12% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Clark & Co. Asset Allocation Fund 7.40% Record
101 West Broadway Fiduciary Class
Waukesha, WI 53186-4833
</TABLE>
B-103
<PAGE> 309
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Bank One Wisconsin TR CO NA Asset Allocation Fund 52.30% Record
101 West Broadway Fiduciary Class
Waukesha, WI 53186-4833
440 Financial Group 401K Asset Allocation Fund 5.94% Record
c/o Ann Sheputa Fiduciary Class
440 Lincoln Street
Worcester, MA 01653-0002
Strafe & Co. Asset Allocation Fund 5.91% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Strafe & Co. Asset Allocation Fund 19.97% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
CBC Companies Inc. Ohio Municipal Money 23.77% Beneficial
Attn: Dirk Cantrell Market Fund
250 East Town Street Class A
Columbus, OH 43215-4637
Barefoot Grass Lawn Service Inc Ohio Municipal Money 6.39% Beneficial
450 W. Wilson Bridge Road Market Fund
Worthington, OH 43085-2237 Class A
Mesa Golfland Ltd Municipal Income Fund 8.40% Beneficial
155 W. Hampton Class A
Mesa, AZ 85210-5258
Woody R. McGinnis Municipal Income Fund 5.25% Beneficial
Julia L. Waters McGinnis JT TEN Class A
3150 E. Cerrada Los
Tuscon, AZ 85718
Donaldson Lufkin Jenrette Municipal Income Fund 6.78% Record
Securities Corporation Inc. Class A
P.O. Box 2052
Jersey City, NJ 07303-2052
Middle Kentucky Construction Co. Kentucky Municipal 18.56% Record
J. Edwin Ruby Jr. Bond Fund
135 Tilford Drive Class A
Beaver Dam, KY 42320-9717
</TABLE>
B-104
<PAGE> 310
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Heartland Environmental Kentucky Municipal 8.38% Record
Thomas W. Smith Bond Fund
831 Eagle Mill Road Class A
Sonora, KY 42776-9721
Donaldson Lufkin Jenrette Kentucky Municipal 6.60% Record
Securities Corporation Inc. Bond Fund
P.O. Box 2052 Class A
Jersey City, NJ 07303-2052
440 Financial Group 401K Government Bond 10.83% Record
c/o Ann Sheputa Fund
440 Lincoln Street Class A
Worcester, MA 01653-0002
Donaldson Lufkin Jenrette Government ARM 77.48% Record
Securities Corporation Inc. Fund
P.O. Box 2052 Class A
Jersey City, NJ 07303-2052
440 Financial Group 401K Asset Allocation Fund 10.71% Record
c/o Ann Sheputa Class A
440 Lincoln Street
Worcester, MA 01653-0002
Strafe & Co. Ohio Municipal Money 72.25% Record
c/o Bank One Trust Co. Market Fund
Attn: Mutual Funds Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Clark & Co. Municipal Income Fund 59.91% Record
101 West Broadway Fiduciary Class
Waukesha, WI 53186-4833
Strafe & Co. Municipal Income Fund 10.84% Record
Attn: Bank One Trust Fiduciary Class
234 West Schrock Road
Westerville, OH 43081-2873
Strafe & Co. Municipal Income Fund 19.51% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
Strafe & Co. Municipal Income Fund 6.66% Record
Attn: Mutual Funds 0393 Fiduciary Class
100 E. Broad Street
Columbus, OH 43215-3607
</TABLE>
B-105
<PAGE> 311
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Loutrag Kentucky Municipal 58.90% Record
Attn: Mutual Fund Clerk Bond Fund
P.O. Box 32590 Fiduciary Class
Louisville, KY 40232-2590
Loucourt Co. Kentucky Municipal 7.07% Record
P.O. Box 32590 Bond Fund
Louisville, KY 40232-2590 Fiduciary Class
Clark & Co. Government Bond 25.33% Record
101 W. Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Class
Bank One Wisconsin TR CO NA Government Bond 9.17% Record
101 W. Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Class
Loutrag Government Bond 9.39% Record
Attn: Mutual Fund Clerk Fund
P.O. Box 32590 Fiduciary Class
Louisville, KY 40232-2590
Loucourt Co. Government Bond 12.11% Record
P.O. Box 32590 Fund
Louisville, KY 40232-2590 Fiduciary Class
Strafe & Co. Government Bond 26.68% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Strafe & Co. Government Bond 11.01% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Class
Columbus, OH 43215-3607
Clark & Co. Government ARM 11.54% Record
101 West Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Fund
Bank One Wisconsin TR CO NA Government ARM 15.88% Record
101 West Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Fund
Strafe & Co. Government ARM 14.39% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Fund
Columbus, OH 43215-3607
</TABLE>
B-106
<PAGE> 312
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Government ARM 28.51% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Fund
Columbus, OH 43215-3607
Clark & Co. Intermediate Bond 31.71% Record
101 West Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Fund
Bank One Wisconsin TR CO NA Intermediate Bond 5.99% Record
101 West Broadway Fund
Waukesha, WI 53186-4833 Fiduciary Fund
Loutrag Intermediate Bond 7.00% Record
Attn: Mutual Fund Clerk Fund
P.O. Box 32590 Fiduciary Fund
Louisville, KY 40232-2590
Loucourt Co. Intermediate Bond 10.56% Record
P.O. Box 32590 Fund
Louisville, KY 40232-2590 Fiduciary Fund
Strafe & Co. Intermediate Bond 27.72% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Fund
Columbus, OH 43215-3607
Strafe & Co. Intermediate Bond 11.26% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary Fund
Columbus, OH 43215-3607
440 Financial Group 401K International Equity 42.53% Record
c/o Ann Sheputa Index Fund
440 Lincoln Street Class A
Worcester, MA 01653-0002
Donaldson Lufkin Jenrette Intermediate Bond 8.27% Record
Securities Corporation Inc. Fund
P.O. Box 2052 Class A
Jersey City, NJ 07303-2052
Tr U/A A.J. Hacl-ESOP Municipal Money 7.03% Beneficial
c/o Cathi Jarvis Market Fund
235 West Schrock Road
Westerville, OH 43081
</TABLE>
B-107
<PAGE> 313
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Wallick Properties Ohio Municipal Money 5.07% Beneficial
c/o Cathi Jarvis Market Fund
235 West Schrock Road
Westerville, OH 43081
David Mikolajczyk Ohio Municipal Money 5.09% Beneficial
c/o Cathi Jarvis Market Fund
235 West Schrock Road
Westerville, OH 43081
Wallick Construction Co. Ohio Municipal Money 5.84% Beneficial
c/o Cathi Jarvis Market Fund
235 West Schrock Road
Westerville, OH 43081
George H. Thomas Ohio Municipal Money 8.51% Beneficial
c/o Cathi Jarvis Market Fund
235 West Schrock Road
Westerville, OH 43081
City of Summit Gen Fd Treasury Only Fund 6.94% Beneficial
c/o Cathi Jarvis
235 West Schrock Road
Westerville, OH 43081
OFDA (MT 2) Asset Allocation Fund 6.06% Beneficial
c/o Cathi Jarvis
235 West Schrock Road
Westerville, OH 43081
Banc One Corp-Retirement Disciplined Value 12.78% Beneficial
c/o Cathi Jarvis Fund
235 West Schrock Road
Westerville, OH 43081
Eli Lilly fbo Christ Church Equity Index Fund 6.39% Beneficial
c/o Cathi Jarvis
235 West Schrock Road
Westerville, OH 43081
NCR Benefit Account Equity Index Fund 8.24% Beneficial
c/o Cathi Jarvis
235 West Schrock Road
Westerville, OH 43081
Banc One Securities Svgs Plan Equity Index Fund 29.88% Beneficial
c/o Cathi Jarvis
235 West Schrock Road
Westerville, OH 43081
</TABLE>
B-108
<PAGE> 314
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
ELCA Mission Invest Government ARM 7.72% Beneficial
c/o Cathi Jarvis Fund
235 West Schrock Road
Westerville, OH 43081
Cook Children's Med Ctr Government ARM 9.15% Beneficial
c/o Cathi Jarvis Fund
235 West Schrock Road
Westerville, OH 43081
OCA OLDC Insur Mgt Government ARM 11.95% Beneficial
c/o Cathi Jarvis Fund
235 West Schrock Road
Westerville, OH 43081
Banc One Sec Svgs Plan Income Bond 7.07% Beneficial
c/o Cathi Jarvis Fund
235 West Schrock Road
Westerville, OH 43081
Banc One Corp-Retirement International Equity 12.84% Beneficial
c/o Cathi Jarvis Index Fund
235 West Schrock Road
Westerville, OH 43081
Banc One Sec Svgs Large Company 8.87% Beneficial
c/o Cathi Jarvis Growth Fund
235 West Schrock Road
Westerville, OH 43081
Banc One Corp-Retirement Large Company 10.99% Beneficial
c/o Cathi Jarvis Growth Fund
235 West Schrock Road
Westerville, OH 43081
Banc One Corp-Retirement Large Company 20.33% Beneficial
c/o Cathi Jarvis Growth Fund
235 West Schrock Road
Westerville, OH 43081
Banc One Corp-Retirement Growth Opportunities 8.94% Beneficial
c/o Cathi Jarvis Fund
235 West Schrock Road
Westerville, OH 43081
</TABLE>
B-109
<PAGE> 315
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Charles P. Brown Kentucky Municipal 6.09% Beneficial
c/o Bank One Kentucky NA Bond Fund
Attn: Nancy Presnell
P.O. Box 32590
Louisville, KY 40239
</TABLE>
As a group, the Trustees and Officers of the Trust owned less than 1%
of the Shares of each class of the Trust.
B-110
<PAGE> 316
THE ONE GROUP FAMILY OF MUTUAL FUNDS
U.S. TREASURY SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
------ ----------- ----
<S> <C>
U.S. TREASURY BILLS (27.7%):
$40,000 6.06%, 7/6/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,966
30,000 6.13%, 8/17/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,760
30,000 6.20%, 8/24/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,721
30,000 6.20%, 10/19/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,432
50,000 5.18%, 11/2/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,108
30,000 6.21%, 11/16/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,286
50,000 5.21%, 12/7/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,850
50,000 5.38%, 12/21/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,708
50,000 5.37%, 1/11/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,554
----------
Total U.S. Treasury Bills 353,385
----------
Total Investments 353,385
REPURCHASE AGREEMENTS (72.7%):
60,000 Barclays de Zoete Wedd, 6.00%, due 7/5/95, dated 6/30/95 (Collateralized by $53,038 various
government securities, 0.00%-12.38%, 8/15/95-5/15/16, market value-$61,201) . . . . . . . . . . 60,000
250,000 Deutsche Bank, 6.20%, due 7/3/95, dated 6/30/95* . . . . . . . . . . . . . . . . . . . . . . . 250,000
60,000 Deutsche Bank, 6.05%, due 7/5/95, dated 6/30/95* . . . . . . . . . . . . . . . . . . . . . . . 60,000
60,000 Hong Kong Shanghai Banc Corp., 6.10%, due 7/5/95, dated 6/30/95 (Collateralized by $57,932
U.S. Treasury Notes, 6.00%-7.88%, 7/31/99-12/31/99, market value-$61,203) . . . . . . . . . . . 60,000
60,000 Lehman Brothers Holdings, Inc., 6.04%, due 7/5/95, dated 6/30/95 (Collateralized by $159,579
various government securities, 0.00%, 5/15/09-5/15/10, market value-$61,200) . . . . . . . . . 60,000
178,810 Lehman Brothers Holdings, Inc., 6.20%, due 7/3/95, dated 6/30/95 (Collateralized by $395,648
various government securities, 0.00%, 11/15/00-5/15/09, market value-$182,382) . . . . . . . . 178,810
60,000 Morgan Stanley, 6.06%, due 7/5/95, dated 6/30/95 (Collateralized by $62,105 U.S. Treasury
Notes, 4.38%-7.75%, 3/31/96-11/15/96, market value-$61,205) . . . . . . . . . . . . . . . . . . 60,000
60,000 Nomura Securities International, 6.05%, due 7/5/95, dated 6/30/95** . . . . . . . . . . . . . . 60,000
140,000 Nomura Securities International, 6.18%, due 7/3/95, dated 6/30/95** . . . . . . . . . . . . . . 140,000
----------
Total Repurchase Agreements 928,810
----------
Total (Cost--$1,282,195)(a) $1,282,195
==========
</TABLE>
- --------------
Percentages indicated are based on net assets of $1,276,814.
(a) Cost for federal income tax and financial reporting purposes are the same.
* These repurchase agreements are both collateralized by $302,852 U.S.
Treasury Notes, 5.13%-8.88%, 8/31/95-2/23/00, market value-$316,200.
** These repurchase agreements are both collateralized by $188,404 various
government securities, 0.00%-12.00%, 12/28/95-2/15/15, market
value-$204,000.
See notes to financial statements.
9
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<PAGE> 317
THE ONE GROUP FAMILY OF MUTUAL FUNDS
PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
------ ----------- ----
<S> <C>
COMMERCIAL PAPER (40.4%):
$36,720 ABS, Inc., 6.00%, 7/27/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36,561
21,330 ABS, Inc., 6.10%, 8/1/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,218
22,500 AES Shady Point, Inc., 6.50%, 7/12/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,455
23,882 AES Shady Point, Inc., 6.58%, 7/24/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,782
45,000 American Honda Finance Corp., 6.55%, 7/5/95 . . . . . . . . . . . . . . . . . . . . . . . . . . 44,967
50,000 American Honda Finance Corp., 6.60%, 7/10/95 . . . . . . . . . . . . . . . . . . . . . . . . . 49,918
65,000 Countrywide Funding Corp., 6.00%, 7/24/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,751
35,000 Countrywide Funding Corp., 6.00%, 7/25/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,860
25,000 CSC Enterprises, 5.98%, 8/22/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,784
40,000 Dean Witter Discover & Co., 5.96%, 7/28/95 . . . . . . . . . . . . . . . . . . . . . . . . . . 39,821
36,000 DIC Americas, Inc., 5.97%, 7/24/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,863
25,000 Embarcadero Center Venture (one), 6.15%, 7/7/95 . . . . . . . . . . . . . . . . . . . . . . . . 24,974
23,750 Embarcadero Center Venture (three), 6.00%, 7/17/95 . . . . . . . . . . . . . . . . . . . . . . 23,687
25,000 Finova Capital Corp., 6.03%, 8/1/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,870
30,000 Finova Capital Corp., 6.13%, 8/4/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,826
30,000 Finova Capital Corp., 5.99%, 8/8/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,810
15,000 Finova Capital Corp., 6.13%, 8/17/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,959
24,121 Freedom Asset Funding Corp., 6.05%, 7/26/95 . . . . . . . . . . . . . . . . . . . . . . . . . . 24,020
25,000 General Motors Acceptance Corp., 6.20%, 7/24/95 . . . . . . . . . . . . . . . . . . . . . . . . 24,901
25,000 General Motors Acceptance Corp., 6.00%, 8/4/95 . . . . . . . . . . . . . . . . . . . . . . . . 24,858
46,700 Madison Funding Corp., 6.00%, 7/12/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,614
29,800 Madison Funding Corp., 5.95%, 8/23/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,539
10,000 Petrolea Brasileiro S.A. Petrobas, 6.65%, 7/10/95 . . . . . . . . . . . . . . . . . . . . . . . 9,983
60,000 Public Service Electric & Gas Co., 5.97%, 8/4/95 . . . . . . . . . . . . . . . . . . . . . . . 59,662
15,000 TamBrands Corp., 5.78%, 11/20/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,658
56,400 WMX Technologies, Inc., 6.97%, 10/2/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,384
15,000 Yamaha Motor Finance Corp., 6.00%, 7/14/95 . . . . . . . . . . . . . . . . . . . . . . . . . . 14,968
25,000 Yamaha Motor Finance Corp., 6.00%, 7/17/95 . . . . . . . . . . . . . . . . . . . . . . . . . . 24,933
--------
Total Commercial Paper 876,626
--------
CORPORATE BONDS AND NOTES (14.1%):
Banking & Finance (12.7%):
50,000 Abbey National Treasury Services, PLC, 7.05%, 3/1/96 . . . . . . . . . . . . . . . . . . . . . 49,994
11,000 Associates Corp. of North America, 4.50%, 2/15/96 . . . . . . . . . . . . . . . . . . . . . . . 10,808
7,600 Beneficial Corp., 9.20%, 7/21/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,612
50,000 CIT Group Holdings, Inc., 7.05%, 3/4/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
50,000 Comerica Bank, 5.61%, 11/8/95* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,990
59,000 Dean Witter Discover & Co., 6.27%, 12/15/95 . . . . . . . . . . . . . . . . . . . . . . . . . . 59,048
7,140 General Motors Acceptance Corp., 7.50%, 10/15/95 . . . . . . . . . . . . . . . . . . . . . . . 7,160
6,900 General Motors Acceptance Corp., 5.15%, 9/21/95 . . . . . . . . . . . . . . . . . . . . . . . . 6,880
25,150 Lehman Brothers, Inc., 6.75%, 5/17/96* . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,179
8,900 Merrill Lynch & Co., Inc., 6.00%, 10/3/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,895
--------
275,566
--------
Utilities (1.4%):
30,000 Waste Management, Inc. 4.88%, 7/1/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
--------
Total Corporate Bonds and Notes 305,566
--------
FUNDING AGREEMENTS (7.8%):
50,000 AllState, 6.29%, 10/2/95* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
60,000 National Home Life, 6.38%, 11/1/95* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
60,000 People's Security Life, 6.32%, 10/22/95* . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
--------
Total Funding Agreements 170,000
--------
MEDIUM TERM NOTES (4.0%):
7,000 General Motors Acceptance Corp., 4.70%, 8/21/95 . . . . . . . . . . . . . . . . . . . . . . . . 6,988
25,000 Lehman Brothers Holdings, Inc., 6.39%, 1/23/96* . . . . . . . . . . . . . . . . . . . . . . . . 25,000
55,000 Lehman Brothers Holdings, Inc., 6.39%, 3/21/96* . . . . . . . . . . . . . . . . . . . . . . . . 55,000
--------
Total Medium Term Notes 86,988
--------
U.S. GOVERNMENT AGENCIES (3.8%):
Student Loan Marketing Assoc.:
31,440 6.08%, 7/1/96* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,440
</TABLE>
Continued
10
B-112
<PAGE> 318
THE ONE GROUP FAMILY OF MUTUAL FUNDS
PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
------ ----------- ----
<S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED
Student Loan Marketing Assoc.; continued;
$50,000 5.70%, 9/28/98* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000
----------
Total U.S. Government Agencies 81,440
----------
U.S. TREASURY BILLS (1.8%):
40,000 5.46%, 9/21/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,502
----------
Total U.S. Treasury Bills 39,502
----------
YANKEE CERTIFICATES OF DEPOSIT (4.6%):
100,000 Sumitomo Bank, 6.07%, 7/5/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
----------
Total Yankee Certificates of Deposit 100,000
----------
Total Investments 1,660,122
----------
REPURCHASE AGREEMENTS (23.5%):
50,000 Barclays de Zoete Wedd, 6.30%, due 7/3/95, dated 6/30/95 (Collateralized by $52,040 various
government securities, 4.45%-8.50%, 3/27/96-2/1/05, market value-$51,003) . . . . . . . . . . . 50,000
100,000 Prudential Securities, 6.20%, due 7/3/95, dated 6/30/95 (Collateralized by $101,249 various
government securities, 0.00%-10.50%, 7/25/95-7/21/08, market value-$102,000) . . . . . . . . . 100,000
358,847 Lehman Brothers Holdings, Inc., 6.20%, due 7/3/95, dated 6/30/95 (Collateralized by $365,228
various government securities, 0.00%-8.80%, 7/5/95-1/25/10, market value-$365,966) . . . . . . 358,847
----------
Total Repurchase Agreements 508,847
----------
Total (Cost--$2,168,969)(a) $2,168,969
==========
</TABLE>
- -------------
Percentages indicated are based on net assets of $2,167,384.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate.
These securities are payable on the date of demand. The rate reflected on
the Schedule of Portfolio Investments is the effective rate at June 30,
1995.
See notes to financial statements.
11
B-113
<PAGE> 319
THE ONE GROUP FAMILY OF MUTUAL FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
------ ----------- ----
<S> <C>
MUNICIPAL SECURITIES (104.6%):
Alabama (0.5%):
$ 2,700 Alabama Private Colleges University Equipment & Capital, Series A, 4.25%, 7/1/05, Insured: FGIC* $ 2,700
--------
Arizona (3.3%):
2,000 Chandler County, Arizona Industrial Development Authority Revenue Bond, 3.60%, 12/15/09 LOC:
National Westminster Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
3,000 Cochise County, Arizona Pollution Control Corp. Revenue, 4.45%, 9/1/24, CFC Backed** . . . . . 3,000
6,400 Cochise County, Arizona Pollution Control Corp. Revenue, 4.45%, 9/1/24, CFC Backed** . . . . . 6,400
3,000 Mesa, Arizona Special Municipal, 3.95%, 7/12/95, LOC: Union Bank of Switzerland . . . . . . . . 3,000
1,600 Pinal County, Arizona Industrial Development Authority Revenue Bonds, 4.15%, 9/1/08, LOC:
Bankers Trust* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600
--------
16,000
--------
Arkansas (1.6%):
8,100 Clark County, Arkansas Solid Waste Disposal Revenue Bonds, 4.25%, 8/1/22, LOC: Trust Company
Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,100
--------
California (1.5%):
2,500 California Higher Education Loan Authority, 3.90%, 6/1/01, LOC: National Westminster Bank** . . 2,500
5,000 Orange County, California, Pooled School District, TRAN, 4.50%, 7/28/95 . . . . . . . . . . . . 5,003
--------
7,503
--------
Colorado (4.4%):
3,000 Arapahoe County, Colorado, Capital Improvement Trust Fund Highway Revenue, Series D, 4.45%,
8/31/26, LOC: Union Bank of Switzerland** . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
9,015 Arapahoe County, Colorado, Capital Improvement Trust Fund Highway Revenue, Series B, 4.40%,
8/31/26, Escrow: FNMA** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,015
2,500 Lakewood, Colorado Multifamily Housing, St Moritz & Diamondhead Project, 4.05%, 10/1/07, LOC:
Dai-Ichi Kangyo* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
7,500 Platte River Power Authority, Colorado Electric Revenue, 3.90%, 7/19/95, SBPA: Morgan Guaranty 7,500
--------
22,015
--------
Delaware (0.7%):
3,225 Delaware State GO Bonds, 5.25%, 12/1/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,230
--------
Florida (6.0%):
6,000 Dade County, Florida, Solid Waste IDR-Monteray-Dade Ltd. Project, 4.45%, 12/1/13, LOC: Banque
Paribas* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
2,500 Florida Housing Finance Authority Bonds, 4.45%, 12/1/08, LOC: Sumitomo Bank* . . . . . . . . . 2,500
5,000 Hillsborough, Florida - Tampa Airport, 4.30%, 7/21/95, LOC: National Westminster Bank** . . . . 5,000
3,500 Putnam County, Florida, Seminole Electric Power Revenue Bonds, 4.30%, 3/15/14, CFC Backed** . . 3,501
1,600 Putnam County, Florida, Seminole Electric Power Revenue Bonds, 3.40%, 12/15/09, CFC Backed** . 1,600
6,200 Sunshine State Finance Commission, 3.95%, 7/10/95, LOC: Union Bank of Switzerland, National
Westminster Bank and Morgan Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,200
5,000 Sunshine State Government Finance Authority, 3.90%, 8/8/95, LOC: Union Bank of Switzerland,
National Westminster Bank and Morgan Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
--------
29,801
--------
Georgia (7.2%):
6,500 Burke County, Georgia, PCR Oglethorpe Power - 1994A Series, 4.15%, 1/1/19, Insured by FGIC* . . 6,500
5,000 Dekalb County, Georgia, TAN, 5.00%, 12/29/95 . . . . . . . . . . . . . . . . . . . . . . . . . 5,018
10,900 Housing Authority of Cobb, Georgia, Multifamily Housing Bond, Series 1992, 4.30%, 6/1/23, LOC:
Societe Generale* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,900
13,200 Municipal Electric Authority of Georgia, 3.65%, 7/5/95, SBPA Credit Suisse . . . . . . . . . . 13,200
--------
35,618
--------
Hawaii (0.8%):
4,000 Hawaii State Housing Finance & Development, Rental Housing System, Series B, 4.25%, 7/1/25 LOC:
Industrial Bank of Japan* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
--------
Idaho (1.0%):
5,000 State of Idaho TAN, 4.50%, 6/27/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,033
--------
</TABLE>
Continued
12
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<PAGE> 320
THE ONE GROUP FAMILY OF MUTUAL FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
------ ----------- ----
<S> <C>
MUNICIPAL SECURITIES CONTINUED:
Illinois (14.2%):
$ 3,175 Chicago Illinois Adjustable Tender Notes, Series A, 4.60%, 10/31/96, Mandatory Put 11/1/95, LOC:
Morgan Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,175
16,000 Chicago O'Hare International Airport Second Lien - Series B, 4.10%, 1/1/18, LOC: Societe
General* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
5,000 City of Jacksonville, Illinois, Industrial Project Loans, 4.40%, 2/1/26, LOC: Bank of America,
Chicago* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
4,000 Decatur Illinois,Water Revenue, 4.00%, 10/19/95, LOC: Sumitomo Bank . . . . . . . . . . . . . . 4,000
2,500 Illinois Educational Facilities Authority, Northwestern University, 4.05%, 3/1/28, LOC: Northern
Trust Co.* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
2,500 Illinois Development Finance Authority, Roosevelt University Project, 4.68%, 4/1/25, LOC:
American National Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
6,500 Illinois Development Finance Authority Revenue Bonds, Aurora Central Catholic High School,
4.15%, 4/1/24, LOC: Northern Trust Co.* . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500
2,000 Illinois Development Finance Authority Revenue Bonds, Sisters Hospital, 4.25%, 2/1/19, LOC: La
Salle National Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
1,625 Illinois Development Finance Authority Revenue Bonds, St. Paul's Development, 3.70%, 2/1/25,
LOC: La Salle National Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,625
8,000 Illinois Facilities Authority, DPA Council for Jewish Elderly Center, 4.50%, 3/1/15, LOC:
LaSalle National Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000
1,500 Illinois Health, Chicago, LaGrange Hospital, 4.50%, 12/1/16, LOC: FNB Chicago* . . . . . . . . 1,500
2,000 Illinois Health Facilities Authority, Chicago, Little City, 4.00%, 10/1/15, LOC: FNB Chicago** 2,000
8,000 Illinois Health Facilities Authority, Franciscan Hospital, 4.35%, 1/1/18, LOC: Toronto Dominion
Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000
1,000 Illinois Health Facilities Authority, Pooled Series, Series C, 4.20%, 8/1/15, LOC: FNB Chicago* 1,000
3,000 Illinois Health Facilities Authority, Washington & Smith Hospital, 4.20%, 7/1/26, LOC: Comerica
Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
1,400 Illinois Health Facilities Authority, Condell Hospital, 4.25%, 11/1/05, LOC: Bank of Tokyo* . . 1,400
2,000 Illinois Health Facilities Authority, Series E, 1985, Sisters Hospital, 4.00%, 12/1/14, Insured:
MBIA* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
--------
70,200
--------
Indiana (5.1%):
13,700 Gary, Indiana, Environmental Improvement, (USX Project), 3.60%, 7/15/02, LOC: Bank of Nova
Scotia* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,700
2,500 Indiana Hospital Equipment Finance Authority, Series A, 4.50%, 12/1/15, Insured: MBIA* . . . . 2,500
4,200 Jasper, Indiana Economic Development, 4.40%, 3/1/19, LOC: PNC Bank* . . . . . . . . . . . . . . 4,200
4,800 Terre Haute, Indiana Economic Development Revenue, First Financial Corp. Project, 4.80%, 7/6/95,
LOC: FNB Chicago . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800
--------
25,200
--------
Iowa (1.0%):
5,000 Iowa School Corporations, 4.25%, 7/17/95, Insured: Capital Guaranty . . . . . . . . . . . . . . 5,001
--------
Kentucky (2.0%):
4,500 County of Clark, Kentucky, PCR East Kentucky Power, 4.15%, 10/15/14, CFC Backed** . . . . . . . 4,500
2,200 Pendleton County, Kentucky Self-insurance Funding Revenue Bonds, Series 1987, 3.75%, 7/1/95,
LOC: PNC, Kentucky. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,200
3,000 Pulaski County, Kentucky Hospital Service District, Solid Waste Disposal Revenue, Series B,
4.65%, 8/15/23, CFC Guaranty** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
--------
9,700
--------
Louisiana (2.9%):
11,190 Jefferson Parish, Louisiana Hospital Service District, 4.25%, 12/1/15, Insured by: FGIC* . . . 11,190
1,000 Parish of St. James, Louisiana, PCR for Texaco Bonds, 4.20%, 8/8/95** . . . . . . . . . . . . . 1,000
2,100 Louisiana Public Facilities Authority, Hospital Financing, Series 1985-A, 4.45%, 12/1/05, LOC:
Sumitomo Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100
--------
14,290
--------
Michigan (1.5%):
3,500 Grand Rapids Michigan, Water Supply Revenue Bonds, 9.50%, 1/1/16, Pre-refunded Escrowed U.S.
Government Securities** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,674
</TABLE>
Continued
13
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MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
------ ----------- ----
<S> <C>
MUNICIPAL SECURITIES CONTINUED:
Michigan, continued:
$2,500 Michigan Municipal Bond Revenue Notes, Series 95-B, 4.50%, 7/3/96 . . . . . . . . . . . . . . . $ 2,517
1,000 Michigan Strategic Environmental, Wayne Disposal, 4.25%, 5/1/05, LOC: Comerica Bank* . . . . . 1,000
--------
7,191
--------
Missouri (1.2%):
2,000 Missouri Environment Improvement Authority, Series 85-A, 3.30%, 7/13/95, LOC: Union Bank of
Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
2,000 Missouri Environment Improvement Authority, 4.10%, 7/14/95, LOC: Union Bank of Switzerland . . 2,000
2,000 Missouri Environment Improvement Authority, Series, 4.00%, 6/1/14, LOC: Union Bank of
Switzerland** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
--------
6,000
--------
Montana (0.7%):
3,500 Montana State Board Investment, Municipal Finance Conservation Act, 4.90%, 3/1/09** . . . . . . 3,500
--------
Nevada (3.3%):
5,500 Clark County, Nevada, IDR Bonds, 4.40%, 11/1/18, LOC: Fuji Bank* . . . . . . . . . . . . . . . 5,500
4,650 Clark County, Nevada, Industrial Development Revenue Bonds, Series 1985, 4.85%, 12/1/15, LOC:
Fuji Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,650
4,000 Clark County, Nevada Airport System Improvement Revenue Bonds, Sub Lien, Series 1995 A-1, 4.15%,
7/1/25, LOC: Toronto Dominion* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
2,000 State of Nevada Department of Commerce, Series 1985, (FMC Corp.), 4.20%, 9/15/97, LOC: Barclays
Bank** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
--------
16,150
--------
New Hampshire (1.0%):
5,000 New Hampshire State Industrial Development Authority Revenue, Series A, United Illuminating Co.,
4.50%, 9/1/15, LOC: Barclays Bank** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
--------
New York (2.0%):
2,500 New York State Energy Research PCR New York State Electric & Gas, 4.60%, 12/1/15, LOC: Union
Bank of Switzerland** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
7,500 New York State Energy Research & Development Authority PCR Bonds, Series A, 4.70%, 3/1/16, LOC:
Deutshebank A.G.** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,506
--------
10,006
--------
North Carolina (1.4%):
7,000 Person County, North Carolina Industrial Facilities & Pollution Control Financing Authority,
4.75%, 11/1/16, LOC: Fuji Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000
--------
North Dakota (0.6%):
3,100 Mercer County, North Dakota, 3.95%, 2/1/18, IDR-CFC Backed** . . . . . . . . . . . . . . . . . 3,100
--------
Ohio (6.9%):
3,000 Columbus, Ohio, GO Adjustable Rate Bonds, 3.80%, 6/1/16* . . . . . . . . . . . . . . . . . . . 3,000
2,000 Geauga County, Ohio, IDR, General Signal Co., 4.35%, 4/1/04, LOC: Wachovia Bank of Georgia* . . 2,000
2,000 Montgomery County, Ohio, Series B, Miami Valley Hospital, 4.00%, 7/21/95, LOC: Fuji Bank . . . 2,000
700 Ohio Air Quality Development Authority, Cincinnati Gas & Electric, 4.25%, 12/1/15, LOC: J.P.
Morgan** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700
6,800 Ohio Air Quality Development Authority, JMG Corp., 4.05%, 4/1/28, LOC: Societe Generale* . . . 6,800
3,300 Ohio State Environmental Improvement Authority, 4.30%, 5/1/11, LOC: Sanwa Bank* . . . . . . . . 3,300
7,000 Ohio State University, General Receipts, Series B, 4.15%, 12/1/12, Liquidity Agreement with Ohio
State University* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000
5,500 Ohio Water Development Authority, Timken Co., Refunding Series 1993, 4.00%, 5/1/07, LOC:
Wachovia Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500
1,500 Student Loan Funding Corp. Series B-1 Revenue Bond, 4.35%, 1/1/07, LOC: National Westminster
Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
1,000 Student Loan Funding Corp., Series 1983-A, Revenue Bond, 4.25%, 12/29/98, LOC: Fuji Bank* . . . 1,000
1,400 Toledo Lucas County, Ohio, CSX Transportation, 4.00%, 7/20/95, LOC: Bank of Nova Scotia . . . . 1,400
--------
34,200
--------
</TABLE>
Continued
14
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<PAGE> 322
THE ONE GROUP FAMILY OF MUTUAL FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
------ ----------- ----
<S> <C>
MUNICIPAL SECURITIES CONTINUED:
Pennsylvania (1.2%):
$6,000 Washington County, Pennsylvania, Pooled Equipment Lease Program, 4.25%, 11/1/05, LOC: Sanwa
Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,000
--------
South Carolina (3.6%):
1,700 Cherokee County, South Carolina, Industrial Revenue Bonds, 4.25%, 7/1/19, LOC: Bank of Nova
Scotia* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700
1,500 South Carolina, GO, Capital Improvement, Series B, 6.80%, 3/1/96: . . . . . . . . . . . . . . . 1,533
5,000 South Carolina Public Service, 3.60%, 9/11/95, LOC: NCNB . . . . . . . . . . . . . . . . . . . 5,000
2,500 York County, South Carolina, PCR, Series 84E-2, 4.55%, 8/15/14, CFC Guaranty** . . . . . . . . 2,500
2,275 York County, South Carolina, PCR, Series 84N-4, 4.30%, 9/15/14, CFC Guaranty** . . . . . . . . 2,275
5,000 York County, South Carolina, PCR, Series 84N-5, 4.30%, 9/15/14, CFC Guaranty** . . . . . . . . 5,000
--------
18,008
--------
Tennessee (2.7%):
5,400 Hamilton County, Tennessee, Industrial Development Board, Series 1985, 4.25%, 11/1/05, LOC:
Sumitomo Bank and Industrial Bank of Japan* . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400
4,040 Knox County, Tennessee, Hospital Facilities Revenue Bond, 3.85%, 12/1/15, Insured: MBIA* . . . 4,040
3,800 Oak Ridge, Tennessee, Industrial Board Economic Development Revenue Bonds, 4.20%, 5/1/09, LOC:
ABM/AMRO* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,800
--------
13,240
--------
Texas (15.3%):
4,590 Bexar, Texas Army Retirement, 4.25%, 7/1/11, LOC: Rabo Bank* . . . . . . . . . . . . . . . . . 4,590
8,000 Brazos River Authority Texas PCR, Electric Company-B, 4.70%, 6/1/30, LOC: Union Bank of
Switzerland* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000
7,500 Capital Health Facilities Development Corp., Texas, Series 1986, 4.30%, 12/1/16, LOC: ABM/AMRO* 7,500
3,100 Capital Industrial Development Corp. of Texas, W.L. Gore Project, 3.50%, 12/5/95, LOC: Morgan
Guaranty** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,100
1,600 Denton, Texas, IDR, 4.20%, 12/1/09, LOC: Union Bank of Switzerland* . . . . . . . . . . . . . . 1,600
2,000 Gulf Coast, Texas, Waste Disposal Authority, Amoco Corp., 4.30%, 4/1/15** . . . . . . . . . . . 2,000
4,000 Gulf Coast, Texas, Waste Disposal Authority, Environmenal Improvement Revenue, Amoco Corp.,
4.40%, 3/1/09* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
5,000 Gulf Coast Texas, Industrial Development Authority, Amoco Corp., 3.80%, 6/1/25** . . . . . . . 5,000
4,000 Hockley County, Texas, Industrial Development Corp., PCR, Amoco Corp., 4.75%, 3/1/14* . . . . . 4,002
4,000 Houston, Texas Airport, 3.60%, 8/1/95, LOC: Morgan Guaranty & Canadian Imperial Bank of Commerce 4,000
5,000 Panhandle-Plains Texas, Higher Education Authority, Series 91-A, 4.30%, 6/1/21, LOC: SLMA* . . 5,000
5,000 Panhandle-Plains Texas, Higher Education Authority, Series A, 4.30%, 6/1/23, LOC: SLMA* . . . . 5,000
16,800 San Antonio, Texas, Health Facilities, Series 92-A, 4.45%, 6/1/08, LOC: NationsBank, Texas* . . 16,800
4,450 Texas Higher Education Authority, Series 1985-B, 4.25%, 12/1/25, Insured: FGIC* . . . . . . . . 4,450
--------
75,042
--------
Utah (0.8%):
4,100 Salt Lake, Utah, Adjustable Rate Airport Revenue Bond, Series 1994-A, 4.30%, 6/1/98, LOC: Credit
Suisse* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,100
--------
Washington (5.0%):
3,000 Seattle, Washington Municipal Light & Power, 4.30%, 10/5/95, LOC: Morgan Guaranty . . . . . . 3,000
700 Washington Community Economic Revitalization Board Revenue Bonds Series 1987-1, 4.35%, 7/1/98,
LOC: Industrial Bank of Japan* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700
725 Washington Community Economic Revitalization Board Revenue Bonds Series 1990-1, 4.35%, 7/1/05,
LOC: National Bank of Japan* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 725
910 Washington Community Economic Revitalization Board Revenue Bonds Series 88-1, 4.35%, 7/1/08,
LOC: National Bank of Japan* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 910
10,000 Washington Public Power System Revenue Bonds, Series 1993-A-2, 3.85%, 7/1/18, LOC: Industrial
Bank of Japan* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
</TABLE>
Continued
15
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MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
------ ----------- ----
<S> <C>
MUNICIPAL SECURITIES CONTINUED:
Washington, continued:
$10,000 Washington Public Power System Revenue Bonds, Project 1 & 3, 3.80%, 7/1/18, LOC: Bank of
America* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000
--------
25,335
--------
West Viriginia (2.8%):
4,800 Marion County West Virginia, 4.15%, 10/1/17, LOC: National Westminster Bank* . . . . . . . . . 4,800
2,500 Marion County West Virginia, 4.30%, 10/1/17, LOC: National Westminster Bank* . . . . . . . . . 2,500
6,000 West Virginia Public Energy, Morgantown Project, 4.25%, 8/4/95, LOC: Swiss Bank . . . . . . . . 6,000
--------
13,300
--------
Wisconsin (2.0%):
10,000 Wisconsin GO Notes, 4.50%, 6/17/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,079
--------
Wyoming (0.3%):
1,500 Gillette County, Wyoming, Pacific Corp Project 4.00%, 7/17/95, LOC: Deutsche Bank . . . . . . . 1,500
--------
Total Municipal Securities 517,142
--------
Total Investments (Cost-$517,142)(a) $517,142
========
</TABLE>
- -------------
Percentages indicated are based on net assets of $494,261.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity arrangements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect on June 30, 1995.
** Put and demand features exist allowing the Fund to require the repurchase of
the investments within variable time periods of less than one year.
CFC Commodities Futures Commission
FGIC Financial Guarantee Insurance Corp.
FNMA Federal National Mortgage Association
GO General Obligation
IDR Industrial Development Revenue
LOC Collateralized by Letters of Credit issued by Foreign and Domestic
Banks
MBIA Municipal Bond Insurance Association.
PCR Pollution Control Revenue
SBPA Standby Bond Purchase Agreement
SLMA Student Loan Marketing Association
TAN Tax Anticipation Notes
TRAN Tax and Revenue Anticipation Notes
See notes to financial statements.
16
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<PAGE> 324
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OHIO MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
------ ----------- ----
<S> <C>
MUNICIPAL SECURITIES (100.7%):
$1,000 Berea, Ohio, GO, BAN, 4.50%, 10/25/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,001
1,000 Cincinnati, Ohio, GO, 5.63%, 12/1/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,005
6,700 Columbus, Ohio, Sewerage System Revenue Bonds, 3.90%, 6/1/11* . . . . . . . . . . . . . . . . . 6,700
3,750 City of St. Mary's, Ohio, Industrial Development Authority, Setex, Inc. Project, 4.60%, 12/1/01,
LOC: Industrial Bank of Japan* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,750
3,105 Clermont County, Ohio, Hospital Facilities, Series B, 3.85%, 12/1/15, Insured: MBIA* . . . . . 3,105
2,000 Columbus, Ohio, GO, 3.80%, 7/6/95* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
2,500 Columbus, Ohio, GO, Sewer Improvement Bonds, 9.00%, 9/15/95 . . . . . . . . . . . . . . . . . . 2,522
1,600 Cuyahoga County, Ohio, IDR Bonds, Series 1985, 3.95%, 12/1/15, LOC: Union Bank of Switzerland* 1,600
300 Cuyahoga County, Ohio, IDR Bonds, Series 1987, 4.10%, 4/1/12, LOC: Dresdner Bank* . . . . . . . 300
1,800 Franklin County, Ohio, IDR, Inland Products, Inc. Project, 4.40%, 8/1/04, LOC: PNC Bank, Ohio* 1,800
1,500 Franklin County, Ohio, Hospital Authority, 4.15%, 5/1/15, LOC: National Bank of Detroit* . . . 1,500
1,000 Greater Cleveland Regional Transit Authority, BAN, 4.10%, 4/10/96 . . . . . . . . . . . . . . . 1,003
500 Hamilton County, Ohio, Performing Arts Center 1995, 4.10%, 6/15/05, LOC: Fifth Third Bank* . . 500
2,445 Hamilton County, Ohio Sewer System, Pre-refunded-Escrow U.S. Government securities, 9.50%,
12/1/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,567
3,500 Hillsboro, Ohio, IDR, TD Manufacturing Co., 4.50%, 6/1/97, LOC: Sanwa Bank* . . . . . . . . . . 3,500
1,725 Montgomery County, Ohio, Miami Valley Hospital, 4.00%, 7/21/95, LOC: Fuji Bank . . . . . . . . 1,725
3,000 Ohio Air Quality Development Authority Bonds, Series 1992, Timken Co., 4.00%, 6/1/01, LOC:
Credit Suisse* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
1,000 Ohio Air Quality Development Authority, Cincinnati Gas & Electric, 4.25%, 7/12/95, LOC: Morgan
Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
4,500 Ohio Air Quality Development Authority, JMG Co., 4.05%, 4/1/28, LOC: Societe Generale* . . . . 4,500
1,700 Ohio Air Quality Development Authority, CEI Co., 3.70%, 8/4/95, Insured by FGIC . . . . . . . . 1,700
2,000 Ohio Air Quality Development Authority, CEI Co. 3.00%, 7/17/95, Insured by FGIC . . . . . . . . 2,000
4,400 Ohio Housing Finance Agency, Multi Family Housing Revenue Bonds, 3.90%, 12/1/15, LOC: Morgan
Guaranty Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,400
1,000 Ohio State Court Street Center, 4.73%, 10/1/98, LOC: Provident Bank* . . . . . . . . . . . . . 1,000
1,500 Ohio State Environmental Improvement Authority, U.S. Steel Corp. Project, 4.30%, 5/1/11, LOC:
Sanwa Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
2,850 Ohio State Higher Education Facilities Commission, Oberlin College Project, 4.00%, 10/1/15, LOC:
Bank of Tokyo* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,850
665 Ohio State University, Series B-85, 4.40%, 12/1/01, SBPA: National Westminster Bank* . . . . . 665
4,000 Ohio State University, Series 86-B, 4.40%, 12/1/06, SBPA: National Westminster Bank* . . . . . 4,000
3,000 Ohio Water Development Authority, Series 1992, Timken Co., 4.00%, 6/1/01, LOC: Credit Suisse* . 3,000
1,500 Ohio Water Development Authority, CEI Co., 4.15%, 7/13/95, LOC: Insured by FGIC . . . . . . . . 1,500
1,000 Ohio Water Development Authority, CEI Co., 4.15%, 8/4/95, Insured by FGIC . . . . . . . . . . . 1,000
1,000 Ohio Water Development Authority, CEI Co., 3.10%, 9/5/95, Insured by FGIC . . . . . . . . . . . 1,000
1,000 Ross County, Ohio Hospital Facilities, 4.15%, 12/1/20, LOC: Fifth Third Bank . . . . . . . . . 1,000
2,000 Student Loan Funding Corp., Cincinnati, Ohio, Series B-1, 4.35%, 1/1/07, LOC: National
Westminster Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
1,300 Student Loan Funding Corp., Cincinnati, Ohio, Series A-3, 4.35%, 1/1/07, LOC: National
Westminster Bank* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300
2,000 Student Loan Funding Corp., Cincinnati, Ohio, Series 1983-A, 4.25%, 12/29/98, LOC: Fuji Bank* . 2,000
4,000 Summit County, Ohio, GO, Series 1995A, BAN, 5.00%, 3/7/96 . . . . . . . . . . . . . . . . . . . 4,009
</TABLE>
Continued
17
B-119
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OHIO MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
------ ----------- ----
<S> <C>
MUNICIPAL SECURITIES CONTINUED:
$2,000 Toledo, (Lucas County) Ohio, CSX Transportation, 4.00%, 7/20/95, LOC: Bank of Nova Scotia . . . $ 2,000
2,500 Toledo, (Lucas County) Ohio, CSX Transportation, 3.85%, 8/1/95, LOC: Bank of Nova Scotia . . . 2,500
1,000 Toledo, (Lucas County) Ohio, 4.15%, 7/5/95, LOC: Bank of Nova Scotia . . . . . . . . . . . . . 1,000
300 Twinsburg, Ohio, IDR, UTD Stationers Supply Co., 4.90%, 12/1/11, LOC: PNC Bank* . . . . . . . . 300
1,300 University of Cincinnati, Ohio, BAN - Series S1, 5.00%, 3/21/96 . . . . . . . . . . . . . . . . 1,303
1,000 University of Cincinnati, Ohio, BAN, 4.75%, 8/30/95 . . . . . . . . . . . . . . . . . . . . . . 1,001
2,100 Wooster, Ohio, IDR Allen Group, 3.95%, 12/1/10, LOC: Dresdner Bank* . . . . . . . . . . . . . . 2,100
--------
Total Municipal Securities 88,206
--------
Total Investments (Cost--$88,206)(a) $ 88,206
========
</TABLE>
- -------------
Percentages indicated are based on net assets of $87,596.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity arrangements. The interest rate,
which will change periodically, is based upon bank prime rates or an index
of market interest rates. The rate reflected on the Schedule of Portfolio
Investments is the rate in effect on June 30, 1995.
BAN Bond Anticipation Notes
FGIC Financial Guaranty Insurance Company
GO General Obligation
IDR Industrial Development Revenue
LOC Collateralized by Letters of Credit issued by Foreign and Domestic Banks
MBIA Municipal Bond Insurance Association
SBPA Standby Bond Purchase Agreement
See notes to financial statements.
18
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<PAGE> 326
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands
except per share amounts)
U.S. TREASURY
SECURITIES
MONEY PRIME MUNICIPAL OHIO MUNICIPAL
MARKET MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND
---------- ---------- -------- -------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value . . . . . . . . . . . . . . . . $ 353,385 $1,660,122 $517,142 $88,206
Repurchase agreements . . . . . . . . . . . . . . . . 928,810 508,847
---------- ---------- -------- -------
1,282,195 2,168,969 517,142 88,206
Cash . . . . . . . . . . . . . . . . . . . . . . . . 109
Interest receivable . . . . . . . . . . . . . . . . . 219 7,381 3,361 496
Receivable for capital shares issued . . . . . . . . 135
Receivable from advisor . . . . . . . . . . . . . . . 167 253 80 17
Deferred organization costs . . . . . . . . . . . . . 2
Prepaid expenses and other assets . . . . . . . . . . 36 10 116 108
---------- ---------- -------- -------
Total Assets . . . . . . . . . . . . . . . . . . . . 1,282,617 2,176,857 520,699 88,829
---------- ---------- -------- -------
LIABILITIES:
Dividends payable . . . . . . . . . . . . . . . . . . 5,248 8,340 1,293 138
Payable to brokers for investments purchased . . . . 19,630 1,000
Payable for capital shares redeemed . . . . . . . . . 39 2
Cash overdraft . . . . . . . . . . . . . . . . . . . 1 5,279 52
Accrued expenses and other payables:
Investment advisory fees . . . . . . . . . . . 357 592 148 21
Administration fees . . . . . . . . . . . . . . 171 284 71 12
12b-1 fees (Class A) . . . . . . . . . . . . . 26 55 15 10
Other . . . . . . . . . . . . . . . . . . . . . 163
---------- ---------- -------- -------
Total Liabilities . . . . . . . . . . . . . . . . . . 5,803 9,473 26,438 1,233
---------- ---------- -------- -------
NET ASSETS:
Capital . . . . . . . . . . . . . . . . . . . . . . . 1,276,812 2,167,440 494,396 87,606
Undistributed (distributions in excess of)
net investment income . . . . . . . . . . . . . . . 27 (20) (139) (10)
Accumulated undistributed net realized
gains (losses) from investment transactions . . . . (25) (36) 4
---------- ---------- -------- -------
Net Assets . . . . . . . . . . . . . . . . . . . . . $1,276,814 $2,167,384 $494,261 $87,596
========== ========== ======== =======
Net Assets
Fiduciary . . . . . . . . . . . . . . . . . . . $1,178,091 $1,965,416 $437,743 $51,806
Class A . . . . . . . . . . . . . . . . . . . . 98,723 201,968 56,518 35,790
---------- ---------- -------- -------
$1,276,814 $2,167,384 $494,261 $87,596
========== ========== ======== =======
Outstanding shares of beneficial interest
Fiduciary . . . . . . . . . . . . . . . . . . . 1,178,070 1,965,444 437,856 51,806
Class A . . . . . . . . . . . . . . . . . . . . 98,740 201,996 56,540 35,800
---------- ---------- -------- -------
Total . . . . . . . . . . . . . . . . . . 1,276,810 2,167,440 494,396 87,606
========== ========== ======== =======
Net asset value--offering and redemption
price per share (Fiduciary and Class A Shares) . . $ 1.00 $1.00 $1.00 $1.00
========== ========== ======== =======
Investments, at amortized cost . . . . . . . . . . . $1,282,195 $2,168,969 $517,142 $88,206
========== ========== ======== =======
</TABLE>
See notes to financial statements.
19
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<PAGE> 327
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands)
U.S.
TREASURY
SECURITIES OHIO
MONEY PRIME MUNICIPAL MUNICIPAL
MARKET MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $64,651 $111,725 $18,689 $3,164
Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 94
------- -------- ------- ------
Total Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,651 111,725 18,871 3,258
------- -------- ------- ------
EXPENSES:
Investment advisory fees . . . . . . . . . . . . . . . . . . . . . . . . 4,214 6,878 1,799 276
Administration fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,030 3,313 866 155
12b-1 fees (Service) . . . . . . . . . . . . . . . . . . . . . . . . . . 2
12b-1 fees (Class A) . . . . . . . . . . . . . . . . . . . . . . . . . . 232 432 160 149
Custodian and accounting fees . . . . . . . . . . . . . . . . . . . . . . 168 230 80 16
Legal and audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . 205 228 79 15
Trustees' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . 13 21 7 3
Transfer agent fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 144 46 55
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . 279 203 132 16
Printing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 45 24 13
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 79 22 5
------- -------- ------- ------
Total expenses before waivers/reimbursements . . . . . . . . . . . . . . 7,290 11,575 3,215 703
Less waivers/reimbursements . . . . . . . . . . . . . . . . . . . . . . . (2,145) (3,122) (973) (230)
------- -------- ------- ------
NET EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,145 8,453 2,242 473
------- -------- ------- ------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . 59,506 103,272 16,629 2,785
------- -------- ------- ------
REALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) from investment transactions . . . . . . . . 14 (126)
------- -------- ------- ------
Change in net assets resulting from operations . . . . . . . . . . . . . $59,520 $103,272 $16,503 $2,785
======= ======== ======= ======
</TABLE>
See notes to financial statements.
20
B-122
<PAGE> 328
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
U.S. TREASURY
SECURITIES MONEY PRIME MUNICIPAL MONEY
MARKET FUND MONEY MARKET FUND MARKET FUND
------------------------- ------------------------- ------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income . . . . . . . . . . $ 59,506 $ 23,624 $ 103,272 $ 43,111 $ 16,629 $ 6,688
Net realized gains (losses) from investment
transactions . . . . . . . . . . . . . 14 (39) (5) (126)
----------- ----------- ----------- ----------- ----------- ----------
Change in net assets resulting from operations 59,520 23,585 103,272 43,106 16,503 6,688
----------- ----------- ----------- ----------- ----------- ----------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income . . . . . . . (56,332) (22,524) (96,873) (41,103) (15,228) (6,091)
In excess of net investment income . . . (43) (43)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income . . . . . . . (3,144) (1,086) (6,244) (1,893) (1,358) (564)
In excess of net investment income . . . (30) (30) (142) (142)
DISTRIBUTIONS TO SERVICE SHAREHOLDERS (A):
From net investment income . . . . . . . (13)
----------- ----------- ----------- ----------- ----------- ----------
Change in net assets from shareholder
distributions . . . . . . . . . . . . . . . (59,506) (23,640) (103,272) (43,138) (16,629) (6,698)
----------- ----------- ----------- ----------- ----------- ----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued . . . . . . . 3,158,947 2,677,540 4,749,069 3,828,384 1,502,281 1,053,067
Dividends reinvested . . . . . . . . . . 4,531 1,842 13,261 5,953 2,064 1,023
Cost of shares redeemed . . . . . . . . . (2,909,428) (2,180,198) (4,270,622) (3,199,010) (1,404,255) (853,992)
----------- ----------- ----------- ----------- ----------- ----------
Change in net assets from share
transactions . . . . . . . . . . . . . . . . . 254,050 499,184 491,708 635,327 100,090 200,098
----------- ----------- ----------- ----------- ----------- ----------
Change in Net Assets . . . . . . . . . . . . . 254,064 499,129 491,708 635,295 99,964 200,088
NET ASSETS:
Beginning of period . . . . . . . . . . . 1,022,750 523,621 1,675,676 1,040,381 394,297 194,209
----------- ----------- ----------- ----------- ----------- ----------
End of period . . . . . . . . . . . . . . $ 1,276,814 $ 1,022,750 $ 2,167,384 $ 1,675,676 $ 494,261 $ 394,297
=========== =========== =========== =========== =========== ==========
SHARE TRANSACTIONS:
Issued . . . . . . . . . . . . . . . . . 3,158,947 2,677,540 4,749,069 3,828,384 1,502,281 1,053,067
Reinvested . . . . . . . . . . . . . . . 4,531 1,842 13,261 5,953 2,064 1,023
Redeemed . . . . . . . . . . . . . . . . (2,909,428) (2,180,198) (4,270,622) (3,199,010) (1,404,255) (853,992)
=========== =========== =========== =========== =========== ==========
Change in shares . . . . . . . . . . . . . . . 254,050 499,184 491,708 635,327 100,090 200,098
=========== =========== =========== =========== =========== ==========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of Period . . . . . . . . . . . . . . $ 27 $ (16) $ (20) $ (27) $ (139) $ (10)
=========== =========== =========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
(Amounts in Thousands)
OHIO MUNICIPAL
MONEY MARKET
FUND
---------------------
YEAR YEAR
ENDED ENDED
JUNE 30, JUNE 30,
1995 1994
--------- ---------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income . . . . . . . . . . $ 2,785 $ 1,108
Net realized gains (losses) from investment
transactions . . . . . . . . . . . . .
--------- ---------
Change in net assets resulting from operations 2,785 1,108
--------- ---------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income . . . . . . . (1,535) (408)
In excess of net investment income . . .
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income . . . . . . . (1,240) (700)
In excess of net investment income . . . (10) (10)
DISTRIBUTIONS TO SERVICE SHAREHOLDERS (A):
From net investment income . . . . . . .
--------- ---------
Change in net assets from shareholder
distributions . . . . . . . . . . . . . . . (2,785) (1,118)
--------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued . . . . . . . 376,500 210,761
Dividends reinvested . . . . . . . . . . 1,226 763
Cost of shares redeemed . . . . . . . . . (382,861) (147,408)
--------- ---------
Change in net assets from share
transactions . . . . . . . . . . . . . . . . . (5,135) 64,116
--------- ---------
Change in Net Assets . . . . . . . . . . . . . (5,135) 64,106
NET ASSETS:
Beginning of period . . . . . . . . . . . 92,731 28,625
--------- ---------
End of period . . . . . . . . . . . . . . $ 87,596 $ 92,731
========= =========
SHARE TRANSACTIONS:
Issued . . . . . . . . . . . . . . . . . 376,500 210,761
Reinvested . . . . . . . . . . . . . . . 1,226 763
Redeemed . . . . . . . . . . . . . . . . (382,861) (147,408)
========= =========
Change in shares . . . . . . . . . . . . . . . (5,135) 64,116
========= =========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of Period . . . . . . . . . . . . . . $ (10) $ (10)
========= =========
</TABLE>
- -------------
(a) The Service Shares commenced offering on January 17, 1994, when they were
designated as "Retirement" Shares. On April 4, 1995, the name of the
Retirement Shares was changed to "Service" Shares. As of May 2, 1995,
Service Shares transferred to Class A Shares and as of June 30, 1995, there
were no shareholders in the Service Class.
See notes to financial statements
21
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<PAGE> 329
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1995
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as a diversified, open-end investment
company established as a Massachusetts business trust. The Trust is
registered to offer five classes of shares: Fiduciary, Class A, Class B,
Institutional and Service. The Trust currently offers twenty-four funds. The
accompanying financial statements and financial highlights are those of the
U.S. Treasury Securities Money Market Fund, the Prime Money Market Fund, the
Municipal Money Market Fund, and the Ohio Municipal Money Market Fund
(individually, a "Fund"; collectively, the "Funds") only.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies in conformity
with generally accepted accounting principles consistently followed by the
Trust in preparation of its financial statements.
SECURITY VALUATION
Securities are valued utilizing the amortized cost method permitted in
accordance with Rule 2a-7 under the 1940 Act. Under the amortized cost
method, discount or premium is amortized on a constant basis to the maturity
of the security. In addition, the Funds may not (a) purchase any instrument
with a remaining maturity greater than thirteen months unless such
instrument is subject to a demand feature, or (b) maintain a dollar-weighted
average maturity which exceeds 90 days.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that the
Fund's investment advisor has determined are creditworthy. Each repurchase
agreement is recorded at cost. The Fund requires that the securities
purchased in a repurchase transaction be transferred to the custodian in a
manner sufficient to enable the Fund to obtain those securities in the event
of a counterparty default. The seller, under the repurchase agreement, is
required to maintain the value of the securities held at not less than the
repurchase price, including accrued interest.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net realized
gains or losses on sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on
the accrual basis. Interest income, including any discount or premium, is
accrued as earned using the effective interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that Fund,
while the expenses which are attributable to more than one fund of the Trust
are allocated among the respective Funds. Each class of shares bears its
pro-rata portion of expenses attributable to its series, except that each
class separately bears expenses related specifically to that class, such as
distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly.
Net income for this purpose consists of interest accrued and discount earned
(including both original issue discount and market discount) less
amortization of any market premium and accrued expenses. Net realized
capital gains, if any, are
Continued
22
B-124
<PAGE> 330
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
distributed at least annually. Dividends are declared separately for each
class. No class has preferential dividend rights; differences in per share
dividend rates are generally due to differences in separate class expenses.
Net investment income and net capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments of expiring capital loss carryforwards and deferrals of
certain losses.
ORGANIZATION COSTS
Costs incurred by the Trust in connection with its organization, including
the fees and expenses of registering and qualifying its shares for
distribution have been deferred and are being amortized using the
straight-line method over a period of five years beginning with the
commencement of each Fund's operations. All such costs have been allocated
among the funds of the Trust pro-rata, based on the relative net assets of
each fund. In the event that any of the initial shares are redeemed during
such period by any holder thereof, the related Fund will be reimbursed by
such holder for any unamortized organization costs in the proportion as the
number of initial shares being redeemed bears to the number of initial
shares outstanding at the time of redemption.
FEDERAL INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment company
by complying with the provisions available to certain investment companies
as defined in applicable sections of the Internal Revenue Code, and to make
distributions of net investment income and net realized capital gains
sufficient to relieve it from all, or substantially all, federal income
taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified
or reclassified into one or more classes. Currently, shares of the Trust are
registered to be offered through thirty series and five classes: Fiduciary,
Class A, Class B, Institutional and Service. The Service Shares commenced
offering on January 17, 1994 when they were designated as "Retirement"
Shares. On April 4, 1995, the name of the Retirement Shares was changed to
"Service" Shares. During the year ended June 30, 1995, Service Shares
transferred to Class A Shares, and as of June 30, 1995, there were no
shareholders in the Service Class. Shareholders are entitled to one vote for
each full share held and will vote in the aggregate and not by class or
series, except as otherwise expressly required by law or when the Board of
Trustees has determined that the matter to be voted on affects only the
interest of shareholders of a particular class or series. The following is a
summary of transactions in Fund shares for the fiscal years ending June 30,
1995 and 1994:
Continued
23
B-125
<PAGE> 331
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES
MONEY MARKET FUND PRIME MONEY MARKET FUND
----------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued . . . . . . . . . $ 2,783,997 $ 2,116,053 $ 3,951,914 $ 3,532,386
Issued in connection with acquisition . . . . 300,662
Dividends reinvested . . . . . . . . . . . . 1,467 810 7,187 4,022
Shares redeemed . . . . . . . . . . . . . . . (2,576,713) (1,941,023) (3,594,562) (2,914,801)
----------- ----------- ----------- -----------
Change in net assets from Fiduciary Share
transactions . . . . . . . . . . . . . . . . $ 208,751 $ 476,502 $ 364,539 $ 621,607
=========== =========== =========== ===========
CLASS A SHARES:
Proceeds from shares issued . . . . . . . . . $ 374,950 $ 260,825 $ 796,201 $ 295,958
Dividends reinvested . . . . . . . . . . . . 3,064 1,032 6,061 1,931
Shares redeemed . . . . . . . . . . . . . . . (332,715) (239,175) (675,053) (284,209)
----------- ----------- ----------- -----------
Change in net assets from Class A Share
transactions . . . . . . . . . . . . . . . . $ 45,299 $ 22,682 $ 127,209 $ 13,680
=========== =========== =========== ===========
SERVICE SHARES:
Proceeds from shares issued . . . . . . . . . $ $ $ 954 $ 40
Dividends reinvested . . . . . . . . . . . . 13
Shares redeemed . . . . . . . . . . . . . . . (1,007)
----------- ----------- ----------- -----------
Change in net assets from
Service Share transactions . . . . . . . . . $ $ $ (40) $ 40
=========== =========== =========== ===========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued . . . . . . . . . . . . . . . . . . . 2,783,997 2,116,053 3,951,914 3,532,386
Issued in connection with acquisition . . . . 300,662
Reinvested . . . . . . . . . . . . . . . . . 1,467 810 7,187 4,022
Redeemed . . . . . . . . . . . . . . . . . . (2,576,713) (1,941,023) (3,594,562) (2,914,801)
----------- ----------- ----------- -----------
Change in Fiduciary Shares . . . . . . . . . 208,751 476,502 364,539 621,607
=========== =========== =========== ===========
CLASS A SHARES:
Issued . . . . . . . . . . . . . . . . . . . 374,950 260,825 796,201 295,958
Reinvested . . . . . . . . . . . . . . . . . 3,064 1,032 6,061 1,931
Redeemed . . . . . . . . . . . . . . . . . . (332,715) (239,175) (675,053) (284,209)
----------- ----------- ----------- -----------
Change in Class A Shares . . . . . . . . . . 45,299 22,682 127,209 13,680
=========== =========== =========== ===========
SERVICE SHARES:
Issued . . . . . . . . . . . . . . . . . . . 954 40
Reinvested . . . . . . . . . . . . . . . . . 13
Redeemed . . . . . . . . . . . . . . . . . . (1,007)
----------- ----------- ----------- -----------
Change in Service Shares . . . . . . . . . . (40) 40
=========== =========== =========== ===========
</TABLE>
Continued
24
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<PAGE> 332
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET OHIO MUNICIPAL MONEY MARKET
FUND FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued . . . . . . . . . . . . . $ 1,202,916 $ 862,583 $ 182,275 $ 94,077
Dividends reinvested . . . . . . . . . . . . . . . . 738 477 41 25
Shares redeemed . . . . . . . . . . . . . . . . . . . (1,118,500) (685,634) (185,885) (42,227)
----------- --------- --------- ---------
Change in net assets from
Fiduciary Share transactions . . . . . . . . . . . . $ 85,154 $ 177,426 $ (3,569) $ 51,875
=========== ========= ========= =========
CLASS A SHARES:
Proceeds from shares issued . . . . . . . . . . . . . $ 299,365 $ 190,484 $ 194,225 $ 116,684
Dividends reinvested . . . . . . . . . . . . . . . . 1,326 546 1,185 738
Shares redeemed . . . . . . . . . . . . . . . . . . . (285,755) (168,358) (196,976) (105,181)
----------- --------- --------- ---------
Change in net assets from
Class A Share transactions . . . . . . . . . . . . . $ 14,936 $ 22,672 $ (1,566) $ 12,241
=========== ========= ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued . . . . . . . . . . . . . . . . . . . . . . . 1,202,916 862,583 182,275 94,077
Reinvested . . . . . . . . . . . . . . . . . . . . . 738 477 41 25
Redeemed . . . . . . . . . . . . . . . . . . . . . . (1,118,500) (685,634) (185,885) (42,227)
----------- --------- --------- ---------
Change in Fiduciary Shares . . . . . . . . . . . . . 85,154 177,426 (3,569) 51,875
=========== ========= ========= =========
CLASS A SHARES:
Issued . . . . . . . . . . . . . . . . . . . . . . . 299,365 190,484 194,225 116,684
Reinvested . . . . . . . . . . . . . . . . . . . . . 1,326 546 1,185 738
Redeemed . . . . . . . . . . . . . . . . . . . . . . (285,755) (168,358) (196,976) (105,181)
----------- --------- --------- ---------
Change in Class A Shares . . . . . . . . . . . . . . 14,936 22,672 (1,566) 12,241
=========== ========= ========= =========
</TABLE>
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and Banc One Investment Advisors Corporation (the "Advisor"), are
parties to an investment advisory agreement under which the Advisor is
entitled to receive an annual fee, computed daily and paid monthly, equal to
0.35% of the average daily net assets of the U.S. Treasury Securities Money
Market Fund, the Prime Money Market Fund and the Municipal Money Market Fund
and 0.30% of the average daily net assets of the Ohio Municipal Money Market
Fund.
The Trust and 440 Financial Group of Worcester ("440 Financial") are parties
to an administrative agreement under which 440 Financial (the
"Administrator") provides services for a fee that is computed daily and
payable monthly, at an annual rate of 0.20% on the first $1.5 billion of the
combined average net assets of the Funds and other funds offered by the
Trust; 0.18% on the next $0.5 billion of the combined average net assets,
and 0.16% on the combined average net assets over $2 billion. Effective
April 1, 1995, The Shareholder Services Group, Inc.,
Continued
25
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<PAGE> 333
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
d/b/a 440 Financial became the Administrator to the Trust. Also effective
April 1, 1995, the Advisor became the Sub-Administrator pursuant to an
agreement between the Administrator and the Advisor. The Advisor assumed
many of the administrative duties, for which it receives a fee paid by the
Administrator.
The Trust has adopted a distribution and shareholder services plan (the
"Plan") on behalf of the Class A, Class B and Service Class Shares pursuant
to Rule 12b-1 under the 1940 Act. 440 Financial Distributors, Inc. (the
"Distributor") acts as the distributor of the Trust's shares. The
Distributor receives a fee for its services of 0.35%, 1.00%, and 0.75% of
the average daily net assets of the Class A, Class B, and Service Class
Shares, respectively. Effective May 1, 1995, the Distributor voluntarily
agreed to limit its fees to an annual rate of 0.55% of the average daily net
assets of the Service Class Shares for distribution and shareholder
assistance for the U.S. Treasury Securities and Prime Money Market Funds.
These fees are used by the Distributor to pay banks, including affiliates of
the the Advisor, other institutions and broker/dealers, and for expenses the
Distributor incurs for providing distribution or shareholder assistance. The
Distributor has voluntarily agreed to limit its fees for the Class A Shares
to an annual rate of 0.25% of the average daily net assets.
Certain officers of the Trust are also officers of the Administrator and/or
Distributor. Such officers receive no compensation from the Funds for
serving in their respective roles.
The Advisor, Administrator, and Distributor voluntarily agreed to waive a
portion of their fees and to reimburse the Funds for certain expenses so
that total expenses of each Fund would not exceed certain annual expense
limitations. For the year ended June 30, 1995, fees in the following amounts
were waived or reimbursed to the Funds:
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES PRIME MONEY
MONEY MARKET FUND MARKET FUND
------------------------ --------------------
<S> <C> <C>
INVESTMENT ADVISOR FEES:
Waivers/reimbursements . . . . . . . . . . . . $1,956,505 $2,887,240
ADMINISTRATION FEES:
Waivers/reimbursements . . . . . . . . . . . . $ 122,233 $ 111,313
12b-1 FEES (CLASS A):
Waivers/reimbursements . . . . . . . . . . . . $ 66,222 $ 123,447
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL MONEY OHIO MUNICIPAL MONEY
MARKET FUND MARKET FUND
------------------------ --------------------
<S> <C> <C>
INVESTMENT ADVISOR FEES:
Waivers/reimbursements . . . . . . . . . . . . $ 834,690 $ 112,517
ADMINISTRATION FEES:
Waivers/reimbursements . . . . . . . . . . . . $ 92,641 $ 61,415
12b-1 FEES (CLASS A):
Waivers/reimbursements . . . . . . . . . . . . $ 45,681 $ 56,095
</TABLE>
5. CONCENTRATION OF CREDIT RISK:
The Ohio Municipal Money Market Fund invests primarily in debt obligations
issued by the State of Ohio and its political subdivisions, agencies and
public authorities to obtain funds for various public purposes. The Fund is
more susceptible to economic and political factors adversely affecting
issuers of Ohio's specific municipal securities than are municipal bond
funds that are not concentrated in these issuers to the same extent.
Continued
26
B-128
<PAGE> 334
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
6. FEDERAL TAX INFORMATION:
As of June 30, 1995, the Funds had the following capital loss carryforwards
which are available to offset future gains, if any:
<TABLE>
<CAPTION>
U.S. TREASURY OHIO MUNICIPAL
SECURITIES MONEY PRIME MONEY MONEY MARKET
MARKET FUND MARKET FUND FUND
---------------- ----------- --------------
<S> <C> <C> <C>
Expiring in 2001 . . . . . . . . . . $ 8,551
Expiring in 2002 . . . . . . . . . . 26,451
Expiring in 2003 . . . . . . . . . . $24,983 552 $315
------- ------- ----
$24,983 $35,554 $315
======= ======= ====
</TABLE>
The Municipal Money Market Fund had no capital loss carryforwards at June
30, 1995.
Of the dividends paid from net investment income by the Municipal Money
Market Fund and the Ohio Municipal Money Market Fund for the fiscal year
ended June 30, 1995, 100.0% constituted exempt interest dividends for
regular federal income tax purposes.
Continued
27
B-129
<PAGE> 335
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS JUNE 30, 1995
<TABLE>
<CAPTION>
U.S. TREASURY SECURIITES MONEY MARKET FUND
---------------------------------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------------------------------
1995 1994 1993
--------------------- -------------------- --------------------
FIDUCIARY CLASS A FIDUCIARY CLASS A FIDUCIARY CLASS A
--------- ------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ------- -------- ------- -------- -------
Investment Activities
Net investment income . . . . . . . . . . . . . . 0.050 0.047 0.030 0.027 0.029 0.026
---------- ------- -------- ------- -------- -------
Less: Distributions
Net investment income . . . . . . . . . . . . . . (0.050) (0.047) (0.030) (0.027) (0.029) (0.026)
---------- ------- -------- ------- -------- -------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ======= ======== ======= ======== =======
Total Return . . . . . . . . . . . . . . . . . . . 5.07% 4.81% 3.01% 2.76% 2.89% 2.63%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000) . . . . . . . . $1,178,091 $98,723 $969,326 $53,423 $492,862 $30,759
Ratio of expenses to average net assets . . . . . 0.41% 0.66% 0.40% 0.63% 0.45% 0.65%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . . . 4.96% 4.71% 3.02% 2.81% 2.85% 2.52%
Ratio of expenses to average net assets* . . . . 0.59% 0.94% 0.58% 0.87% 0.67% 1.02%
Ratio of net investment income to average
net assets* . . . . . . . . . . . . . . . . . . 4.78% 4.43% 2.84% 2.57% 2.63% 2.15%
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY SECURIITES
MONEY MARKET FUND
--------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------
1992 1991
------------------------- ---------
FIDUCIARY CLASS A (a) FIDUCIARY
--------- ----------- ---------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
-------- ------- --------
Investment Activities
Net investment income . . . . . . . . . . . . . . 0.043 0.012 0.062
-------- ------- --------
Less: Distributions
Net investment income . . . . . . . . . . . . . . (0.043) (0.012) (0.062)
-------- ------- --------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
======== ======= ========
Total Return . . . . . . . . . . . . . . . . . . . 4.40% 3.38%(b) 6.63%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000) . . . . . . . . $410,146 $ 6 $339,987
Ratio of expenses to average net assets . . . . . 0.55% 0.59%(b) 0.60%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . . . 4.25% 2.51%(b) 6.20%
Ratio of expenses to average net assets* . . . . 0.77% 0.71%(b) 0.80%
Ratio of net investment income to average
net assets* . . . . . . . . . . . . . . . . . . 4.04% 2.39%(b) 6.00%
</TABLE>
- --------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on February 18, 1992.
(b) Annualized.
See notes to financial statements.
28
B-130
<PAGE> 336
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS JUNE 30, 1995
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
----------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------------------
1995 1994 1993
----------------------------------- --------------------------------- -------------------
FIDUCIARY CLASS A SERVICE (a) FIDUCIARY CLASS A RETIREMENT FIDUCIARY CLASS A
---------- -------- ----------- ---------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- -------- ------- ---------- ------- ------- -------- -------
Investment Activities
Net investment income . . 0.052 0.050 0.041 0.031 0.027 0.008 0.030 0.030
---------- -------- ------- ---------- ------- ------- -------- -------
Less: Distributions
Net investment income . . (0.052) (0.050) (0.041) (0.031) (0.027) (0.008) (0.030) (0.030)
---------- -------- ------- ---------- ------- ------- -------- -------
NET ASSET VALUE,
END OF PERIOD . . . . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ======== ======= ========== ======= ======= ======== =======
Total Return . . . . . . . 5.34% 5.08% (a) 3.19% 2.93% 0.79%(d) 3.09% 2.83%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000). . . . . . $1,965,416 $201,968 $1,600,876 $74,759 $ 40 $979,275 $61,106
Ratio of expenses to
average net assets . . 0.41% 0.67% 1.42%(c) 0.40% 0.65% 1.18%(c) 0.44% 0.65%
Ratio of net investment
income to average net
assets . . . . . . . . 5.27% 5.02% 4.52%(c) 3.18% 2.92% 3.03%(c) 3.05% 2.67%
Ratio of expenses to
average net assets *. . 0.57% 0.92% 1.60%(c) 0.59% 0.90% 1.36%(c) 0.62% 0.99%
Ratio of net investment
income to average net
assets * . . . . . . . 5.12% 4.77% 5.23%(c) 2.99% 2.67% 2.85%(c) 2.87% 2.33%
</TABLE>
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
-----------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------
1992 1991
------------------------- ---------
FIDUCIARY CLASS A (b) FIDUCIARY
--------- ----------- ---------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . $ 1.000 $1.000 $ 1.000
-------- ------ --------
Investment Activities
Net investment income . . 0.045 0.013 0.069
-------- ------ --------
Less: Distributions
Net investment income . . (0.045) (0.013) (0.069)
-------- ------ --------
NET ASSET VALUE,
END OF PERIOD . . . . . . . $ 1.000 $1.000 $ 1.000
======== ====== ========
Total Return . . . . . . . 4.64% 3.51%(c) 7.12%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000). . . . . . $946,504 $ 511 $760,726
Ratio of expenses to
average net assets . . 0.59% 0.79%(c) 0.68%
Ratio of net investment
income to average net
assets . . . . . . . . 4.49% 3.40%(c) 6.86%
Ratio of expenses to
average net assets *. . 0.76% 0.94%(c) 0.83%
Ratio of net investment
income to average net
assets * . . . . . . . 4.32% 3.25%(c) 6.71%
</TABLE>
- ---------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Service Shares commenced offering on January 17, 1994 when they were
designated as "Retirement" Shares. On April 4, 1995, the name of the
Retirement Shares was changed to "Service" Shares. As of June 1, 1995,
Service Shares transferred to Class A Shares. As of June 30, 1995, there
were no shareholders in the Service Class. The return for the period from
July 1, 1994 to June 1, 1995 for the Service Shares was 4.11%.
(b) Class A Shares commenced offering on February 18, 1992.
(c) Annualized.
(d) Not annualized.
See notes to financial statements.
29
B-131
<PAGE> 337
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS JUNE 30, 1995
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET FUND
------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------------ ------------------ ------------------ ---------------------- ---------
FIDUCIARY CLASS A FIDUCIARY CLASS A FIDUCIARY CLASS A FIDUCIARY CLASS A (a) FIDUCIARY
--------- ------- --------- ------- --------- ------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- ------- -------- ------- -------- ------- -------- ------- --------
Investment Activities
Net investment income . . 0.032 0.030 0.021 0.021 0.021 0.019 0.034 0.009 0.050
-------- ------- -------- ------- -------- ------- -------- ------- --------
Less: Distributions
Net investment income . . (0.032) (0.030) (0.021) (0.021) (0.021) (0.019) (0.034) (0.009) (0.050)
-------- ------- -------- ------- -------- ------- -------- ------- --------
NET ASSET VALUE,
END OF PERIOD . . . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======= ======== ======= ======== ======= ======== ======= ========
Total Return 3.28% 3.02% 2.16% 1.96% 2.15% 1.89% 3.47% 2.48%(b) 5.17%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) . . . . . $437,743 $56,518 $352,702 $41,595 $175,277 $18,932 $170,961 $ 122 $166,200
Ratio of expenses to
average net assets. . . 0.41% 0.66% 0.40% 0.65% 0.46% 0.66% 0.43% 0.84%(b) 0.32%
Ratio of net investment
income to average
net assets . . . . . . 3.26% 3.01% 2.13% 1.92% 2.12% 1.82% 3.41% 2.44%(b) 5.04%
Ratio of expenses to
average net assets *. . 0.59% 0.94% 0.60% 0.91% 0.66% 1.01% 0.80% 0.99%(b) 0.67%
Ratio of net investment
income to average net
assets * . . . . . . . 3.08% 2.73% 1.93% 1.66% 1.92% 1.47% 3.04% 2.29%(b) 4.69%
</TABLE>
- ---------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on February 18, 1992.
(b) Annualized.
See notes to financial statements.
30
B-132
<PAGE> 338
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS JUNE 30, 1995
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET FUND
------------------------------------------------------------------------
JUNE 9, JANUARY 26,
YEAR ENDED JUNE 30, 1993 TO 1993 TO
------------------------------------------ JUNE 30, JUNE 30,
1995 1994 1993 (a) 1993 (a)
------------------- ------------------- --------- -----------
FIDUCIARY CLASS A FIDUCIARY CLASS A FIDUCIARY CLASS A
--------- ------- --------- ------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income . . . . . 0.032 0.029 0.022 0.021 0.013 0.009
------- ------- ------- ------- ------- -------
Less: Distributions
Net investment income . . . . . (0.032) (0.029) (0.022) (0.021) (0.013) (0.009)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= =======
Total Return . . . . . . . . . . 3.20% 2.98% 2.25% 2.09% 2.14%(b) 2.34%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) . . . . . . . . $51,806 $35,790 $55,375 $37,356 $ 3,500 $25,125
Ratio of expenses to average
net assets . . . . . . . . . 0.41% 0.63% 0.34% 0.44% 0.08%(b) 0.26%(b)
Ratio of net investment income
to average net assets . . . . 3.13% 2.91% 2.29% 2.05% 2.07%(b) 2.03%(b)
Ratio of expenses to average
net assets * . . . . . . . . 0.60% 0.95% 0.57% 0.94% 0.51%(b) 0.92%(b)
Ratio of net investment income
to average net assets * . . . 2.94% 2.59% 2.06% 1.55% 1.64%(b) 1.37%(b)
</TABLE>
- ---------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
See notes to financial statements.
31
B-133
<PAGE> 339
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1995
To the Shareholders and Board of Trustees of
The One Group:
We have audited the accompanying statements of assets and liabilities of the
U.S. Treasury Securities Money Market Fund, the Prime Money Market Fund, the
Municipal Money Market Fund and the Ohio Municipal Money Market Fund (four
series of The One Group), including the schedules of portfolio investments, as
of June 30, 1995, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the periods indicated
herein. These financial statements and financial highlights are the
responsibility of The One Group's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
U.S. Treasury Securities Money Market Fund, the Prime Money Market Fund, the
Municipal Money Market Fund and the Ohio Municipal Money Market Fund of The One
Group as of June 30, 1995, the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods indicated
herein, in conformity with generally accepted accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
August 18, 1995
32
B-134
<PAGE> 340
THE ONE GROUP FAMILY OF MUTUAL FUNDS
TREASURY ONLY MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<S> <C>
U.S. TREASURY BILLS (57.8%):
$25,000 6.14%, 8/10/95 . . . . . . . . . . . . . . . . . . . . . . . $ 24,829
5,191 5.66%, 8/24/95 . . . . . . . . . . . . . . . . . . . . . . . 5,147
16,017 5.68%, 8/24/95 . . . . . . . . . . . . . . . . . . . . . . . 15,880
1,800 5.72%, 8/24/95 . . . . . . . . . . . . . . . . . . . . . . . 1,785
2,806 5.51%, 9/7/95 . . . . . . . . . . . . . . . . . . . . . . . . 2,777
3,516 5.59%, 9/7/95 . . . . . . . . . . . . . . . . . . . . . . . . 3,479
12,443 5.59%, 9/7/95 . . . . . . . . . . . . . . . . . . . . . . . . 12,312
7,281 5.48%, 9/14/95 . . . . . . . . . . . . . . . . . . . . . . . 7,198
48,639 5.47%, 9/21/95 . . . . . . . . . . . . . . . . . . . . . . . 48,033
1,451 5.42%, 9/28/95 . . . . . . . . . . . . . . . . . . . . . . . 1,432
11,000 5.47%, 9/28/95 . . . . . . . . . . . . . . . . . . . . . . . 10,851
416 5.49%, 9/28/95 . . . . . . . . . . . . . . . . . . . . . . . 410
10,000 5.82%, 10/26/95 . . . . . . . . . . . . . . . . . . . . . . . 9,811
331 5.61%, 11/2/95 . . . . . . . . . . . . . . . . . . . . . . . 325
1,280 5.68%, 11/16/95 . . . . . . . . . . . . . . . . . . . . . . . 1,252
20,000 5.68%, 11/16/95 . . . . . . . . . . . . . . . . . . . . . . . 19,565
1,962 5.38%, 12/21/95 . . . . . . . . . . . . . . . . . . . . . . . 1,911
--------
Total U.S. Treasury Bills 166,997
--------
U.S. TREASURY NOTES (41.5%):
50,000 8.88%, 7/15/95 . . . . . . . . . . . . . . . . . . . . . . . 50,056
50,000 4.63%, 8/15/95 . . . . . . . . . . . . . . . . . . . . . . . 49,934
20,000 4.00%, 1/31/96 . . . . . . . . . . . . . . . . . . . . . . . 19,791
--------
Total U.S. Treasury Notes 119,781
--------
Total Investments (Cost--$286,778)(a) $286,778
========
</TABLE>
- ---------
Percentages indicated are based on net assets of $288,697.
(a) Cost for federal income tax and financial reporting purposes are the same.
See notes to financial statements.
7
B-135
<PAGE> 341
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Government Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS FUNDS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<S> <C>
U.S. Government Agencies (53.6%):
Federal Farm Credit Bank:
$ 23,000 6.09%, 9/8/95 . . . . . . . . . . . . . . . . . . . . . . . $ 22,732
14,000 5.99%, 9/29/95 . . . . . . . . . . . . . . . . . . . . . . 13,790
5,000 5.97%, 3/4/96 . . . . . . . . . . . . . . . . . . . . . . . 4,795
10,250 6.38%, 5/1/96 . . . . . . . . . . . . . . . . . . . . . . . 10,250
10,000 5.80%, 5/3/96 . . . . . . . . . . . . . . . . . . . . . . . 9,505
Federal Home Loan Bank:
10,000 6.18%, 12/18/95 . . . . . . . . . . . . . . . . . . . . . . 9,708
5,240 8.10%, 3/25/96 . . . . . . . . . . . . . . . . . . . . . . 5,304
6,600 6.43%, 7/17/96 . . . . . . . . . . . . . . . . . . . . . . 6,601
Federal Home Loan Mortgage Corp.:
14,000 5.95%, 3/29/96 . . . . . . . . . . . . . . . . . . . . . . 13,371
10,000 5.86%, 5/1/96 . . . . . . . . . . . . . . . . . . . . . . . 9,503
Federal National Mortgage Assoc.:
13,865 6.03%, 8/8/95 . . . . . . . . . . . . . . . . . . . . . . . 13,777
20,000 6.26%*, 8/14/95 . . . . . . . . . . . . . . . . . . . . . . 19,848
20,000 6.04%, 8/28/95 . . . . . . . . . . . . . . . . . . . . . . 19,805
18,400 6.00%, 9/21/95 . . . . . . . . . . . . . . . . . . . . . . 18,149
4,000 5.55%*, 6/2/99 . . . . . . . . . . . . . . . . . . . . . . 4,000
20,000 5.58%*, 7/26/99 . . . . . . . . . . . . . . . . . . . . . . 20,000
10,000 5.58%*, 9/22/99 . . . . . . . . . . . . . . . . . . . . . . 10,000
Student Loan Marketing Assoc:
30,000 5.68%*, 10/14/97 . . . . . . . . . . . . . . . . . . . . . 29,978
25,000 5.70%*, 11/24/97 . . . . . . . . . . . . . . . . . . . . . 25,000
25,000 5.70%*, 9/28/98 . . . . . . . . . . . . . . . . . . . . . . 25,000
40,000 5.68%*, 11/10/98 . . . . . . . . . . . . . . . . . . . . . 40,000
10,000 5.72%*, 1/13/99 . . . . . . . . . . . . . . . . . . . . . . 9,999
10,000 5.72%*, 2/8/99 . . . . . . . . . . . . . . . . . . . . . . 10,000
25,000 5.71%*, 2/22/99 . . . . . . . . . . . . . . . . . . . . . . 25,000
10,000 5.73%*, 8/2/99 . . . . . . . . . . . . . . . . . . . . . . 9,994
--------
Total U.S. Government Agencies 386,109
--------
U.S. TREASURY BILLS (1.3%):
$ 10,000 5.92%, 5/2/96 . . . . . . . . . . . . . . . . . . . . . . . 9,497
--------
Total U.S. Treasury Bills 9,497
--------
Total Investments 395,606
--------
REPURCHASE AGREEMENTS (45.1%):
85,000 Hong Kong Shanghai Banc Corp., 6.19%,
7/3/95, dated 6/30/95 (Collateralized by
$84,269 various government securities,
0.00%-9.55%, 7/5/95-3/22/05, market
value-$85,865) . . . . . . . . . . . . . . . . . . . . . 85,000
140,040 Lehman Brothers Holdings Inc., 6.20%,
7/3/95, dated 6/30/95 (Collateralized by
$143,653 various government securities,
7/3/95-5/3/96, market value-$142,841) . . . . . . . . . . 140,040
100,000 Prudential Securities, 6.20%,
7/3/95, dated 6/30/95 (Collateralized by
$143,998 various government securities,
0.00%-9.88%, 9/20/95-1/1/29, market
value-$101,314) . . . . . . . . . . . . . . . . . . . . 100,000
--------
Total Repurchase Agreements 325,040
--------
Total (Cost--$720,646)(a) $720,646
========
</TABLE>
- ----------
Percentages indicated are based on net assets of $720,699.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable Rate Securities that have interest rates that change weekly based
on the 3 month treasury bill bond equivalent yield. The final maturity date
is stated, however, the maturity date for valuation purposes is the next
reset date. The rate shown on the Schedule of Portfolio Investments is the
reset rate in effect on 6/30/95.
See notes to financial statements.
8
B-136
<PAGE> 342
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands
except per share amounts)
TREASURY ONLY GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
------------- ------------
<S> <C> <C>
ASSETS:
Investments, at value . . . . . . . . . . . . . . $286,778 $395,606
Repurchase agreements . . . . . . . . . . . . . . 325,040
-------- --------
286,778 720,646
Cash . . . . . . . . . . . . . . . . . . . . . . 2
Interest receivable . . . . . . . . . . . . . . . 3,232 2,505
Receivable from advisor . . . . . . . . . . . . . 3
Prepaid expenses and other assets . . . . . . . . 1 3
Deferred organization costs . . . . . . . . . . . 11 63
-------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . 290,024 723,220
LIABILITIES:
Dividends payable . . . . . . . . . . . . . . . . 1,200 2,218
Accrued expenses and other payables:
Investment advisory fees . . . . . . . . . . . . 19 46
Administration fees . . . . . . . . . . . . . . . 12 29
Other . . . . . . . . . . . . . . . . . . . . . . 96 228
-------- --------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . 1,327 2,521
-------- --------
NET ASSETS:
Capital . . . . . . . . . . . . . . . . . . . . . 288,676 720,773
Accumulated undistributed net realized gains
(losses) from investment transactions . . . . . 21 (74)
-------- --------
NET ASSETS . . . . . . . . . . . . . . . . . . . $288,697 $720,699
======== ========
Outstanding shares of beneficial interest--
Institutional Shares . . . . . . . . . . . . . . 288,676 720,773
======== ========
Net asset value--offering and redemption
price per share . . . . . . . . . . . . . . . . $1.00 $1.00
======== ========
Investments, at amortized cost . . . . . . . . . $286,778 $720,646
======== ========
</TABLE>
See notes to financial statements.
9
B-137
<PAGE> 343
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands)
TREASURY GOVERNMENT
ONLY MONEY MONEY
MARKET MARKET
FUND FUND
---------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Interest income . . . . . . . . . . . . . . . . . . $13,252 $39,811
EXPENSES:
Investment advisory fees . . . . . . . . . . . . . 198 579
Administration fees . . . . . . . . . . . . . . . . 147 409
Custodian and accounting fees . . . . . . . . . . . 49 142
Legal and audit fees . . . . . . . . . . . . . . . 43 121
Organization costs . . . . . . . . . . . . . . . . 5 27
Trustees' fees and expenses . . . . . . . . . . . . 9 13
Transfer agent fees . . . . . . . . . . . . . . . . 19 19
Registration and filing fees . . . . . . . . . . . 25 292
Printing costs . . . . . . . . . . . . . . . . . . 14 29
Other . . . . . . . . . . . . . . . . . . . . . . . 14 41
------- -------
Total expenses before waivers/reimbursements . . . 523 1,672
Less waivers/reimbursements . . . . . . . . . . . . (17) (125)
------- -------
NET EXPENSES . . . . . . . . . . . . . . . . . . . 506 1,547
------- -------
Net Investment Income . . . . . . . . . . . . . . . 12,746 38,264
------- -------
REALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) from investment
transactions . . . . . . . . . . . . . . . . . . 29 (66)
------- -------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . . . . . . $12,775 $38,198
======= =======
</TABLE>
See notes to financial statements.
10
B-138
<PAGE> 344
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands)
TREASURY ONLY MONEY GOVERNMENT MONEY MARKET
MARKET FUND FUND
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income . . . . . . . . . . . . $ 12,746 $ 5,499 $ 38,264 $ 17,918
Net realized gains (losses) from investment
transactions . . . . . . . . . . . . . . . 29 (6) (66) (8)
----------- ----------- ----------- -----------
Change in net assets resulting from operations . . 12,775 5,493 38,198 17,910
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income . . . . . . . . . . . . (12,746) (5,499) (38,264) (17,918)
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued . . . . . . . . . 894,833 939,006 2,818,461 1,934,259
Dividends reinvested . . . . . . . . . . . . 1,574 1,095 12,982 5,040
Cost of shares redeemed . . . . . . . . . . . (825,464) (782,700) (2,802,931) (1,492,029)
----------- ----------- ----------- -----------
Change in net assets from share transactions . . . 70,943 157,401 28,512 447,270
----------- ----------- ----------- -----------
Change in Net Assets . . . . . . . . . . . . . . . 70,972 157,395 28,446 447,262
NET ASSETS:
Beginning of period . . . . . . . . . . . . . 217,725 60,330 692,253 244,991
----------- ----------- ----------- -----------
End of period . . . . . . . . . . . . . . . . $ 288,697 $ 217,725 $ 720,699 $ 692,253
=========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued . . . . . . . . . . . . . . . . . . . 894,833 939,006 2,818,461 1,934,259
Reinvested . . . . . . . . . . . . . . . . . 1,574 1,095 12,982 5,040
Redeemed . . . . . . . . . . . . . . . . . . (825,464) (782,700) (2,802,931) (1,492,029)
----------- ----------- ----------- -----------
Change in shares . . . . . . . . . . . . . . . . . 70,943 157,401 28,512 447,270
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
11
B-139
<PAGE> 345
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1995
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as a diversified, open-end investment
company established as a Massachusetts business trust. The Trust is
registered to offer five classes of shares: Fiduciary, Class A, Class B,
Institutional, and Service. The Trust currently offers twenty-four funds.
The accompanying financial statements and financial highlights are those of
the Treasury Only Money Market Fund and the Government Money Market Fund
(individually, a "Fund" collectively, the "Funds") only.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies in conformity
with generally accepted accounting principles consistently followed by the
Trust in preparation of its financial statements.
SECURITY VALUATION:
Securities are valued utilizing the amortized cost method permitted in
accordance with Rule 2a-7 under the 1940 Act. Under the amortized cost
method, discount or premium is amortized on a constant basis to the
maturity of the security. In addition, the Funds may not (a) purchase
any instrument with a remaining maturity greater than thirteen months
unless such instrument is subject to a demand feature, or (b) maintain a
dollar-weighted average maturity which exceeds 90 days.
REPURCHASE AGREEMENTS:
The Funds may invest in repurchase agreements with institutions that the
Fund's investment advisor has determined are creditworthy. Each
repurchase agreement is recorded at cost. The Fund requires that the
securities purchased in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a counterparty default. The seller, under the
repurchase agreement, is required to maintain the value of the
securities held at not less than the repurchase price, including accrued
interest.
SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on a trade date basis. Net
realized gains or losses on sales of securities are determined on the
specific identification cost method. Interest income and expenses are
recognized on the accrual basis. Interest income, including any discount
or premium, is accrued as earned using the effective interest method.
EXPENSES:
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one Fund of
the Trust are allocated among the respective Funds.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid
monthly. Net income for this purpose consists of interest accrued and
discount earned (including both original issue discount and market
discount) less amortization of any market premium and accrued expenses.
Net realized capital gains, if any, are distributed at least annually.
Net investment income and net capital gain distributions are determined
in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are
primarily due to differing treatments for expiring capital loss
carryforwards and deferrals of certain losses.
Continued
12
B-140
<PAGE> 346
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
ORGANIZATION COSTS:
Costs incurred by the Trust in connection with its organization,
including the fees and expenses of registering and qualifying its shares
for distribution have been deferred and are being amortized using the
straight-line method over a period of five years beginning with the
commencement of each Fund's operations. All such costs have been
allocated among the Funds of the Trust pro-rata, based on the relative
net assets of each Fund. In the event that any of the initial shares are
redeemed during such period by any holder thereof, the related Fund will
be reimbursed by such holder for any unamortized organization costs in
the proportion as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of redemption.
FEDERAL INCOME TAXES:
Each Fund intends to continue to qualify as a regulated investment
company by complying with the provisions available to certain investment
companies as defined in applicable sections of the Internal Revenue
Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or
substantially all, federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified
or reclassified into one or more classes. Currently, shares of the Trust
are registered to be offered through thirty series and five classes:
Fiduciary, Class A, Class B, Institutional and Service. Shareholders are
entitled to one vote for each full share held and will vote in the
aggregate and not by class or series, except as otherwise expressly
required by law or when the Board of Trustees has determined that the
matter to be voted on affects only the interest of shareholders of a
particular class or series.
4. INVESTMENT ADVISORY AND ADMINISTRATIVE AGREEMENTS:
The Trust and Banc One Investment Advisors Corporation (the "Advisor") are
parties to an investment advisory agreement under which the Advisor is
entitled to receive a fee, computed daily and paid monthly, at an annual
rate of 0.08% of the average daily net assets of each Fund.
The Trust and 440 Financial Group of Worcester ("440 Financial") are
parties to an administrative agreement under which 440 Financial (the
"Administrator") provides services for a fee that is computed daily and
payable monthly, at an annual rate of 0.05% of each Fund's average daily
net assets. Effective April 1, 1995, The Shareholder Services Group, Inc,
d/b/a 440 Financial became the Administrator to the Trust. Also effective
April 1, 1995, the Advisor became the Sub-Administrator pursuant to an
agreement between the Administrator and the Advisor. The Advisor assumed
many of the administrative duties, for which it receives a fee paid by the
Administrator.
Certain officers of the Trust are also officers of the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
13
B-141
<PAGE> 347
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
The Advisor and Administrator have voluntarily agreed to waive a portion of
their fees and to reimburse the Funds for certain expenses so that total
expenses of each Fund would not exceed certain annual expense limitations.
For the year ended June 30, 1995, fees in the following amounts were waived
or reimbursed to the Funds:
<TABLE>
<CAPTION>
GOVERNMENT
TREASURY ONLY MONEY
MONEY MARKET
MARKET FUND FUND
------------- ----------
<S> <C> <C>
INVESTMENT ADVISOR FEES:
Waivers/reimbursements ............. $16,794 $101,302
ADMINISTRATION FEES:
Waivers/reimbursements ............. $ 23,414
</TABLE>
5. FEDERAL TAX INFORMATION:
As of June 30, 1995, the Government Money Market Fund had the following
capital loss carryforwards which are available to offset future capital
gains, if any:
<TABLE>
<S> <C>
Expiring in 2002 . . . . . . . . . . . . . . . $ 7,782
Expiring in 2003 . . . . . . . . . . . . . . . $26,184
-------
$33,966
=======
</TABLE>
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the fiscal year ended
June 30, 1996. Losses deferred for the Government Money Market Fund
amounted to $39,961 at June 30, 1995.
14
B-142
<PAGE> 348
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS JUNE 30, 1995
<TABLE>
<CAPTION>
TREASURY ONLY MONEY MARKET FUND
---------------------------------------------
APRIL 16,
FOR THE YEAR ENDED JUNE 30, 1993 TO
--------------------------- JUNE 30,
1995 1994 1993(A)
-------- -------- ---------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
-------- -------- -------
Investment Activities
Net investment income . . . . . . . . . . . . . . . . . . 0.051 0.032 0.006
-------- -------- -------
Distributions
Net investment income . . . . . . . . . . . . . . . . . . (0.051) (0.032) (0.006)
-------- -------- -------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
======== ======== =======
Total Return . . . . . . . . . . . . . . . . . . . . . . . 5.22% 3.23% 2.96%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . . . . . . . . $288,697 $217,725 $60,330
Ratio of expenses to average net assets . . . . . . . . . 0.20% 0.15% 0.07%(b)
Ratio of net investment income to average net assets . . 5.14% 3.23% 2.95%(b)
Ratio of expenses to average net assets* . . . . . . . . 0.21% 0.22% 0.33%(b)
Ratio of net investment income to average net assets* . . 5.13% 3.16% 2.69%(b)
</TABLE>
- ---------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
See notes to financial statements.
15
B-143
<PAGE> 349
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS JUNE 30, 1995
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET FUND
----------------------------------------------
JUNE 14,
FOR THE YEAR ENDED JUNE 30, 1993 TO
--------------------------- JUNE 30,
1995 1994 1993(a)
-------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
-------- -------- --------
Investment Activities
Net investment income . . . . . . . . . . . . . . . . . . 0.053 0.033 0.001
-------- -------- --------
Distributions
Net investment income . . . . . . . . . . . . . . . . . . (0.053) (0.033) (0.001)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
======== ======== ========
Total Return . . . . . . . . . . . . . . . . . . . . . . . 5.41% 3.40% 3.28%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . . . . . . . . $720,699 $692,253 $244,991
Ratio of expenses to average net assets . . . . . . . . . 0.21% 0.11% 0.07%(b)
Ratio of net investment income to average net assets . . 5.28% 3.41% 3.13%(b)
Ratio of expenses to average net assets* . . . . . . . . 0.22% 0.20% 0.33%(b)
Ratio of net investment income to average net assets* . . 5.27% 3.32% 2.87%(b)
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
See notes to financial statements.
16
B-144
<PAGE> 350
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1995
To the Shareholders and Board of Trustees of
The One Group:
We have audited the accompanying statements of assets and liabilities of the
Treasury Only Money Market Fund and the Government Money Market Fund (two series
of The One Group), including the schedules of portfolio investments, as of June
30, 1995, and the related statements of operations for the year then ended, the
statements of changes in net assets for the two years in the period then ended,
and financial highlights for each of the periods indicated herein. These
financial statements and financial highlights are the responsibility of The One
Group's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1995 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury Only Money Market Fund and the Government Money Market Fund of The One
Group as of June 30, 1995, the results of their operations for the year then
ended, the changes in their net assets for the two years in the period then
ended, and the financial highlights for each of the periods indicated herein, in
conformity with generally accepted accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
August 18, 1995
17
B-145
<PAGE> 351
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Asset Allocation Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- ------
<S> <C> <C>
COMMON STOCKS (39.3%):
Air Transport (0.4%):
970 AMR Corp. (b) ...................................... $ 72
1,710 Federal Express Corp. (b) .......................... 104
-----
176
-----
Aircraft (1.0%):
3,000 Boeing Co. ......................................... 188
2,000 United Technologies Corp. .......................... 156
1,980 Lockheed Martin Corp. .............................. 125
-----
469
-----
Aluminum (0.4%):
2,000 Alumax, Inc. (b) ................................... 62
1,400 Aluminum Co. of America ............................ 70
-----
132
-----
Apparel (0.6%):
1,960 Nike, Inc., Class B ................................ 165
2,110 V F Corp. .......................................... 113
-----
278
-----
Banks (1.8%):
4,320 BankAmerica Corp. .................................. 227
1,500 Barnett Banks, Inc. ................................ 77
1,500 Citicorp ........................................... 87
2,000 Comerica, Inc. ..................................... 64
1,790 Nationsbank Corp. .................................. 96
3,910 NBD Bancorp, Inc. .................................. 125
1,000 U.S. Bancorp ....................................... 24
650 Wells Fargo & Co. .................................. 117
-----
817
-----
Beverages (1.2%):
1,300 Anheuser Busch Cos., Inc. .......................... 74
4,230 Coca Cola Co. ...................................... 270
4,190 PepsiCo., Inc. ..................................... 191
-----
535
-----
Broadcasting (0.2%):
930 Capital Cities ABC, Inc. ........................... 98
-----
Business Equipment & Services (0.8%):
3,510 Browning Ferris Industries, Inc. ................... 127
2,500 Olsten Corp. ....................................... 82
3,700 Service Corp., International ....................... 117
1,700 WMX Technologies, Inc. ............................. 48
-----
374
-----
Capital Equipment (0.5%):
1,000 General Signal Corp. ............................... 40
5,000 Giddings & Lewis, Inc. ............................. 89
2,820 Harnischfeger Industries, Inc. ..................... 98
-----
227
-----
Chemicals--Inorganic & Petroleum (1.0%):
2,410 Dow Chemical Co. ................................... 173
3,170 DuPont (EI) de Nemours & Co. ....................... 218
1,830 Schulman A., Inc. .................................. 53
-----
444
-----
Chemicals--Specialty (0.1%):
4,000 Crompton & Knowles Corp. ........................... 57
-----
Computer--Main/Mini (1.8%):
2,600 Hewlett Packard Co. ................................ 194
3,850 International Business Machines Corp. .............. 370
4,300 Silicon Graphics, Inc. ............................. 171
800 Xerox Corp. ........................................ 94
-----
829
-----
Computer--Micro (0.6%):
3,490 Apple Computer, Inc. ............................... 162
2,000 Compaq Computer Corp. .............................. 91
-----
253
-----
Computers--Peripheral (0.8%):
1,500 Autodesk, Inc. ..................................... 65
2,850 Microsoft Corp. (b) ................................ 258
890 3 Com Corp. (b) .................................... 60
-----
383
-----
Construction Materials (0.2%):
2,200 PPG Industries, Inc. ............................... 95
-----
Containers (0.2%):
3,000 Ball Corp. ......................................... 105
-----
Cosmetic/Toiletry (0.1%):
3,000 Maybelline, Inc. ................................... 62
-----
Defense (0.2%):
940 Raytheon Co. ....................................... 73
-----
Electrical Equipment (1.9%):
8,480 General Electric Co. ............................... 478
1,400 Grainger W.W., Inc. ................................ 82
1,000 Johnson Controls, Inc. ............................. 57
2,200 Tyco Labs, Inc. .................................... 119
4,000 Westinghouse Electric Corp. ........................ 58
700 Dover Corp. ........................................ 51
-----
845
-----
Electronic Components (1.8%):
2,440 AMP, Inc. .......................................... 103
6,300 Intel Corp. ........................................ 399
3,980 Motorola, Inc. ..................................... 267
450 Texas Instruments, Inc. ............................ 60
-----
829
-----
</TABLE>
Continued
23
B-146
<PAGE> 352
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Asset Allocation Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- ------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Farm Machinery (0.1%):
600 Deere & Co. ........................................ $ 51
------
Food & Related (0.5%):
3,730 Archer Daniels Midland Co. ......................... 69
1,000 CPC International, Inc. ............................ 62
3,170 Sara Lee Corp. ..................................... 90
------
221
------
Forest/Paper Products (1.3%):
1,100 Consolidated Papers, Inc. .......................... 63
1,970 International Paper Co. ............................ 169
1,500 Kimberly Clark Corp. ............................... 90
1,800 Mead Corp. ......................................... 107
2,650 Willamette Industries, Inc. ........................ 147
------
576
------
Furniture/Furnishings (0.2%):
4,430 Newell Co. ......................................... 109
------
Healthcare--Drugs (1.9%):
2,700 Abbott Laboratories ................................ 109
4,060 Baxter International, Inc. ......................... 148
1,220 Forest Laboratories, Class A (b) ................... 54
5,650 Merck & Co., Inc. .................................. 277
1,900 Pfizer, Inc. ....................................... 176
2,000 Schering Plough .................................... 88
------
852
------
Healthcare--General (1.6%):
1,500 American Home Products Corp. ....................... 116
5,100 Biomet, Inc. (b) ................................... 79
3,180 Bristol-Myers Squibb Co. ........................... 217
4,060 Johnson & Johnson .................................. 275
------
687
------
Hospital Supply & Management (0.8%):
4,100 Columbia/HCA Healthcare Corp. ...................... 177
3,250 Health Management Assoc., Inc., Class A (b) ........ 95
560 Medtronic, Inc. .................................... 43
900 PacifiCare Health Systems-A (b) .................... 46
------
361
------
Household--General Products (0.7%):
2,360 American Greetings Corp., Class A .................. 69
3,300 Procter & Gamble Co. ............................... 237
------
306
------
Insurance--Life (0.1%):
1,480 Providan Corp. ..................................... 54
------
Insurance--Property/Casual (0.9%):
1,680 American International Group, Inc. ................. 192
1,400 Cincinnati Financial ............................... 78
700 MBIA, Inc. ......................................... 46
2,330 St. Paul Cos., Inc. ................................ 115
------
431
------
Leisure Time Industries (0.5%):
3,130 Walt Disney Co. .................................... 174
1,000 Hasbro, Inc. ....................................... 32
------
206
------
Mining (0.2%):
3,590 Cyprus Amax Minerals ............................... 102
------
Motor Vehicle Parts (0.1%):
1,480 Dana Corp. ......................................... 42
------
Motor Vehicles (0.6%):
4,000 Ford Motor Co. ..................................... 119
2,880 General Motors Corp. ............................... 135
------
254
------
Multiple Industry (1.0%):
900 ALCO Standard Corp. ................................ 72
2,420 Allied Signal, Inc. ................................ 108
3,790 Corning, Inc. ...................................... 124
1,340 ITT Corp. .......................................... 157
------
461
------
Petroleum--Domestic (0.8%):
1,400 Amoco Corp. ........................................ 93
1,610 Atlantic Richfield Co. ............................. 177
2,400 Tenneco, Inc. ...................................... 110
------
380
------
Petroleum--International (2.8%):
1,540 Chevron Corp. ...................................... 72
6,790 Exxon Corp. ........................................ 479
2,400 Mobil Corp. ........................................ 230
3,400 Royal Dutch Petroleum .............................. 414
1,310 Texaco, Inc. ....................................... 86
------
1,281
------
Petroleum--Services (0.3%):
3,190 Halliburton Co. .................................... 114
------
Publishing (0.3%):
1,920 Tribune Co. ........................................ 118
------
Railroad (0.1%):
1,000 Norfolk Southern Corp. ............................. 67
------
Restaurants (0.9%):
4,260 Bob Evans Farms, Inc. .............................. 87
2,000 Lone Star Restaurants .............................. 61
4,100 McDonald's Corp. ................................... 160
</TABLE>
Continued
24
B-147
<PAGE> 353
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Asset Allocation Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- -------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
5,000 Wendy's International, Inc. ........................ $ 89
-------
397
-------
Retail--Food Stores (0.1%):
2,000 American Stores Co. ................................ 56
-------
Retail--General Merchandise (1.0%):
3,500 Sears Roebuck & Co. ................................ 210
9,340 Wal-Mart Stores, Inc. .............................. 250
-------
460
-------
Retail--Specialty (0.6%):
3,550 Circuit City Stores, Inc. .......................... 112
1,900 Home Depot, Inc. ................................... 77
3,190 Smith Food & Drug .................................. 63
-------
252
-------
Securities & Commercial Brokers (0.6%):
2,570 American Express Co. ............................... 90
900 Federal Home Loan Mortgage Corp. ................... 62
1,320 Federal National Mortgage Assoc .................... 125
-------
277
-------
Tires/Rubber Products (0.2%):
2,000 Goodyear Tire & Rubber Co. ......................... 83
-------
Tobacco (1.5%):
6,430 Philip Morris Cos., Inc. ........................... 478
3,450 RJR Nabisco Holdings Corp. ......................... 96
4,200 UST, Inc. .......................................... 125
-------
699
-------
Utilites--Electric (1.1%):
4,760 Central & South West Corp. ......................... 125
4,200 Consolidated Edison Co., Inc. ...................... 124
900 Duke Power Co. ..................................... 37
2,300 Northern States Power Co. .......................... 106
3,600 Texas Utilities Co. ................................ 124
-------
516
-------
Utilities--Gas/Pipeline (0.3%):
4,510 Enron Corp. ........................................ 158
-------
Utilities--Telephone (2.6%):
6,790 AT&T ............................................... 361
2,760 Ameritech Corp. .................................... 121
2,300 Bell Atlantic Corp. ................................ 129
1,800 Bellsouth Corp. .................................... 114
4,310 GTE Corp. .......................................... 147
1,320 Nynex Corp. ........................................ 53
2,890 SBC Communications, Inc. ........................... 138
4,120 Sprint Corp. ....................................... 139
-------
1,202
-------
Total Common Stocks ............................................ 17,854
-------
CORPORATE BONDS (12.7%):
500,000 AT&T Corp., 6.00%, 8/1/00 .......................... 486
500,000 AT&T Corp., 6.75%, 4/1/04 .......................... 513
500,000 Campbell Soup, 5.63%, 9/15/03 ...................... 471
500,000 Ford Motor Credit Corp., 8.38%, 1/15/00 ............ 534
520,204 Honda Auto 94-A-A, 4.80%, 8/15/99 .................. 514
500,000 J C Penney & Co., 5.38%, 11/15/98 .................. 482
500,000 John Deere Capital Corp., 4.63%, 9/2/96 ............ 492
250,000 Lehman Brothers Holdings, 6.38%, 6/1/98 ............ 246
500,000 Lehman Brothers, Inc., 9.88%, 10/15/00 ............. 561
435,070 The Money Store, 6.80%, 1/15/13 .................... 435
500,000 Union Pacific, 7.60%, 5/1/05 ....................... 527
500,000 Virginia Electric & Power, 6.63%, 4/1/03 ........... 501
-------
Total Corporate Bonds .......................................... 5,762
-------
MUNICIPAL BONDS (1.8%):
Ohio
800,000 Advanta Mortgage Loan Trust, 7.60%, 7/25/10 ........ 809
-------
Total Municipal Bonds .......................................... 809
-------
U.S. GOVERNMENT AGENCIES (13.4%):
Federal Home Loan Mortgage Corp.:
312,395 10.00%, 9/1/03 ..................................... 329
356,758 8.00%, 3/1/08 ...................................... 367
339,672 10.50%, 10/1/20 .................................... 369
Federal National Mortgage Assoc.:
1,000,000 4.40%, 9/8/95 ...................................... 968
1,000,000 5.53%, 2/10/99 ..................................... 977
534,542 8.00%, 6/1/24 ...................................... 545
969,189 8.00%, 6/1/24 ...................................... 988
Government National Mortgage Assoc.:
1,493,871 8.00%, 11/15/24 .................................... 1,531
-------
Total U.S. Government Agencies ................................. 6,074
-------
U.S. TREASURY BILLS (0.5%):
150,000 7/13/95 ........................................... 150
40,000 8/24/95 ........................................... 39
20,000 9/7/95 ........................................... 20
35,000 9/21/95 ........................................... 35
-------
Total U.S. Treasury Bills ...................................... 244
-------
U.S. TREASURY BONDS (3.8%):
1,500,000 8.13%, 8/15/19 ..................................... 1,747
-------
Total U.S. Treasury Bonds ...................................... 1,747
-------
U.S. TREASURY NOTES (11.7%):
500,000 5.13%, 3/31/98 ..................................... 490
1,500,000 7.00%, 4/15/99 ..................................... 1,551
</TABLE>
Continued
25
B-148
<PAGE> 354
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Asset Allocation Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- -------
<S> <C> <C>
U.S. TREASURY NOTES, CONTINUED:
$1,500,000 6.38%, 1/15/00 ..................................... $ 1,521
1,750,000 6.25%, 2/15/03 ..................................... 1,755
-------
Total U.S. Treasury Notes ...................................... 5,317
-------
Total Investments, at value .................................... 37,807
-------
REPURCHASE AGREEMENT (15.9%):
7,207,000 Lehman Brothers, 6.15%, dated 6/30/95,
due 7/3/95 (Collateralized by
$7,105,000 U.S. Treasury Notes, 6.75%,
2/28/97, market value--$7,360) .................... 7,207
-------
Total Repurchase Agreement ..................................... 7,207
-------
Total (Cost--$42,377)(a) ....................................... $45,014
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $45,422.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
approximately $39. Cost for federal income tax purposes differed from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ................................... $ 2,866
Unrealized depreciation ................................... (268)
-------
Net unrealized appreciation ............................... $ 2,598
=======
</TABLE>
(b) Represents non-income producing security.
At June 30, 1995, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
OPENING MARKET
# OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- --------- ---------------------------------------------- --------- ------
<S> <C> <C> <C>
22 S & P 500 September .......................... $5,905 $6,019
</TABLE>
See notes to financial statements.
26
B-149
<PAGE> 355
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Income Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS (89.8%):
Aircraft (2.3%):
70,000 Boeing Co. ......................................... $ 4,384
--------
Banks (4.1%):
76,754 BankAmerica Corp. 4,039
53,000 J.P. Morgan & Co., Inc. ............................ 3,717
--------
7,756
--------
Beverages (2.2%):
65,000 Coca Cola Co. ...................................... 4,144
--------
Building & Construction (0.8%):
30,000 Corning Delaware ................................... 1,534
--------
Business Equipment & Services (5.3%):
55,000 Browning Ferris Industries, Inc. ................... 1,987
90,000 Dun & Bradstreet Corp. ............................. 4,725
115,000 National Service Industries, Inc. .................. 3,320
--------
10,032
--------
Chemicals--Petroleum & Inorganic (6.3%):
65,000 ARCO Chemical Co. .................................. 2,949
68,000 Dow Chemical Co. ................................... 4,887
65,000 Grace W. R. & Co. .................................. 3,989
--------
11,825
--------
Chemicals--Specialty (2.4%):
125,000 Nalco Chemical Co. ................................. 4,547
--------
Computers--Main/Mini (3.3%):
25,000 Salomon, Inc. ...................................... 2,400
32,000 Xerox Corp. ........................................ 3,752
--------
6,152
--------
Cosmetics/Toiletry (2.1%):
80,000 International Flavors & Fragrances, Inc. ........... 3,980
--------
Food & Related (3.5%):
90,000 Campbell Soup Co. .................................. 4,410
65,000 ConAgra, Inc. ...................................... 2,267
--------
6,677
--------
Furniture/Furnishings (0.7%):
50,000 Masco Corp. ........................................ 1,350
--------
Health Care--Drugs (2.6%):
136,000 Baxter International, Inc. ......................... 4,947
--------
Health Care--General (7.9%):
60,000 American Home Products ............................. 4,642
73,000 Bristol-Myers Squibb Co. ........................... 4,973
60,000 Warner - Lambert Co. ............................... 5,183
--------
14,798
--------
Household--General Products (1.4%):
125,000 Jostens ............................................ $ 2,656
--------
Household--Major Appliances (1.8%):
100,000 Briggs & Stratton Corp. ............................ 3,450
--------
Insurance--Life (2.5%):
80,000 Transamerica Corp. ................................. 4,660
--------
Insurance--Property/Casualty (2.8%):
120,000 Lincoln National Corp. ............................. 5,250
--------
Multiple Industry (1.4%):
80,000 Corning, Inc. ...................................... 2,620
--------
Petroleum--Domestic (4.8%):
70,000 Amoco Corp. ........................................ 4,664
40,000 Atlantic Richfield Co. ............................. 4,390
--------
9,054
--------
Petroleum--International (7.2%):
70,000 Exxon Corp. ........................................ 4,944
45,000 Mobil Corp. ........................................ 4,320
35,000 Royal Dutch Petroleum .............................. 4,266
--------
13,530
--------
Petroleum Services (1.6%):
85,000 Halliburton Co. .................................... 3,039
--------
Photography Equipment (2.4%):
75,000 Eastman Kodak Co. .................................. 4,547
--------
Publishing (2.6%):
65,000 McGraw-Hill Cos., Inc. ............................. 4,932
--------
Retail--General Merchandise (2.9%):
90,000 Sears Roebuck & Co. ................................ 5,389
--------
Securities & Commercial Broker (2.3%):
125,000 American Express Co. ............................... 4,391
--------
Tobacco (2.9%):
73,000 Philip Morris Cos., Inc. ........................... 5,429
--------
Utilities--Electric (4.6%):
133,000 Central & South West Corp. ......................... 3,491
60,000 Duke Power Co. ..................................... 2,490
90,000 WPS Resources ...................................... 2,632
--------
8,613
--------
Utilities--Telephone (5.1%):
90,000 AT&T ............................................... 4,781
100,000 SBC Communications, Inc. ........................... 4,763
--------
9,544
--------
Total Common Stocks ............................................ 169,230
--------
</TABLE>
Continued
27
B-150
<PAGE> 356
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Income Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
PREFERRED STOCK (CONVERTIBLE) (6.7%):
80,000 ConAgra, Inc., Class E ............................. $ 2,830
70,000 General Motors Corp. ............................... 4,410
80,000 Sonoco Products .................................... 4,440
70,000 Westinghouse Electric .............................. 1,024
--------
Total Preferred Stock .......................................... 12,704
--------
CORPORATE BONDS (2.5%):
$2,500,000 Browning Ferris Industries, Inc., 6.25%,
8/15/12 .......................................... 2,513
2,500,000 Masco Corp., 5.25%, 2/15/12 ........................ 2,187
--------
Total Corporate Bonds .............................. 4,700
--------
Total Investments, at value ........................ 186,634
--------
REPURCHASE AGREEMENTS (0.8%):
1,416,000 Lehman Brothers, 6.15%, dated 6/30/95,
due 9/3/95 (Collateralized by
$1,400,000 U.S. Treasury Notes,
6.75%, 2/28/97, market value--$1,450) ............ 1,416
--------
Total Repurchase Agreements .................................... 1,416
--------
Total (Cost--$147,891)(a) ...................................... $188,050
========
</TABLE>
- ---------------
Percentages indicated are based on net assets of $188,180.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
approximately $7. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ..................... $41,700
Unrealized depreciation ..................... (1,548)
-------
Net unrealized appreciation ................. $40,152
=======
</TABLE>
See notes to financial statements.
28
B-151
<PAGE> 357
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS (94.9%):
Aircraft (1.3%):
19,349 Boeing Co. ......................................... $ 1,212
11,398 Lockheed Martin Corp. .............................. 719
6,729 McDonnell Douglas Corp. ............................ 517
2,728 Northrop Grumman Corp. ............................. 142
7,128 United Technologies Corp. .......................... 557
-------
3,147
-------
Air Transport (0.4%):
4,300 AMR Corp.(b) ....................................... 321
2,928 Delta Air Lines, Inc. .............................. 216
3,128 Federal Express Corp.(b) ........................... 190
8,200 Southwest Airlines ................................. 196
2,743 U.S. Air Group(b) .................................. 32
-------
955
-------
Aluminum (0.4%):
12,742 Alcan Aluminum Ltd. ................................ 385
10,072 Aluminum Co. of America ............................ 505
3,414 Reynolds Metals Co. ................................ 177
-------
1,067
-------
Apparel (0.4%):
971 Brown Group, Inc. .................................. 22
4,300 Fruit of the Loom(b) ............................... 91
4,586 Liz Claiborne, Inc. ................................ 97
2,850 Nike, Inc., Class B ................................ 239
4,771 Reebok International, Ltd. ......................... 162
2,357 Russell Corp. ...................................... 68
2,842 Stride Rite Corp. .................................. 30
3,614 V.F. Corp. ......................................... 194
-------
903
-------
Banks (5.6%):
22,812 Banc One Corp. ..................................... 736
6,071 Bank of Boston Corp. ............................... 228
10,600 Bank of New York Co., Inc. ......................... 428
21,424 BankAmerica Corp. .................................. 1,127
4,686 Bankers Trust New York Corp. ....................... 291
5,514 Barnett Banks, Inc. ................................ 283
6,986 Boatmens Bancshares, Inc. .......................... 246
10,428 Chase Manhattan Corp. .............................. 490
13,884 Chemical Banking Corp. ............................. 656
22,542 Citicorp ........................................... 1,305
8,156 Corestates Financial Corp. ......................... 284
4,914 First Chicago Corp. ................................ 294
4,714 First Fidelity Bancorp ............................. 278
4,514 First Interstate Bancorp ........................... 362
9,757 First Union Corp. .................................. 442
7,843 Fleet Financial Group, Inc. ........................ 291
10,843 J.P. Morgan & Co., Inc. ............................ 760
13,800 Keycorp ............................................ 433
8,350 MBNA Corp. ......................................... 282
8,092 Mellon Bank Corp. .................................. 337
8,500 National City Corp. ................................ 250
15,577 Nationsbank Corp. .................................. 835
9,164 NBD Bancorp, Inc. .................................. 293
18,356 Norwest Corp. ...................................... 528
13,242 PNC Financial Corp. ................................ 349
7,285 Shawmut National Corp. ............................. 232
6,628 Suntrust Banks, Inc. ............................... 386
5,621 U.S. Bancorp ....................................... 135
9,800 Wachovia Corp. ..................................... 350
2,778 Wells Fargo & Co. .................................. 501
-------
13,412
-------
Beverages (3.5%):
14,614 Anheuser Busch Cos., Inc. .......................... 831
2,392 Brown-Forman Corp., Class B ........................ 80
72,140 Coca Cola Co. ...................................... 4,599
2,243 Coors Adolph Co., Class B .......................... 37
44,647 PepsiCo., Inc. ..................................... 2,037
21,284 Seagram Co., Ltd. .................................. 737
-------
8,321
-------
Broadcasting (1.2%):
8,890 Capital Cities ABC, Inc. ........................... 932
3,450 CBS, Inc. .......................................... 231
11,150 Comcast Corp. Special .............................. 207
32,814 Tele Communications, Inc.(b) ....................... 769
16,407 Viacom, Class B(b) ................................. 761
-------
2,900
-------
Business Equipment & Services (1.9%):
5,956 Block, H & R, Inc. ................................. 245
12,085 Browning Ferris Industries, Inc. ................... 437
2,457 Ceridian Corp.(b) .................................. 91
4,686 Deluxe Corp. ....................................... 155
9,072 Donnelley, R.R. & Sons, Co. ........................ 327
9,691 Dun & Bradstreet. Corp. ............................ 509
11,100 First Data Corp. ................................... 631
1,828 Harland, John H. Co. ............................... 42
4,300 Interpublic Group of Cos., Inc. .................... 161
13,400 Laidlaw, Inc., Class B ............................. 129
5,671 Moore Corp., Ltd. .................................. 125
2,728 National Service Industries, Inc. .................. 79
2,443 Ogden Corp. ........................................ 53
9,072 Pitney-Bowes, Inc. ................................. 348
4,400 Ryder Systems, Inc. ................................ 105
3,271 Safety Kleen Corp. ................................. 53
5,464 Service Corp. International ........................ 173
27,428 WMX Technologies, Inc. ............................. 778
-------
4,441
-------
</TABLE>
Continued
29
B-152
<PAGE> 358
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Capital Equipment (1.1%):
11,614 Caterpillar, Inc. .................................. $ 746
1,957 Cincinnati Milacron, Inc. .......................... 53
2,372 Cummins Engine, Inc. ............................... 103
4,686 Fluor Corp. ........................................ 244
2,057 Foster Wheeler Corp. ............................... 73
2,642 General Signal Corp. ............................... 105
1,984 Giddings & Lewis, Inc. ............................. 35
2,428 Harnischfeger Industries, Inc. ..................... 84
6,456 Illinois Tool Works, Inc. .......................... 355
5,942 Ingersoll Rand Co. ................................. 227
2,245 PACCAR, Inc. ....................................... 105
4,129 Parker-Hannifin Corp. .............................. 150
2,443 Snap-On, Inc. ...................................... 95
1,871 Timken Co. ......................................... 86
1,657 TRINOVA Corp. ...................................... 58
1,186 Zurn Industries, Inc. .............................. 24
------
2,543
------
Chemicals--Petroleum & Inorganic (2.1%):
15,571 Dow Chemical Co. ................................... 1,119
30,870 Dupont (E.I.) de Nemours & Co. ..................... 2,122
828 First Mississippi Corp. ............................ 28
1,471 Goodrich B.F. Co. .................................. 79
5,286 Grace W.R. & Co. ................................... 324
6,384 Hercules, Inc. ..................................... 311
6,528 Monsanto Co. ....................................... 588
3,896 Rohm & Haas Co. .................................... 214
7,828 Union Carbide Corp. ................................ 261
------
5,046
------
Chemical--Specialty (0.9%):
6,556 Air Products & Chemicals, Inc. ..................... 366
3,214 Avery Dennison Corp. ............................... 129
4,469 Eastman Chemical Co. ............................... 277
3,542 Ecolab, Inc. ....................................... 87
5,438 Engelhard Corp. .................................... 233
4,000 Great Lakes Chemical Corp. ......................... 241
8,284 Morton International, Inc. ......................... 242
3,900 Nalco Chemical Co. ................................. 142
6,608 Pall Corp. ......................................... 147
7,628 Praxair, Inc. ...................................... 191
2,600 Sigma-Aldrich ...................................... 128
------
2,183
------
Coal (0.0%):
2,343 Pittston Co. ....................................... 56
------
Communications Equipment (0.8%):
28,042 Airtouch Communications(b) ......................... 799
2,181 Andrew Corp.(b) .................................... 126
6,328 DSC Communications Corp.(b) ........................ 294
2,257 Harris Cos., Delaware .............................. 117
1,086 M.A. Com, Inc.(b) .................................. 13
14,357 Northern Telecom, Ltd. ............................. 524
4,270 Scientific-Atlanta, Inc. ........................... 94
------
1,967
------
Computer--Main/Mini (3.1%):
6,543 Amdahl Corp.(b) .................................... 73
1,471 Cray Research Inc.(b) .............................. 36
1,571 Data General Corp.(b) .............................. 15
8,377 Digital Equipment Corp.(b) ......................... 341
29,114 Hewlett Packard Co. ................................ 2,169
7,300 Honeywell, Inc. .................................... 315
33,156 International Business Machines Corp. .............. 3,183
9,100 Silicon Graphics, Inc.(b) .......................... 363
6,557 Tandem Computers, Inc.(b) .......................... 106
9,414 Unisys Corp.(b) .................................... 102
5,971 Xerox Corp. ........................................ 700
------
7,403
------
Computers--Micro (0.5%):
14,958 Compaq Computer Corp.(b) ........................... 679
6,743 Apple Computer, Inc. ............................... 313
5,300 Sun Microsystems, Inc.(b) .......................... 257
------
1,249
------
Computers--Peripheral (2.5%):
2,642 Autodesk, Inc. ..................................... 114
15,100 Cisco Systems, Inc.(b) ............................. 763
9,257 Computer Assoc., International, Inc. ............... 627
2,528 Intergraph Corp.(b) ................................ 28
2,543 Lotus Development Corp.(b) ......................... 162
33,400 Microsoft Corp.(b) ................................. 3,019
20,900 Novell, Inc.(b) .................................... 417
24,792 Oracle Corp.(b) .................................... 958
------
6,088
------
Construction Materials (0.5%):
4,714 Black & Decker Corp. ............................... 146
1,779 Crane Co. .......................................... 64
2,443 Owens Corning Fiberglass Corp.(b) .................. 90
12,014 PPG Industries, Inc. ............................... 517
4,986 Sherwin-Williams Co. ............................... 178
2,486 Stanley Works ...................................... 94
------
1,089
------
Consumer Electronics (0.0%):
2,143 Zenith Electronics Corp.(b) ........................ 16
------
Containers (0.2%):
1,643 Ball Corp. ......................................... 57
2,914 Bemis, Inc. ........................................ 76
</TABLE>
Continued
30
B-153
<PAGE> 359
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Containers, continued:
4,971 Crown Cork & Seal Co., Inc.(b) ..................... $ 249
------
382
------
Cosmetics/Toiletry (0.7%):
1,471 Alberto Culver Co., Class B ........................ 45
3,900 Avon Products, Inc. ................................ 261
25,000 Gillette Co. ....................................... 1,116
6,529 International Flavors & Fragrances, Inc. ........... 325
------
1,747
------
Defense (0.7%):
3,242 EG&G, Inc. ......................................... 54
3,486 General Dynamics Corp. ............................. 155
4,714 Loral Corp. ........................................ 244
7,028 Raytheon Co. ....................................... 546
12,571 Rockwell International Corp. ....................... 575
------
1,574
------
Electrical Equipment (3.2%):
6,543 Cooper Industries, Inc. ............................ 258
3,214 Dover Corp. ........................................ 234
13,285 Emerson Electric Co. ............................... 950
96,668 General Electric Co. ............................... 5,450
2,928 Grainger W.W., Inc. ................................ 172
2,343 Johnson Controls, Inc. ............................. 132
4,328 Tyco Labs, Inc. .................................... 234
19,871 Westinghouse Electric Corp. ........................ 291
------
7,721
------
Electronic Components (3.5%):
6,078 Advanced Micro Devices, Inc. ....................... 221
11,714 AMP, Inc. .......................................... 495
4,700 Applied Materials, Inc.(b) ......................... 407
4,100 Cabletron Systems(b) ............................... 218
47,184 Intel Corp. ........................................ 2,987
11,600 Micron Technology, Inc. ............................ 637
33,556 Motorola, Inc. ..................................... 2,252
6,871 National Semiconductor Corp. ....................... 191
2,457 Raychem Corp. ...................................... 94
5,294 Texas Instruments, Inc. ............................ 709
1,071 Thomas & Betts Corp. ............................... 73
------
8,284
------
Electronic Instruments (0.1%):
2,457 Perkin-Elmer Corp. ................................. 87
1,828 Tektronix, Inc. .................................... 90
------
177
------
Farm Machinery (0.2%):
4,800 Deere & Co. ........................................ 411
4,341 Navistar International Corp.(b) .................... $ 66
2,524 Varity Corp.(b) .................................... 111
------
588
------
Finance Companies (0.2%):
2,914 Beneficial Corp. ................................... 128
5,386 Household International, Inc. ...................... 267
------
395
------
Food & Related (3.3%):
29,288 Archer Daniels Midland Co. ......................... 545
14,256 Campbell Soup Co. .................................. 699
14,135 ConAgra, Inc. ...................................... 493
8,400 CPC International, Inc. ............................ 519
2,157 Fleming Cos., Inc. ................................. 57
9,071 General Mills, Inc. ................................ 466
13,842 Heinz H.J. Co. ..................................... 614
4,171 Hershey Foods Corp. ................................ 230
12,556 Kellogg Co. ........................................ 896
5,000 Pioneer Hi-Bred International, Inc. ................ 210
7,600 Quaker Oats Co. .................................... 250
5,643 Ralston Purina Co. ................................. 288
27,170 Sara Lee Corp. ..................................... 774
4,100 Supervalu, Inc. .................................... 119
10,442 Sysco Corp. ........................................ 308
9,171 Unilever N.V. - ADR ................................ 1,193
6,629 Wrigley (Wm) Jr. Co. ............................... 307
------
7,968
------
Forest/Paper Products (1.8%):
2,685 Boise Cascade Corp. ................................ 109
5,271 Champion International Corp. ....................... 275
2,357 Federal Paper Board, Inc. .......................... 83
5,186 Georgia Pacific Corp. .............................. 450
7,043 International Paper Co. ............................ 604
4,686 James River Corp. of Virginia ...................... 129
9,172 Kimberly Clark Corp. ............................... 549
6,286 Louisiana-Pacific Corp. ............................ 165
3,314 Mead Corp. ......................................... 197
1,657 Potlatch Corp. ..................................... 69
8,600 Scott Paper Co. .................................... 426
5,000 Stone Container Corp.(b) ........................... 106
3,171 Temple-Inland, Inc. ................................ 151
3,957 Union Camp Corp. ................................... 229
3,857 Westvaco Corp. ..................................... 171
11,628 Weyerhaeuser Co. ................................... 548
------
4,261
------
</TABLE>
Continued
31
B-154
<PAGE> 360
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Furniture/Furnishings (0.2%):
2,157 Armstrong World Industries, Inc. ................... $ 108
848 Bassett Furniture Industries, Inc. ................. 24
8,800 Masco Corp. ........................................ 238
9,028 Newell Co. ......................................... 221
-------
591
-------
Gold/Precious Metals (0.4%):
19,900 Barrick Gold Corp. ................................. 502
6,486 Echo Bay Mines Ltd. ................................ 58
7,757 Homestake Mining Co. ............................... 128
13,516 Placer Dome, Inc. .................................. 353
-------
1,041
-------
Health Care--Drugs (4.6%):
45,680 Abbott Laboratories ................................ 1,850
3,600 Allergan, Inc. ..................................... 98
7,600 Amgen, Inc.(b) ..................................... 611
4,614 Alza Corp., Class A(b) ............................. 108
15,699 Baxter International, Inc. ......................... 571
16,699 Lilly Eli & Co. .................................... 1,311
70,168 Merck & Co., Inc. .................................. 3,438
1,400 Millipore Corp. .................................... 94
18,042 Pfizer, Inc. ....................................... 1,667
21,270 Schering Plough .................................... 939
9,957 UpJohn Co. ......................................... 377
-------
11,064
-------
Health Care--General (3.1%):
17,371 American Home Products Corp. ....................... 1,344
3,314 Bausch & Lomb, Inc. ................................ 138
3,886 Becton Dickinson & Co. ............................. 226
6,656 Biomet, Inc.(b) .................................... 103
8,500 Boston Scientific Corp.(b) ......................... 271
28,705 Bristol Myers Squibb Co. ........................... 1,956
36,784 Johnson & Johnson .................................. 2,488
4,413 Mallinckrodt Group, Inc. ........................... 157
2,628 St. Jude Medical, Inc. ............................. 132
7,714 Warner-Lambert Co. ................................. 666
-------
7,481
-------
Home Building/Mobil Home (0.1%):
1,814 Centex Corp. ....................................... 51
2,542 Fleetwood Enterprises, Inc. ........................ 50
1,866 Kaufman & Broad Home Corp. ......................... 27
1,586 Pulte Corp. ........................................ 44
586 Skyline Corp. ...................................... 11
-------
183
-------
Hospital Supply & Management (1.2%):
2,928 Bard, C.R., Inc. ................................... 88
4,643 Beverly Enterprises, Inc.(b) ....................... 57
24,937 Columbia/HCA Healthcare Corp. ...................... 1,079
2,428 Community Psychiatric Centers ...................... 27
3,492 Manor Care, Inc. ................................... 102
6,528 Medtronic, Inc. .................................... 503
1,343 Shared Medical Systems Corp. ....................... 54
11,300 Tenet Healthcare Corp.(b) .......................... 162
9,686 United Healthcare .................................. 401
9,200 U.S. Healthcare, Inc. .............................. 282
3,200 U.S. Surgical Corp. ................................ 67
-------
2,822
-------
Hotels & Gaming (0.3%):
2,585 Bally Entertainment(b) ............................. 32
2,628 Hilton Hotels Corp. ................................ 185
7,250 Marriott Corp., International ...................... 260
5,792 Promus Cos., Inc. .................................. 226
-------
703
-------
Household--General Products (1.8%):
4,314 American Greetings Corp., Class A .................. 127
3,128 Clorox Co. ......................................... 204
8,214 Colgate Palmolive Co. .............................. 601
2,543 Jostens, Inc. ...................................... 54
3,514 Premark International, Inc. ........................ 182
39,240 Procter & Gamble Co. ............................... 2,820
9,072 Rubbermaid, Inc. ................................... 252
-------
4,240
-------
Household--Major Appliances (0.2%):
1,572 Briggs & Stratton Corp. ............................ 54
6,057 Maytag Corp. ....................................... 97
4,300 Whirlpool Corp. .................................... 237
-------
388
-------
Insurance--Life (0.6%):
11,856 American General Corp. ............................. 400
2,750 Jefferson Pilot Corp. .............................. 151
5,686 Providan Corp. ..................................... 206
4,100 Transamerica Corp. ................................. 239
4,242 Torchmark Corp. .................................... 160
4,500 Unum Corp. ......................................... 211
1,335 U.S. Life Corp. .................................... 54
-------
1,421
-------
Insurance--Property/Casualty (1.9%):
6,443 Aetna Life & Casualty Co. .......................... 405
18,032 American International Group, Inc. ................. 2,056
4,200 CIGNA Corp. ........................................ 326
4,986 Chubb Corp. ........................................ 399
4,586 General Re Corp. ................................... 614
5,386 Lincoln National Corp. ............................. 236
3,514 SAFECO, Corp. ...................................... 202
4,820 St. Paul Cos., Inc. ................................ 237
</TABLE>
Continued
32
B-155
<PAGE> 361
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
6,328 USF&G Corp. $ 103
................................................................. -------
4,578
-------
Leisure Time Industries (1.1%):
5,386 Brunswick Corp. .................................... 92
6,500 CUC International, Inc.(b) ......................... 273
1,993 Handleman Co. ...................................... 19
4,992 Hasbro, Inc. ....................................... 159
12,638 Mattel, Inc. ....................................... 329
1,057 Outboard Marine Corp. .............................. 21
29,556 Walt Disney Co. .................................... 1,644
-------
2,537
-------
Mining (0.5%):
2,342 Asarco, Inc. ....................................... 71
5,207 Cyprus Amax Minerals ............................... 148
6,657 Inco Ltd. .......................................... 188
386 Nacco Industries ................................... 23
4,866 Newmont Mining Corp. ............................... 204
4,014 Phelps Dodge Corp. ................................. 237
8,464 Santa Fe Pacific Corp. ............................. 216
-------
1,087
-------
Motion Pictures (0.0%):
2,157 King World Productions, Inc.(b) .................... 87
-------
Motor Vehicle Parts (0.3%):
5,586 Dana Corp. ......................................... 160
4,214 Eaton Corp. ........................................ 245
3,328 Echlin, Inc. ....................................... 116
7,164 Genuine Parts Co. .................................. 271
571 SPX, Inc. .......................................... 7
-------
799
-------
Motor Vehicles (2.0%):
20,859 Chrysler Corp. ..................................... 999
58,162 Ford Motor Co. ..................................... 1,730
42,570 General Motors Corp. ............................... 1,995
-------
4,724
-------
Multiple Industry (2.1%):
3,143 ALCO Standard Corp. ................................ 251
16,028 Allied Signal, Inc. ................................ 713
13,042 Corning, Inc. ...................................... 427
5,386 Dial Corp. ......................................... 133
2,057 FMC Corp.(b) ....................................... 138
4,435 Harcourt General, Inc. ............................. 187
5,943 ITT Corp. .......................................... 698
3,400 Loews Corp. ........................................ 411
23,700 Minnesota Mining & Manufacturing Co. ............... 1,357
3,107 Teledyne, Inc. ..................................... 76
4,986 Textron, Inc. ...................................... 290
3,614 TRW, Inc. .......................................... 289
6,057 Whitman Corp. ...................................... 117
-------
5,087
-------
Non-Residential Construction (0.0%):
1,842 Morrison Knudsen Corp. ............................. 12
-------
Petroleum--Domestic (2.6%):
5,386 Amerada Hess Corp. ................................. 263
28,199 Amoco Corp. ........................................ 1,879
3,414 Ashland, Inc. ...................................... 120
9,071 Atlantic Richfield Co. ............................. 996
5,000 Burlington Northern, Inc. .......................... 317
2,928 Kerr McGee Corp. ................................... 157
1,971 Louisiana Land & Exploration Co. ................... 79
18,185 Occidental Petroleum Corp. ......................... 416
5,486 Oryx Energy Co.(b) ................................. 75
2,543 Pennzoil Co. ....................................... 120
14,842 Phillips Petroleum Co. ............................. 495
5,044 Santa Fe Energy Resources, Inc.(b) ................. 48
5,957 Sun Co., Inc. ...................................... 163
10,328 Tenneco, Inc. ...................................... 475
13,771 Unocal Corp. ....................................... 380
16,414 USX-Marathon Group, Inc. ........................... 324
-------
6,307
-------
Petroleum--International (5.7%):
36,928 Chevron Corp. ...................................... 1,722
70,869 Exxon Corp. ........................................ 5,005
22,542 Mobil Corp. ........................................ 2,164
30,656 Royal Dutch Petroleum .............................. 3,736
14,742 Texaco, Inc. ....................................... 967
-------
13,594
-------
Petroleum--Services (0.7%):
7,948 Baker Hughes, Inc. ................................. 163
10,014 Dresser Industries, Inc. ........................... 223
6,557 Halliburton Co. .................................... 234
1,471 Helmerich & Payne, Inc. ............................ 43
3,043 McDermott International, Inc. ...................... 73
4,714 Rowan Cos., Inc.(b) ................................ 38
13,871 Schlumberger, Ltd. ................................. 862
3,300 Western Atlas(b) ................................... 146
-------
1,782
-------
Photography Equipment (0.5%):
19,299 Eastman Kodak Co. .................................. 1,170
2,595 Polaroid Corp. ..................................... 106
-------
1,276
-------
Publishing (1.0%):
5,614 Dow Jones & Co., Inc. .............................. 207
</TABLE>
Continued
33
B-156
<PAGE> 362
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Publishing, continued:
7,871 Gannett, Inc. ...................................... $ 427
3,028 Knight-Ridder, Inc. ................................ 172
2,728 McGraw-Hill Cos., Inc. ............................. 207
1,614 Meredith Corp. ..................................... 41
5,900 New York Times Co., Class A ........................ 139
21,456 Time Warner, Inc. .................................. 882
6,428 Times Mirror Co., Class A .......................... 153
3,814 Tribune Co. ........................................ 234
------
2,462
------
Railroad (0.9%):
7,400 Burlington ......................................... 273
4,586 Conrail, Inc. ...................................... 255
5,857 CSX Corp. .......................................... 440
7,585 Norfolk Southern Corp. ............................. 511
7,299 Santa Fe Pacific Gold Corp. ........................ 89
11,714 Union Pacific Corp. ................................ 649
------
2,217
------
Restaurants (0.7%):
1,493 Luby's Cafeterias, Inc. ............................ 30
39,612 McDonald's Corp. ................................... 1,550
3,043 Ryan's Family Steak House, Inc.(b) ................. 24
2,336 Shoney's, Inc.(b) .................................. 27
5,843 Wendy's International, Inc. ........................ 104
------
1,735
------
Retail--Food Stores (0.8%):
14,428 Albertsons, Inc. ................................... 429
8,028 American Stores Co. ................................ 226
4,486 Brunos, Inc. ....................................... 52
3,314 Giant Food, Inc., Class A .......................... 94
2,243 Great Atlantic & Pacific Tea, Inc. ................. 59
6,186 Kroger Co.(b) ...................................... 166
1,171 Longs Drug Stores, Inc. ............................ 44
4,886 Rite Aid Corp. ..................................... 125
7,028 Walgreen Co. ....................................... 352
4,286 Winn Dixie Stores, Inc. ............................ 248
------
1,795
------
Retail--General Merchandise (3.1%):
4,100 Dayton Hudson Corp. ................................ 294
6,429 Dilliard Department Stores, Inc., Class A .......... 189
12,986 J.C. Penney Co., Inc. .............................. 623
25,542 K Mart Corp. ....................................... 374
14,160 May Department Stores, Co. ......................... 589
2,143 Mercantile Stores Co., Inc. ........................ 100
4,686 Nordstrom, Inc. .................................... 194
11,000 Price/Costco, Inc.(b) .............................. 179
22,028 Sears Roebuck & Co. ................................ 1,319
4,200 TJX Cos, Inc. ...................................... 56
130,452 Wal-Mart Stores, Inc. .............................. 3,490
7,514 Woolworth Corp. .................................... 114
------
7,521
------
Retail--Specialty (1.3%):
5,800 Charming Shoppes, Inc. ............................. 30
5,486 Circuit City Stores, Inc. .......................... 173
8,200 Gap, Inc. .......................................... 286
25,553 Home Depot, Inc. ................................... 1,038
20,599 Limited, Inc. ...................................... 453
8,772 Lowes Cos., Inc. ................................... 262
5,957 Melville Corp. ..................................... 204
3,414 Pep Boys-Manny, Moe & Jack ......................... 91
3,786 Tandy Corp. ........................................ 196
16,257 Toys R Us, Inc.(b) ................................. 476
------
3,209
------
Savings & Loans (0.2%):
6,743 Ahmanson H.F. & Co. ................................ 148
3,614 Golden West Financial Corp. ........................ 170
7,528 Great Western Financial Corp. ...................... 155
------
473
------
Securities & Commercial Broker (2.3%):
2,428 Alexander & Alexander Services, Inc. ............... 58
28,506 American Express Co. ............................... 1,001
9,696 Dean Witter Discover & Co. ......................... 456
10,200 Federal Home Loan Mortgage Corp. ................... 701
15,514 Federal National Mortgage Assoc .................... 1,464
4,300 Marsh & McLennan Cos., Inc. ........................ 349
10,014 Merrill Lynch & Co., Inc. .......................... 526
6,243 Salomon, Inc. ...................................... 251
18,213 Travelers Group, Inc. .............................. 797
------
5,603
------
Steel (0.3%):
5,871 Armco, Inc.(b) ..................................... 40
6,100 Bethlehem Steel Corp.(b) ........................... 99
2,257 Inland Steel Industries ............................ 69
4,956 Nucor Corp. ........................................ 265
4,311 USX-U.S. Steel Group, Inc. ......................... 148
5,138 Worthington Industries, Inc. ....................... 105
------
726
------
Textile (0.0%):
957 Springs Industries, Inc., Class A .................. 36
------
Timeshare & Software (0.3%):
8,214 Automatic Data Processing, Inc. .................... 516
2,900 Computer Sciences Corp.(b) ......................... 165
------
681
------
</TABLE>
Continued
34
<PAGE> 363
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Tires/Rubber Products (0.2%):
4,786 Cooper Tire & Rubber Co. ........................... $ 117
8,528 Goodyear Tire & Rubber Co. ......................... 352
--------
469
--------
Tobacco (1.8%):
10,845 American Brands, Inc. .............................. 431
48,213 Philip Morris Cos., Inc. ........................... 3,586
11,614 UST, Inc. .......................................... 346
--------
4,363
--------
Trucking (0.1%):
2,014 Consolidated Freightways, Inc. ..................... 45
2,343 Roadway Services, Inc. ............................. 111
1,643 Yellow Corp. ....................................... 30
--------
186
--------
Utilities--Electric (3.7%):
10,443 American Electric Power, Inc. ...................... 367
8,229 Baltimore Gas & Electric Co. ....................... 206
9,172 Carolina Power & Light Co. ......................... 277
10,742 Central & South West Corp. ......................... 282
8,478 Cinergy Corp. ...................................... 223
13,285 Consolidated Edison Co., Inc. ...................... 392
8,300 Detroit Edison Co. ................................. 243
9,585 Dominion Resources, Inc. of Virginia ............... 350
11,614 Duke Power Co. ..................................... 482
13,043 Entergy Corp. ...................................... 315
10,685 FPL Group, Inc. .................................... 413
6,300 General Public Utilities Corp. ..................... 187
7,428 Houston Industries, Inc. ........................... 313
8,014 Niagara Mohawk Power Corp. ......................... 118
3,814 Northern States Power Co. .......................... 176
8,685 Ohio Edison Co. .................................... 196
24,613 Pacific Gas & Electric Co. ......................... 714
15,857 Pacificorp ......................................... 297
12,600 Peco Energy Corp. .................................. 348
13,800 Public Service Enterprise Group, Inc. .............. 383
25,400 SCE Corp. .......................................... 435
37,714 Southern Co. ....................................... 844
12,714 Texas Utilities Co. ................................ 437
12,200 Unicom Corp. ....................................... 325
5,800 Union Electric Co. ................................. 216
--------
8,539
--------
Utilities--Gas/Pipeline (0.8%):
5,857 Coastal Corp. ...................................... 178
2,928 Columbia Gas System, Inc. .......................... 93
5,286 Consolidated Natural Gas Co. ....................... 200
971 Eastern Enterprises ................................ 29
14,212 Enron Corp. ........................................ 499
3,814 Enserch Corp. ...................................... 65
3,114 NICOR, Inc. ........................................ 84
6,943 Noram Energy Corp. ................................. 45
1,514 ONEOK, Inc. ........................................ 32
4,783 Pacific Enterprises ................................ 117
8,086 Panhandle Eastern Corp. ............................ 197
2,057 People's Energy Corp. .............................. 53
4,886 Sonat, Inc. ........................................ 149
6,186 Williams Cos., Inc. ................................ 216
--------
1,957
--------
Utilities--Telephone (7.4%):
10,900 Alltel Corp. ....................................... 277
31,656 Ameritech Corp. .................................... 1,393
90,527 AT&T ............................................... 4,809
24,856 Bell Atlantic Corp. ................................ 1,392
28,228 Bellsouth Corp. .................................... 1,792
54,998 GTE Corp. .......................................... 1,877
38,484 MCI Communications Corp. ........................... 847
24,156 Nynex Corp. ........................................ 972
24,042 Pacific Telesis Group .............................. 643
34,670 SBC Communications, Inc. ........................... 1,651
19,500 Sprint Corp. ....................................... 656
26,356 U.S. West, Inc. .................................... 1,097
--------
17,406
--------
Total Common Stocks 227,065
--------
PARTICIPATING UNITS (0.0%):
9,071 Darden Restaurants, Inc.(b) ........................ 99
--------
Total Participating Units 99
--------
U.S. TREASURY BILLS (0.5%):
$ 10,000 8/17/95 ............................................ 10
125,000 9/7/95 ............................................. 123
1,035,000 9/14/95 ............................................ 1,023
25,000 9/21/95 ............................................ 25
--------
Total U.S. Treasury Bills 1,181
--------
Total Investments, at value 228,345
--------
</TABLE>
Continued
35
<PAGE> 364
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C>
REPURCHASE AGREEMENTS (4.1%):
$9,781,000 Lehman Brothers, 6.15%, dated 6/30/95,
due 7/3/95 (Collateralized by
$9,640,000 U.S. Treasury Notes, 6.75%,
2/28/97, market value--$9,986) $ 9,781
--------
Total Repurchase Agreements 9,781
--------
Total (Cost--$199,635)(a) $238,126
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $239,306.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
approximately $381. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ....................... $ 43,114
Unrealized depreciation ....................... (5,004)
--------
Net unrealized appreciation ................... $ 38,110
========
</TABLE>
(b) Represents non-income producing security.
ADR--American Depository Receipt
At June 30, 1995, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
OPENING MARKET
# OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
--------- ------------------------------------------- --------- -------
<S> <C> <C> <C>
36 S & P 500 September ....................... $9,691 $9,849
</TABLE>
See notes to financial statements.
36
B-157
<PAGE> 365
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Large Company Value Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS (86.7%):
Banks (3.3%):
91,100 Keycorp ............................................... $ 2,858
40,000 NationsBank Corp. ..................................... 2,145
300,000 U.S. Bancorp .......................................... 7,219
-------
12,222
-------
Business Equipment & Services (3.0%):
100,000 Dun & Bradstreet Corp. ................................ 5,250
200,000 WMX Technologies, Inc. ................................ 5,675
-------
10,925
-------
Chemicals--Petroleum & Inorganics (3.0%):
85,000 Dow Chemical Co. ...................................... 6,109
100,000 Imperial Chemical Industries-ADR ...................... 4,875
-------
10,984
-------
Chemicals--Specialty (1.5%):
126,000 Betz Laboratories, Inc. ............................... 5,702
-------
Computers--Main/Mini (1.6%):
550,000 Unisys Corp.(b) ....................................... 5,981
-------
Computers--Micro (0.8%):
62,500 Apple Computer, Inc. .................................. 2,902
-------
Construction Materials (1.0%):
100,000 Stanley Works ......................................... 3,787
-------
Defense (1.2%):
121,200 Litton Industries, Inc.(b) ............................ 4,469
-------
Electrical Equipment (2.0%):
500,000 Westinghouse Electric Corp. ........................... 7,313
-------
Financial (1.2%):
320,000 Horsham Corp. ......................................... 4,320
-------
Forest/Paper Products (3.0%):
150,000 Louisiana-Pacific Corp. ............................... 3,937
75,000 Temple-Inland, Inc. ................................... 3,572
79,700 Weyerhaeuser Co. ...................................... 3,756
-------
11,265
-------
Gold/Precious Metals (1.7%):
150,000 ASA Ltd. .............................................. 6,450
-------
Health Care--Drugs (1.9%):
175,000 Marion Merrell Dow .................................... 4,463
64,300 UpJohn Co. ............................................ 2,435
-------
6,898
-------
Health Care--General (1.1%):
130,000 Hillenbrand Industries ................................ 4,046
-------
Hospital Supply & Management (0.6%):
67,000 U.S. Healthcare, Inc. ................................. 2,052
-------
Household--General Products (2.1%):
150,000 American Greetings Corp., Class A ..................... 4,406
123,000 Rubbermaid ............................................ 3,413
-------
7,819
-------
Household--Major Appliances (2.4%):
270,000 Singer Sew Co. ........................................ 6,986
150,000 Sunbeam Corp. ......................................... 2,081
-------
9,067
-------
Insurance--Life (2.0%):
160,000 Kemper Corp. .......................................... 7,460
-------
Insurance--Property/Casualty (1.0%):
97,500 AON Corp. ............................................. 3,632
-------
Leisure Time Industries (1.5%):
325,000 Brunswick Corp. ....................................... 5,525
-------
Mining (6.3%):
291,700 Asarco, Inc. .......................................... 8,897
371,000 Cyprus AMAX Minerals .................................. 10,573
88,900 Newmont Mining Corp. .................................. 3,723
-------
23,193
-------
Motor Vehicles (1.0%):
75,000 Chrysler Corp. ........................................ 3,591
-------
Multiple Industry (3.5%):
185,000 Corning, Inc. ......................................... 6,059
400,000 Hanson ................................................ 7,050
-------
13,109
-------
Petroleum--Domestic (14.4%):
160,000 Ashland, Inc. ......................................... 5,620
100,000 Atlantic Richfield Co. ................................ 10,975
150,000 Murphy Oil Corp. ...................................... 6,150
200,000 Occidental Petroleum Corp. ............................ 4,575
125,000 Pennzoil Co. .......................................... 5,890
42,300 Phillips Petroleum .................................... 1,412
200,000 Sun Co., Inc. ......................................... 5,475
160,000 Tenneco, Inc. ......................................... 7,360
300,000 USX-Marathon Group, Inc. .............................. 5,925
-------
53,382
-------
Petroleum--International (3.3%):
50,000 Repsol S.A.-ADR ....................................... 1,581
60,000 Texaco, Inc. .......................................... 3,938
350,000 YPF S.A.-Sponsored ADR ................................ 6,606
-------
12,125
-------
Publishing (2.2%):
350,000 New York Times Co., Class A ........................... 8,225
-------
Railroad (0.7%):
50,000 Conrail, Inc. ......................................... 2,781
-------
</TABLE>
Continued
37
B-158
<PAGE> 366
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Large Company Value Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS (86.7%):
Retail--Food Stores (1.5%):
200,000 American Stores Co. ................................ $ 5,625
--------
Retail--General Merchants (2.8%):
150,000 Dillard Department Stores, Inc., Class A ........... 4,406
400,000 K Mart Corp. ....................................... 5,850
--------
10,256
--------
Retail--Specialty (1.6%):
200,000 Toys R Us, Inc.(b) ................................. 5,850
--------
Securities & Commissions Broker (1.4%):
125,000 Salomon, Inc. ...................................... 5,016
--------
Steel (1.3%):
200,000 Bethlehem Steel(b) ................................. 3,250
50,000 USX-U.S. Steel Group, Inc. ......................... 1,719
--------
4,969
--------
Tires/Rubber Production (2.1%):
250,000 Cooper Tire & Rubber Co. ........................... 6,094
37,600 Goodyear Tire & Rubber Co. ......................... 1,551
--------
7,645
--------
Tobacco (1.7%):
1,000,000 RJR Preferred Series ............................... 6,125
--------
Utilities--Electric (2.8%):
100,000 American Electric Power, Inc. ...................... 3,512
75,000 Dominion Resources, Inc. of Virginia ............... 2,738
50,000 Entergy Corp. ...................................... 1,206
122,200 Southern Co. ....................................... 2,734
--------
10,190
--------
Utilities--Gas/Pipeline (1.0%):
226,600 ENSERCH Corp. ...................................... 3,881
--------
Utilities--Telephone (3.2%):
150,000 AT&T ............................................... 7,969
150,000 Pacific Telesis Group .............................. 4,013
--------
11,982
--------
Total Common Stocks 320,764
--------
U.S. TREASURY BILLS (0.1%):
$430,000 9/21/95 ............................................ 420
--------
Total U.S. Treasury Bills 420
--------
Total Investments, at value 321,184
--------
REPURCHASE AGREEMENTS (15.3%):
56,533,000 Lehman Brothers, 6.10%, 7/3/95
(Collateralized by $57,475,000 various
U.S. Government Securities,
0.00%-8.38%, 10/12/95-4/19/05,
market value--$57,649 ............................ 56,533
--------
Total Repurchase Agreements 56,533
--------
Total (Cost--$364,832)(a) $377,717
========
</TABLE>
- ---------------
Percentages indicated are based on net assets of $369,717.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
approximately $571. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ............................. $ 16,416
Unrealized depreciation ............................. (4,102)
--------
Net unrealized appreciation ......................... $ 12,314
========
</TABLE>
(b) Represents non-income producing security.
ADR--American Depository Receipt
At June 30, 1995, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
OPENING MARKET
# OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
--------- ------------------------------------ --------- -------
<S> <C> <C> <C>
40 S & P 500 September ................ $10,976 $10,943
</TABLE>
See notes to financial statements.
38
B-159
<PAGE> 367
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Blue Chip Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS (99.1%):
Banks (7.9%):
30,000 BankAmerica Corp. ..................................... $ 1,579
25,000 J.P. Morgan & Co., Inc. ............................... 1,753
-------
3,332
-------
Beverages (3.7%):
35,000 PepsiCo., Inc. ........................................ 1,597
-------
Business Equipment & Services (7.1%):
27,000 Dun & Bradstreet Corp. ................................ 1,417
57,000 WMX Technologies, Inc. ................................ 1,617
-------
3,034
-------
Capital Equipment (3.6%):
30,000 Fluor Corp. ........................................... 1,560
-------
Consumer Durables (3.5%):
35,000 General Motors Corp., Class E ......................... 1,522
-------
Electrical Equipment (7.0%):
22,500 Emerson Electric Co. .................................. 1,609
25,000 General Electric Co. 1,409
-------
3,018
-------
Electronic Components (7.9%):
40,000 AMP, Inc. ............................................. 1,690
25,000 Motorola, Inc. ........................................ 1,678
-------
3,368
-------
Forest/Paper Products (3.8%):
27,500 Kimberly Clark Corp. .................................. 1,647
-------
Health Care--Drugs (7.9%):
40,000 Merck & Co., Inc. ..................................... 1,960
15,000 Pfizer, Inc. .......................................... 1,386
-------
3,346
-------
Household General Products (5.9%):
20,000 Procter & Gamble Co. .................................. 1,438
40,000 Rubbermaid, Inc. ...................................... 1,110
-------
2,548
-------
Insurance--Property/Casualty (2.7%):
10,000 American International Group, Inc. .................... 1,140
-------
Leisure Time Industry (3.2%):
25,000 Walt Disney Co. ....................................... 1,391
-------
Metals & Mining (4.0%):
60,000 Cyprus Amax Minerals .................................. 1,710
-------
Motor Vehicles (3.3%):
30,000 General Motors Corp. .................................. 1,406
-------
Multiple Industry (3.3%):
25,000 Minnesota Mining & Manufacturing Co. .................. 1,431
-------
Petroleum--Domestic (3.8%):
15,000 Atlantic Richfield Co. ................................ 1,646
-------
Petroleum--International (6.6%):
20,000 Exxon Corp. ........................................... 1,412
15,000 Mobil Corp. ........................................... 1,440
-------
2,852
-------
Petroleum Services (3.6%):
25,000 Schlumberger, Ltd. .................................... 1,553
-------
Restaurants (4.1%):
45,000 McDonald's Corp. ...................................... 1,761
-------
Retail General Merchandise (2.5%):
40,000 Wal-Mart Stores, Inc. ................................. 1,070
-------
Utilities--Telephone (3.7%):
30,000 AT&T .................................................. 1,594
-------
Total Common Stocks 42,526
-------
Total Investments, at value 42,526
-------
REPURCHASE AGREEMENTS (1.0%):
$426,000 Lehman Brothers, 6.15%, dated 6/30/95,
due 7/3/95 (Collateralized by
$320,000 U.S. Treasury Bonds, 11.88%,
11/15/03, market value--$440) ....................... 426
-------
Total Repurchase Agreements 426
-------
Total (Cost--$36,014)(a) $42,952
=======
</TABLE>
- -------------
Percentages indicated are based on net assets of $42,920.
(a) Represents cost for federal income tax purposes and differs from unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ............................... $ 7,577
Unrealized depreciation ............................... (639)
-------
Net unrealized appreciation ........................... $ 6,938
=======
</TABLE>
See notes to financial statements.
39
B-160
<PAGE> 368
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Large Company Growth Fund
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- -------- --------------------------------------------------------------------------- -----------
<S> <C>
COMMON STOCKS (94.4%):
Aerospace--Aircraft (1.4%):
100,000 TRW, Inc. .................................................................. $ 7,987
-------
Banks (4.0%):
100,000 BankAmerica Corp. .......................................................... 5,263
125,000 First Union Corp. .......................................................... 5,656
100,000 J.P. Morgan & Co., Inc. .................................................... 7,013
190,000 U.S. Bancorp ............................................................... 4,572
-------
22,504
-------
Beverages (1.0%):
125,000 PepsiCo., Inc. ............................................................. 5,703
-------
Broadcasting (1.5%):
130,000 CBS, Inc. .................................................................. 8,710
-------
Business Equipment & Services (3.5%):
190,000 Browning Ferris Industries, Inc. ........................................... 6,864
140,000 Dun & Bradstreet Corp. ..................................................... 7,350
240,000 Ryder Systems, Inc. ........................................................ 5,730
-------
19,944
-------
Capital Equipment (3.3%):
180,000 Fluor Corp. ................................................................ 9,360
90,800 Illinois Tool Works, Inc. .................................................. 4,994
120,000 Ingersoll Rand Co. ......................................................... 4,590
-------
18,944
-------
Chemicals--Petroleum & Inorganics (1.7%):
135,000 Dow Chemical Co. ........................................................... 9,703
-------
Chemicals--Specialty (5.5%):
175,000 Air Products & Chemicals, Inc. ............................................. 9,756
200,000 Lubrizol Corp. ............................................................. 7,075
215,000 Nalco Chemical ............................................................. 7,821
290,000 Pall Corp. ................................................................. 6,453
-------
31,105
-------
Computer--Main/Mini (2.8%):
90,000 Hewlett Packard Co. ......................................................... 6,705
95,000 International Business Machines Corp. ....................................... 9,120
-------
15,825
-------
Cosmetic/Toiletry (1.1%):
120,000 International Flavors & Fragrances, Inc. 5,970
-------
Electrical Equipment (1.6%):
125,000 Emerson Electric Co. ....................................................... 8,938
-------
Electronic Component (6.8%):
255,000 AMP, Inc. .................................................................. 10,774
150,000 Motorola, Inc. ............................................................. 10,069
75,000 Texas Instruments, Inc. .................................................... 10,040
150,000 Avnet, Inc. ................................................................ 7,256
-------
38,139
-------
Food & Related (4.3%):
350,000 Archer Daniels Midland Co. ................................................. $6,519
90,000 CPC International, Inc. .................................................... 5,558
105,000 Hershey Foods Corp. ........................................................ 5,801
150,000 Pioneer Hi-Bred International, Inc. ........................................ 6,300
-------
24,178
-------
Forest/Paper Products (3.6%):
90,000 Consolidated Papers, Inc. .................................................. 5,186
95,000 International Paper Co. .................................................... 8,146
120,000 Kimberly Clark Corp. ....................................................... 7,185
-------
20,517
-------
Furniture/Furnishings (1.7%):
350,000 Masco Corp. ................................................................ 9,450
-------
Health Care--Drugs (5.2%):
250,000 Abbott Laboratories ........................................................ 10,125
240,000 Alza Corp., Class A (b) .................................................... 5,610
130,000 Elan Corp., PLC ADR (b) .................................................... 5,298
170,000 Merck & Co., Inc. .......................................................... 8,330
-------
29,363
-------
Health Care--General (1.6%):
130,000 Johnson & Johnson .......................................................... 8,791
-------
Hospital Supply & Management (2.2%)
245,000 Bard C.R., Inc. ............................................................ 7,350
65,000 Medtronic, Inc. ............................................................ 5,013
-------
12,363
-------
Household--General Products (2.3%):
100,000 Procter & Gamble Co. ....................................................... 7,187
200,000 Rubbermaid, Inc. ........................................................... 5,550
-------
12,737
-------
Insurance--Property/Casualty (3.1%):
90,000 American International Group, Inc. ......................................... 10,260
150,000 St. Paul Cos., Inc. ........................................................ 7,388
-------
17,648
Leisure Time Industries (0.9%):
90,000 Walt Disney Co. ............................................................ 5,006
-------
Mining (1.6%):
310,000 Cyprus Amax Minerals ....................................................... 8,835
-------
Motor Vehicles (1.2%):
235,000 Ford Motor Co. ............................................................. 6,991
-------
Motor Vehicle Parts (1.3%):
210,000 Echlin, Inc. ............................................................... 7,297
-------
Multiple Industry (3.3%):
270,000 Corning, Inc. .............................................................. 8,842
</TABLE>
Continued
40
B-161
<PAGE> 369
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Large Company Growth Fund
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ---------------------------------------------------------------------- -----
<S> <C> <C>
COMMON STOCKS, CONTINUED
175,000 Minnesota Mining & Manufacturing Co $ 10,019
--------
18,861
--------
Petroleum--Domestic (3.6%):
140,000 Amerada Hess Corp. ......................................................... 6,843
110,000 Kerr McGee Corp. ........................................................... 5,898
275,000 UNOCAL Corp. ............................................................... 7,597
--------
20,338
--------
Petroleum--International (2.4%):
150,000 Chevron Corp. .............................................................. 6,994
70,000 Mobil Corp. ................................................................ 6,720
--------
13,714
--------
Petroleum--Services (3.0%):
180,000 Halliburton Co. ............................................................ 6,435
167,700 Schlumberger, Ltd. ......................................................... 10,418
--------
16,853
--------
Photo Equipment (1.0%):
90,000 Eastman Kodak Co. .......................................................... 5,456
--------
Publishing (3.4%):
200,000 Gannett, Inc. .............................................................. 10,850
110,000 McGraw-Hill Cos., Inc. ..................................................... 8,346
--------
19,196
--------
Railroad (2.5%):
100,000 Norfolk Southern Corp. ..................................................... 6,738
135,000 Union Pacific Corp. ........................................................ 7,476
--------
14,214
--------
Restaurants (1.2%):
180,000 McDonald's Corp. ........................................................... 7,042
--------
Retail--Food Stores (1.3%):
150,000 Walgreen Co. ............................................................... 7,519
--------
Retail--General Merchant (1.2%):
260,000 Wal-Mart Stores, Inc. ...................................................... $ 6,955
--------
Retail--Specialty (1.4%):
265,000 Toys R Us (b)............................................................... 7,751
--------
Securities & Commissions Broker (1.1%):
80,000 Marsh & McLennan Cos., Inc. ................................................ 6,490
--------
Timeshare & Software (2.2%):
110,000 Automatic Data Processing, Inc. ............................................ 6,916
130,000 General Motors Corp., Class E .............................................. 5,655
--------
12,571
--------
Utilities--Gas/Pipeline (0.7%):
100,000 Consolidated Natural Gas Co. ............................................... 3,775
--------
Utilities--Telephone (2.9%):
160,000 AT&T ....................................................................... 8,500
175,000 GTE Corp. .................................................................. 5,972
50,000 Nynex Corp. ................................................................ 2,013
--------
16,485
--------
Total Common Stocks .................................................................. 533,868
--------
Total Investments, at value .......................................................... 533,868
--------
REPURCHASE AGREEMENTS (5.5%):
$ 31,322,000 Lehman Brothers, 6.15%, dated
6/30/95, due 7/3/95 (Collateralized
by $31,075,000 U.S. Treasury Notes,
6.63%, 3/31/97, market
value--31,970) ........................................................ 31,322
--------
Total Repurchase Agreements 31,322
--------
Total (Cost--$491,144)(a) $565,190
========
</TABLE>
- -------------
Percentages indicated are based on net assets of $565,941.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
approximately $90. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
Unrealized appreciation .......................... $79,316
Unrealized depreciation .......................... (5,360)
Net unrealized appreciation ...................... $73,956
(b) Represents non-income producing security.
ADR--American Depository Receipt
See notes to financial statements.
41
B-162
<PAGE> 370
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Disciplined Value Fund
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ -------------------------------------------------------------------------- -----
<S> <C>
COMMON STOCKS (91.5%):
Aircraft (0.9%):
57,000 United Technologies Corp. ................................................. $ 4,453
--------
Air Transport (0.9%):
60,000 British Airways PLC ........................................................ 4,035
--------
Apparel (2.2%):
310,000 Liz Claiborne, Inc. ....................................................... 6,587
70,000 V F Corp. ................................................................. 3,762
--------
10,349
--------
Banks (4.2%):
77,500 Central Fidelity Banks .................................................... 2,364
120,000 First Union Corp. ......................................................... 5,430
190,000 Keycorp ................................................................... 5,961
195,000 NBD Bancorp, Inc. ......................................................... 6,240
--------
19,995
--------
Beverages (2.6%):
25,250 Coors Adolph Co., Class B ................................................ 4,503
225,000 Seagram Co., Ltd. ........................................................ 7,791
--------
12,294
--------
Business Equipment & Services (2.2%):
60,000 Browning Ferris Industries, Inc. ......................................... 2,168
60,000 Flight Safety International .............................................. 2,925
200,000 Kelly Service ............................................................ 5,150
--------
10,243
--------
Chemicals--Petroleum & Inorganic (2.1%):
100,000 Olin Corp. ............................................................... 5,150
150,000 Shanghai Petrochemical: Integrated Petroleum ............................. 4,706
--------
9,856
--------
Chemicals--Specialty (1.0%):
170,000 Wellman, Inc. ............................................................ 4,654
--------
Communications Equipment (1.1%):
100,000 Harris Corp., Delaware ................................................... 5,163
--------
Computers--Micro (1.1%):
110,000 Apple Computer, Inc. ..................................................... 5,108
--------
Containers (1.1%):
150,000 Ball Corp. ............................................................... 5,231
--------
Cosmetics/Toiletry (0.8%):
135,000 Helene Curtis Industries, Inc., .......................................... 3,848
--------
Defense (2.0%):
85,000 Loral Corp. .............................................................. 4,399
30,000 Raytheon Co. ............................................................. 2,329
60,000 Rockwell International Corp. ............................................. 2,745
--------
9,473
--------
Electrical Equipment (0.7%):
60,000 Johnson Controls, Inc. .................................................... $ 3,390
--------
Electronic Components (1.8%):
90,000 Avnet, Inc. ............................................................... 4,354
210,000 Dallas Semiconductors Co. ................................................. 4,305
--------
8,659
--------
Food & Related (0.3%):
70,000 International Multifoods Corp. ............................................ 1,575
--------
Forest/Paper Products (5.3%):
60,000 International Paper Co. ................................................... 5,145
100,000 Pentair, Inc. ............................................................. 4,350
140,000 Rayonier, Inc. ............................................................ 4,970
100,000 Temple-Inland, Inc. ....................................................... 4,762
100,000 Union Camp Corp. .......................................................... 5,787
--------
25,014
--------
Health Care--Drugs (2.8%):
70,000 Baxter International, Inc. ................................................ 2,546
250,000 Marion Merrell Dow ........................................................ 6,375
120,000 UpJohn Co. ................................................................ 4,545
--------
13,466
--------
Health Care--General (2.5%):
50,000 Becton Dickinson & Co. .................................................... 2,913
165,000 Bergen Brunswick Corp. .................................................... 3,774
225,000 Emphesys Financial Group .................................................. 5,316
--------
12,003
--------
Hospital Supply & Management (2.4%):
500,000 Community Psychiatric Centers ............................................. 5,625
276,100 United Wisconsin Services ................................................. 5,522
--------
11,147
--------
Household--Major Appliances (1.1%):
150,000 Briggs & Stratton Corp. ................................................... 5,175
--------
Insurance--Life (2.5%):
120,000 Jefferson Pilot Corp. ..................................................... 6,570
160,000 Ohio Casualty Corp. ....................................................... 5,040
--------
11,610
--------
Insurance--Property/Casualty (4.8%):
105,000 Ace Limited ............................................................... 3,045
10,000 Berkshire Hathaway, Inc.(b) ............................................... 235
65,000 CIGNA Corp. ............................................................... 5,046
40,000 MBIA, Inc. ................................................................ 2,660
160,000 Partnerre Holdings Ltd. ................................................... 4,180
100,000 St. Paul Cos., Inc. ....................................................... 4,925
40,000 Transatlantic Holding, Inc. ............................................... 2,600
--------
22,691
--------
</TABLE>
Continued
42
B-163
<PAGE> 371
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Disciplined Value Fund
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
Disciplined Value Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ---------------------------------------------------------------------- -----
<S> <C> <C>
COMMON STOCKS, CONTINUED
Metals & Mining (2.9%):
160,000 Asarco, Inc. .............................................................. $ 4,880
320,000 Kloff Gold Mines .......................................................... 3,480
90,000 Phelps Dodge Corp. ........................................................ 5,310
--------
13,670
--------
Multiple Industry (2.9%):
220,000 American Financial Group .................................................. 5,720
270,000 Hanson PLC ................................................................ 4,759
235,000 U.S. Industries, Inc. ..................................................... 3,202
--------
13,681
--------
Non-Residual Construction (1.0%):
205,000 Granite Construction, Inc. ................................................ 4,561
--------
Petroleum--Domestic (3.1%):
150,000 Ashland, Inc. ............................................................. 5,269
110,000 Murphy Oil Corp. .......................................................... 4,510
185,000 Sun Co., Inc. ............................................................. 5,064
--------
14,843
--------
Petroleum--International (4.2%):
110,000 Exxon Corp. ............................................................... 7,769
210,000 Repsol S.A.-ADR ........................................................... 6,641
180,000 Total S.A.-ADR ............................................................ 5,445
--------
19,855
--------
Publishing (2.2%):
80,000 Knight-Rider, Inc. ........................................................ 4,550
240,000 New York Times Co., Class A ............................................... 5,640
--------
10,190
--------
Railroad (1.5%):
125,000 Conrail, Inc. ............................................................. 6,953
--------
Retail--Food Stores (1.2%):
500,000 Brunos Inc. ............................................................... 5,812
--------
Retail--General Merchandise (0.6%):
200,000 TJX Cos., Inc. ............................................................ 2,650
--------
Retail--Specialty (4.4%):
300,000 Charming Shoppes, Inc. .................................................... 1,575
700,000 Hechinger Co., Class A .................................................... 5,031
260,000 Ross Stores ............................................................... 3,055
300,000 Smith Food & Drug ......................................................... 5,925
105,000 Tandy Corp. ............................................................... 5,447
--------
21,033
--------
Savings & Loans (0.4%):
68,900 ONBANCorp, Inc. ........................................................... $ 1,955
--------
Textile (0.8%):
105,000 Spring Industries, Inc., Class A .......................................... 3,911
--------
Tobacco (0.9%):
110,000 American Brands, Inc. ..................................................... 4,373
--------
Trucking (1.2%):
125,000 Roadway Services, Inc.(b) ................................................. 5,906
--------
Utilities--Electric (12.1%):
200,000 Central & South West Corp. ................................................ 5,250
150,000 Consolidated Edison Co., Inc. ............................................. 4,425
200,000 Florida Progress Corp. .................................................... 6,250
150,000 General Public Utilities Corp. ............................................ 4,462
100,400 LG&E Energy Corp. ......................................................... 3,916
186,100 New York State Electric & Gas ............................................. 4,350
142,400 Northern States Power Co. ................................................. 6,568
160,000 Oklahoma Gas & Electric ................................................... 5,620
200,000 SCE Corp. ................................................................. 3,425
170,000 Union Electric Co. ........................................................ 6,332
235,000 Wisconsin Energy Corp. .................................................... 6,580
--------
57,178
--------
Utilities--Telephone (5.7%):
90,000 Ameritech Corp. ........................................................... 3,960
70,000 Bellsouth Corp. ........................................................... 4,445
150,000 Southern New England Telecommunications ................................... 5,288
150,000 Tele Danmark A/S-ADR ...................................................... 4,200
120,000 Telefonica de Espana ...................................................... 4,650
155,000 Telefonos de Mexico--CL-L ADR ............................................. 4,592
--------
27,135
--------
Total Common Stocks .................................................................. 433,138
--------
Total Investments, at value .......................................................... 433,138
--------
REPURCHASE AGREEMENTS (7.7%):
$36,243,000 Lehman Brothers, 6.10%, dated
6/30/95, due 7/3/95 (Collateralized
by $38,395,000 various
Federal National Mortgage Assoc., 0.00%,
1/22/96-3/1/96, market
value--$36,968)......................................................... 36,243
--------
Total Repurchase Agreements .......................................................... 36,243
--------
Total (Cost--$441,020)(a) ............................................................ $469,381
========
</TABLE>
- --------------
Percentages indicated are based on net assets of $473,312.
(a) Represents cost for financial reporting purposes and differs from
cost basis for federal income tax purposes by the amount of losses
recognized for financial reporting in excess of federal income tax
reporting of approximately $72. Cost for federal income tax purposes
differs from value by net unrealized appreciation of securities as
follows:
Unrealized appreciation ......................... $37,097
Unrealized depreciation ........................ (8,808)
Net unrealized appreciation .................... $28,289
(b) Represents non-income producing security.
See notes to financial statements.
43
B-164
<PAGE> 372
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Small Company Growth Fund
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ---------- ------------------------------------------------------------------ --------
<S> <C> <C>
COMMON STOCK (95.3%):
Air Transport (0.3%):
114,400 American West(b) ................................................... $1,387
--------
Aluminum (0.7%):
100,000 Alumax, Inc.(b) .................................................... 3,113
--------
Apparel (2.1%):
100,000 Jones Apparel Group(b) ............................................. 2,987
105,000 Nautica Enterprises, Inc.(b) ....................................... 3,806
80,000 Tommy Hilfiger(b) .................................................. 2,240
--------
9,033
--------
Banks (4.1%):
30,000 Amsouth Bancorp .................................................... 979
60,000 BayBanks, Inc. ..................................................... 4,755
35,000 First American Corp. -- Tennessee .................................. 1,256
30,000 First Commerce Corp. ............................................... 885
10,000 First Tennessee National Corp. ..................................... 464
60,000 Integra Financial Corp. ............................................ 2,918
50,000 Midatlantic Corp., Inc. ............................................ 2,000
30,000 Southtrust Corp.(b) ................................................ 694
20,000 UJB Financial Corp. ................................................ 607
30,000 Union Planters Corp. ............................................... 802
100,000 Washington Mutual, Inc. ............................................ 2,344
--------
17,704
--------
Beverages (0.8%):
75,000 Canadiagua Wine(b) ................................................. 3,356
--------
Business Equipment & Services (4.0%):
132,000 Barefoot, Inc. ..................................................... 1,831
50,000 Cintas Corp. ....................................................... 1,775
80,000 Franklin Quest(b) .................................................. 1,920
30,000 Olsten Corp. ....................................................... 982
190,200 Pyxis Corp.(b) ..................................................... 4,303
80,000 Service Corp., Inc. ................................................ 2,530
100,000 United Waste Systems, Inc.(b) ...................................... 3,600
--------
16,941
--------
Capital Equipment (4.7%):
49,500 Diebold, Inc. ...................................................... 2,153
222,000 Gasonics International(b) .......................................... 6,327
99,800 Giddings & Lewis, Inc. ............................................. 1,784
160,000 Harnischfeger Industries, Inc. ..................................... 5,540
53,000 Teleflex, Inc. ..................................................... 2,279
70,000 Wabash National Corp. .............................................. 2,179
--------
20,262
--------
Chemical--Petroleum & Inorganic (0.0%):
5,800 Schulman, Inc. ..................................................... 167
--------
Chemical--Specialty (1.2%):
90,400 Air Gas Industry(b) ................................................ 2,430
50,000 Minerals Technologies, Inc. ........................................ 1,800
91,000 Uniroyal Chemical(b) ............................................... 1,035
--------
5,265
--------
Coal (0.4%):
70,000 Pittston Co. ....................................................... 1,680
--------
Communications Equipment (0.9%):
60,000 Antec Corp.(b) ..................................................... 990
55,000 StrataCom, Inc.(b) ................................................. 2,681
--------
3,671
--------
Computers--Peripherals (7.2%):
120,000 American Power(b) .................................................. 2,745
90,000 Cadence Designs(b) ................................................. 2,914
5,000 Chipcom Corp.(b) ................................................... 119
130,000 Danka Business Systems ADR ......................................... 3,144
140,700 Global Village Communication(b) .................................... 2,198
21,200 Informix Corp.(b) .................................................. 538
130,000 Keane, Inc.(b) ..................................................... 3,234
30,000 Landmark Graphics(b) ............................................... 765
20,000 Parametric Technology(b) ........................................... 995
150,500 Quantum Corp.(b) ................................................... 3,443
54,500 Read-Rite Corp.(b) ................................................. 1,458
140,000 Softkey International(b) ........................................... 4,462
40,000 Sterling Software(b) ............................................... 1,540
50,000 Synopsis, Inc.(b) .................................................. 3,131
5,000 System Software Assoc., Inc. ....................................... 100
--------
30,786
--------
Construction Materials (0.7%):
34,200 Crane Co. .......................................................... 1,240
70,000 Fastenal Corp. ..................................................... 1,912
--------
3,152
--------
Consumer Electronics (0.9%):
90,500 Harman International ............................................... 3,665
--------
Cosmetic Toiletry (0.4%):
50,000 Alberto Culver Co. ................................................. 1,513
--------
Electrical Equipment (1.0%):
83,500 Federal Signal Corp. ............................................... 1,806
61,920 Mark IV ............................................................ 1,331
60,000 Whittaker Corp.(b) ................................................. 1,320
--------
4,457
--------
Electronic Components (11.8%):
50,000 Altera Corp.(b) .................................................... 2,162
60,000 Amphenol Corp(b) ................................................... 1,748
125,000 Analog Devices, Inc.(b) ............................................ 4,250
74,000 Applied Materials, Inc.(b) ......................................... 6,410
53,700 Cabletron Systems(b) ............................................... 2,860
66,500 Cypress Semiconductors(b) .......................................... 2,693
159,700 FSI International, Inc.(b) ......................................... 3,724
</TABLE>
Continued
44
B-165
<PAGE> 373
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Small Company Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ------------------------------------------------------- ------
<S> <C> <C>
COMMON STOCK, CONTINUED:
Electronic Components, continued:
225,000 Genus, Inc.(b).......................................... $ 3,051
70,000 Komag, Inc.(b).......................................... 3,640
180,000 Lattice Semiconductor Corp.(b) ......................... 6,188
80,000 Micro Chip Technology(b) ............................... 2,910
150,000 National Semiconductor Corp.(b) ........................ 4,163
10,500 Nexgen(b)............................................... 248
5,000 Paradigm Technology, Inc.(b) ........................... 70
10,000 Store Media(b).......................................... 315
90,800 VLSI Technology, Inc.(b) ............................... 2,735
15,000 Xilinx, Inc.(b)......................................... 1,410
35,000 Zilog, Inc.(b).......................................... 1,746
--------
50,323
--------
Electronic Instruments (4.9%):
900 Asyst Technologies, Inc.(b) ............................. 33
28,000 KLA Instruments Corp.(b) ................................ 2,163
145,500 LTX Corp................................................. 1,291
110,000 Silicon Valley Group, Inc.(b) ........................... 3,988
65,000 Tektronix, Inc........................................... 3,201
75,000 Teradyne, Inc.(b)........................................ 4,903
155,000 Ultratech Stepper, Inc.(b) .............................. 5,463
--------
21,042
--------
Finance Companies (3.2%):
127,000 Aames Financial Corp. ................................... 2,302
50,000 Advanta Corp............................................. 1,888
75,000 Capital One Financial Corp. ............................. 1,463
159,300 Olympic Financial Ltd.(b) ............................... 2,658
20,000 Regional Acceptance Corp.(b) ............................ 355
59,000 Robert Half International, Inc.(b) ...................... 1,512
100,000 The Money Store, Inc. ................................... 3,581
--------
13,759
--------
Food & Related (0.8%):
100,000 General Nutrition Co.(b) ............................... 3,513
--------
Forest/Paper Products (2.6%):
80,000 Bowater, Inc............................................ 3,590
55,000 Chesapeake Corp......................................... 1,712
70,000 Federal Paper Board, Inc. .............................. 2,476
60,000 Rayonier, Inc........................................... 2,130
30,000 Sealed Air Corp.(b)..................................... 1,320
--------
11,228
--------
Gold/Precious Metals (0.5%):
45,300 ASA Ltd................................................ 1,947
--------
Health Care--Drugs (6.3%):
91,000 Cardinal Health, Inc.................................... 4,300
150,000 Elan Corp. ADS(b)....................................... 6,113
56,500 Forest Laboratories(b).................................. 2,507
55,150 Genzyme Corp............................................ 2,206
57,500 Mycogen Corp.(b)........................................ 474
130,000 Sunrise Medical, Inc.(b) ............................... 4,046
105,000 Teva Pharmaceutical..................................... 3,937
80,000 Watson Pharmaceutical(b) ............................... 3,120
--------
26,703
--------
Health Care--General (1.8%):
54,000 Amerisource(b).......................................... 1,232
65,700 APPS Dental(b).......................................... 750
70,000 Horizon Health(b)....................................... 1,251
2,500 Sun Healthcare(b)....................................... 39
100,000 Value Health, Inc.(b)................................... 3,225
60,000 Ventritex, Inc.(b)...................................... 1,013
--------
7,510
--------
Homebuilding, Mobil Homes (0.8%):
85,000 Oakwood Homes........................................... 2,178
50,000 Webb Corp............................................... 1,163
--------
3,341
--------
Hospital Supply & Management (2.4%):
45,000 HBO & Co.(b)............................................ 2,453
60,000 Health Management Assoc., Inc.(b) ...................... 1,755
60,000 Healthcare Compare Corp.(b) ............................ 1,800
40,000 Healthcare & Retirement(b) ............................. 1,170
5,300 Medaphis Corp.(b)....................................... 115
60,000 Mid Atlantic Medical Services(b) ....................... 1,110
145,100 Physicians Resource Group, Inc.(b) ..................... 1,941
--------
10,344
--------
Hotels & Gaming (0.5%):
65,000 Hospitality Franchise Systems(b) ....................... 2,251
--------
Household--Major Appliances (0.1%):
30,000 Juno Lighting, Inc...................................... 480
--------
Insurance--Life (0.4%):
15,000 Equitable of Iowa....................................... 493
40,000 Protective Life Corp.................................... 1,090
--------
1,583
--------
Insurance--Property/Casualty (2.4%):
60,000 Allied Group, Inc....................................... 1,710
70,000 MGIC Investment Corp.................................... 3,281
70,000 Mid Ocean Ltd........................................... 2,214
90,000 Midland Financial....................................... 1,665
29,300 PMI Group, Inc.......................................... 1,271
--------
10,141
--------
Leisure Time Industries (1.2%):
100,000 Loewen Group, Inc....................................... 3,563
40,000 Stewart Enterprises..................................... 1,340
--------
4,903
--------
</TABLE>
Continued
45
B-166
<PAGE> 374
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Small Company Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ --------------------------------------------------- -----
<S> <C> <C>
COMMON STOCK, CONTINUED:
Mining (0.6%):
90,500 Asarco, Inc......................................... $ 2,760
--------
Motor Vehicle Parts (2.0%):
109,600 Allen Group.......................................... 3,247
118,800 Copart, Inc.(b)...................................... 2,703
9,100 Exide Corp........................................... 391
10,000 Gentex Corp.(b)...................................... 198
83,500 Titan Wheel International, Inc. ..................... 2,150
--------
8,689
--------
Motor Vehicles (0.5%):
200,000 AmeriCredit Corp.(b)................................. 2,225
--------
Multiple Industry (2.2%):
15,400 ACT Networks, Inc.(b)................................. 266
56,000 American Radio(b)..................................... 1,274
2,000 HNC Software(b)....................................... 42
144,400 Mobil Media(b)........................................ 2,960
100,000 Numerex Corp.......................................... 1,125
15,500 Oak Technologies(b)................................... 570
116,800 Studio Plus Hotels, Inc. ............................. 1,956
60,000 Whitman Corp.......................................... 1,163
--------
9,356
--------
Non-Residential Construction (0.4%):
89,900 CDI Co.p.(b) ......................................... 1,843
--------
Petroleum--Domestic (2.6%):
115,000 Apache Corp........................................... 3,148
100,100 Noble Affiliates, Inc................................. 2,552
50,000 Quaker State Corp. .............................. 750
200,000 Union Texas Petroleum Holdings ....................... 4,225
20,000 Valero Energy......................................... 405
--------
11,080
--------
Petroleum--Services (1.3%):
109,000 NL Industries, Inc.(b)................................ 1,458
128,200 Seitel, Inc.(b)....................................... 3,974
--------
5,432
--------
Photography Equipment (0.2%):
49,100 X-Rite, Inc........................................... 908
--------
Publishing (0.9%):
90,900 Meredith Corp......................................... 2,306
29,000 Scholastic Corp.(b)................................... 1,573
--------
3,879
--------
Restaurants (2.3%):
161,700 Apple South........................................... 3,153
150,600 Bob Evans Farms, Inc.................................. 3,068
99,000 Lone Star Restaurants(b) ............................. 3,001
15,200 Starbucks Corp.(b).................................... 541
--------
9,763
--------
Retail--Food Stores (0.7%):
100,000 Eckerd Corp.(b)....................................... 3,200
--------
Retail--Specialty Stores (5.0%):
40,000 Bed & Bath & Beyond(b)................................ 970
300,000 Borders Group, Inc.(b)................................ 4,312
173,600 Global Directmail Corp.(b) ........................... 3,429
40,000 Gymboree Corp.(b)..................................... 1,162
30,300 Just For Feet, Inc.................................... 1,208
15,000 Michael's Stores(b)................................... 319
140,000 Officemax, Inc.(b).................................... 3,903
36,000 Revco D.S., Inc.(b)................................... 864
65,000 Sunglass Hut Intl., Inc.(b) .......................... 2,275
90,000 Tiffany & Co.......................................... 3,060
--------
21,502
--------
Savings & Loans (1.7%):
20,000 Astoria Financial Corp.(b) ........................... 715
25,000 California Federal Bank(b) ........................... 328
40,000 Commercial Federal Corp.(b) .......................... 1,090
25,000 FirstFed Michigan Corp. .............................. 700
30,500 First Financial Corp. Wisconsin ...................... 534
80,000 Great Western Financial Corp. ........................ 1,650
65,500 Standard Federal Bancorp ............................. 2,202
--------
7,219
--------
Securities & Commercial Brokers (1.6%):
60,000 First USA, Inc........................................ 2,663
60,000 Insurance Auto Auctions, Inc.(b) ..................... 1,755
67,000 Mutual Risk Management, Ltd. ......................... 2,245
--------
6,663
--------
Textile (0.5%):
100,000 G & K Services........................................ 1,950
--------
Timeshare & Software (0.9%):
70,000 Fiserv, Inc.(b)....................................... 1,969
64,400 Uunet Technologies, Inc.(b) .......................... 1,771
--------
3,740
--------
Trucking (0.8%):
80,000 American Freightways Corp.(b) ........................ 1,640
90,000 TNT Freightways Corp.................................. 1,789
--------
3,429
--------
Utilities--Electric (1.2%):
215,000 California Energy, Inc.(b) ........................... 3,521
52,000 Enron Global Power & Pipeline ........................ 1,235
Continued
</TABLE>
46
B-167
<PAGE> 375
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Small Company Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ---------------------------------------------------------------------- -----
<S> <C> <C>
COMMON STOCK, CONTINUED:
Utilities--Electric, continued:
5,500 Lincoln Electric ......................................................... $ 165
--------
4,921
--------
Utilities--Gas & Pipeline (0.2%):
60,000 Westcoast, Inc. .......................................................... 885
--------
Utilities--Telephone (0.6%):
72,000 Telephone & Data Systems, Inc. ........................................... 2,619
--------
Total Common Stocks ................................................................. 407,283
PARTICIPATING UNITS (0.0%):
3,040 Apria Healthcare Group, Inc................................................ 86
--------
Total Participating Units ........................................................... 86
--------
Total Investments, at value ......................................................... 407,369
--------
REPURCHASE AGREEMENTS (2.9%):
$12,390,000 Lehman Brothers, 6.10%, dated
6/30/95, due 7/3/95
(Collateralized by $12,925,000
various U.S Government
Securities, 0.00%, 7/5/95-5/31/96,
market value--$12,639) ......................................... $ 12,390
--------
Total Repurchase Agreements ......................................................... 12,390
--------
Total (Cost--$362,501)(a) ........................................................... $419,759
========
</TABLE>
- -------------
Percentages indicated are based on net assets of $427,483.
(a) Represents cost for financial reporting purposes and differs from
cost basis for federal income tax purposes by the amount of losses
recognized for financial reporting in excess of federal income tax
reporting of approximately $1,410. Cost for federal income tax
purposes differs from value by net unrealized appreciation of
securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ........ $ 64,660
Unrealized depreciation ........ (8,812)
--------
Net unrealized appreciation..... $ 55,848
========
</TABLE>
(b) Represents non-income producing security.
ADR--American Depository Receipt
See notes to financial statements.
47
B-168
<PAGE> 376
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<S> <C>
COMMON STOCKS (97.6%):
Argentina (0.8%):
53 Ba Embotllodora ........................................................... $ 67
60,475 Cia Bavuera Oerez Companc SA .............................................. 254
4,954 Ciadea SA ................................................................. 24
89,920 Telecom Argentina SA--Class B ............................................. 409
258,880 Telefonica de Argentina--Class B .......................................... 650
17,801 Yacimentos Petroliferos Fiscades SA ....................................... 339
------
1,743
------
Australia (2.3%):
220,700 Boral Ltd. ................................................................ 551
69,520 Broken Hill Proprietary Co. ............................................... 854
25,225 Coles Myer Ltd. ........................................................... 79
55,500 CSR Ltd. .................................................................. 173
41,900 Email Ltd. ................................................................ 102
51,900 Fai Insurances Ltd. ....................................................... 21
138,000 General Property Trust .................................................... 233
80,000 M.I.M. Holdings Ltd. ...................................................... 99
119,800 National Australian Bank Ltd. ............................................. 945
20,250 News Corp. Ltd. ........................................................... 100
20,800 Newcrest Mining Ltd. ...................................................... 88
126,700 Pioneer International Ltd. ................................................ 315
40,400 Southcorp Holdings Ltd. ................................................... 81
104,800 Stockland Group ........................................................... 244
88,900 News Corp. Ltd. ........................................................... 496
54,600 TNT Ltd.(b) ............................................................... 72
47,200 Western Mining Corp., Holding Ltd. ........................................ 259
81,100 Westfield Trust Units ..................................................... 142
93,900 Westpac Banking Corp.(b) .................................................. 339
------
5,193
------
Austria (1.5%):
950 Austrian Airlines(b) ....................................................... 161
13,650 Bank of Austria ............................................................ 1,136
1,950 Bank of Austria, Participating Certificates ................................ 69
250 BWT AG ..................................................................... 30
1,848 Constantia Industries Holding(b) ........................................... 124
2,450 Creditanstalt Bankverein ................................................... 144
1,100 EA Generali AG ............................................................. 324
1,000 Lenzing AG ................................................................. 93
3,450 OEMV AG .................................................................... 398
850 Osterreichische Brau-Beteiligungs AG ....................................... 45
5,350 Osterreichische Elekrizitaitswirts AG(b) ................................... 392
6,500 Steyr-Daimler-Puch AG(b) ................................................... 117
1,300 Veitsch-Radex AG(b) ........................................................ 31
750 Wienerberger Baustoffindustrie AG .......................................... 288
------
3,352
------
Belgium (1.9%):
17,580 Delhaize Le Lion--PS ....................................................... 792
5,597 Electrabel NPV ............................................................. 1,184
1,592 Fortis AG .................................................................. 169
1,116 GBL Bruxelles Lambert--PS .................................................. 150
1,017 Generale de Banque SA ...................................................... 327
346 Kredietbank ................................................................ 82
1,302 Kredietbank AFVL ........................................................... 309
2,990 NV Union Miniere SA(b) ..................................................... 196
2,236 Petrofina SA NPV ........................................................... 676
699 Royal Belge SA ............................................................. 132
343 Solvay SA .................................................................. 190
------
4,207
------
Brazil (0.9%):
378,000 Centrais Eletrobras ........................................................ 104
1,133,000 Cia Vale Do Rio Doce ....................................................... 332
1,211,000 Eletrobras Cent El ......................................................... 329
355,000 Light Servicos de El ....................................................... 112
886,000 Petrol Brasil .............................................................. 77
141,000 Sadia Concordia SA ......................................................... 131
3,589,000 Sid Nacional ............................................................... 81
13,000 Souza Cruz ................................................................. 99
10,660,819 Telec Brasileiras TE ....................................................... 337
828,000 Telesp Tel S Paulo ......................................................... 105
1,458,000 Vale Rio Doce .............................................................. 224
------
1,931
------
Denmark (1.3%):
3,550 Carlsberg AG ............................................................... 165
2,650 Carlsberg AS-B ............................................................. 124
4,900 Den Danske Bank ............................................................ 308
13 D/S 1912--B ................................................................ 248
9 D/S Svendborg--B ........................................................... 247
300 FLS Industries A/S B ....................................................... 30
2,850 ISS--International Service System--Class B ................................. 74
300 J Lauritzen Holdings A/S ................................................... 59
250 Korn-Og Foderstof .......................................................... 10
150 NKT Holdings AS ............................................................ 9
3,100 Novo Nordisk A/S B ......................................................... 331
3,072 Royal Copenhagen A/S Class A ............................................... 273
600 Superfos AS ................................................................ 49
12,650 Tele Danmark AS Class B .................................................... 704
3,750 Unidanmark A/S A ........................................................... 184
------
2,815
------
Finland (0.8%):
135,320 Kansallis Banking Group(b) ................................................. 147
16,400 Kymmene OY ................................................................. 511
14,500 Nokia AB ................................................................... 860
8,200 Repola OY SI ............................................................... 173
1,200 Sampo Insurance Co. A Free ................................................. 60
40,400 Unitas Bank Ltd. A(b) ...................................................... 131
------
1,882
------
France (9.4%):
2,200 Accor SA ................................................................... 293
11,800 Alcatel Alsthom ............................................................ 1,063
12,450 Axa SA ..................................................................... 673
</TABLE>
Continued
48
B-169
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<S> <C>
COMMON STOCKS, CONTINUED:
France, continued:
12,200 Banque National de Paris ............................................... $ 589
3,000 BIC .................................................................... 495
1,050 Bouygues ............................................................... 126
8,200 Carnaud Metal Box--SA .................................................. 367
1,680 Carrefour .............................................................. 861
440 Chargeurs .............................................................. 86
7,300 Cie Financiere de Paribas .............................................. 439
4,950 Compagnie de St. Gobain(b) ............................................. 599
9,600 Compagnie de Suez ...................................................... 535
17,850 Compagnie Francaise de Petroleum Total(b) .............................. 1,075
750 Compagnie Francaise de Petroleum Total Certificates Petroliers(b) ...... 34
7,150 Compagnie Generale des Eaux ............................................ 797
650 Credit Foncier de France ............................................... 72
5,250 Danone Group ........................................................... 884
1,150 Dollfus-Mieg & Cie ..................................................... 65
1,650 Ecco SA ................................................................ 259
21,350 Elf Aquitaine .......................................................... 1,579
6,600 Elf Sanofi ............................................................. 366
4,450 Eridania Beghin Say .................................................... 687
3,250 Havas .................................................................. 258
1,300 Imetal ................................................................. 153
5,455 L'Air Liquide .......................................................... 872
6,235 Lafarge Coppee ......................................................... 485
7,750 Lagardere Group ........................................................ 161
7,750 Lagardere Group Warrants ............................................... 5
2,000 Legrand(b) ............................................................. 318
4,450 L'Oreal ................................................................ 1,117
8,140 LVMH Moet Hennessy Louis Vuitton ....................................... 1,466
3,700 Lyonnaise des Eaux Dumez ............................................... 350
7,550 Michelin B ............................................................. 335
8,120 Pernod Ricard .......................................................... 534
1,500 Pinault-Printemps Redoute(b) ........................................... 322
1,200 Promodes ............................................................... 274
4,350 PSA Peugeot Citroen(b) ................................................. 604
26,850 Rhone-Poulenc--A ....................................................... 606
5,450 Schneider SA ........................................................... 431
450 Societe d'Applications Generales D'electricite et de Mecanique(b) ...... 259
5,273 Societe Generale de Paris .............................................. 617
8,350 Thomson CSF(b) ......................................................... 187
-------
21,298
-------
Germany (14.4%):
600 AGIV AG--Fuer Industrie und Verkehrswesen .............................. 194
2,474 Allianz AG Holdings .................................................... 4,429
1,924 Allianz AG Holdings Rights(b) .......................................... 143
440 AMB--AAchener und Muenchener-Beteiligungs AG ........................... 305
110 AMB--AAchener und Muenchener-Beteiligungs AG, Registered ............... 81
280 Asko deutsche kaufhaus AG .............................................. 175
4,780 BASF AG ................................................................ 1,019
5,530 Bayer AG ............................................................... 1,373
1,310 Bayer Hypotheken--und Wechsel-Bank AG .................................. 357
1,730 Bayerische Vereinsbank(b) .............................................. 524
430 Beiersdorf ............................................................. 341
220 Bilfinger & Berger Bau AG .............................................. 102
17 CKAG Colonia Knozern ................................................... 15
230 Colonia konzern AG-R ................................................... 207
4,540 Daimler Benz AG ........................................................ 2,087
730 Degussa ................................................................ 228
46,900 Deutsche Bank AG ....................................................... 2,280
3,680 Deutsche Lufthansa AG(b) ............................................... 532
310 Douglas Holdings AG .................................................... 117
28,800 Dresdner Bank AG ....................................................... 832
150 Escada AG .............................................................. 33
900 Fag Kuglefischer George Schaefer Kommanditgesellschaft Auf Aktien(b) ... 123
490 Heidelberger Zement AG ................................................. 419
900 Hochtief AG ............................................................ 504
500 Karstadt AG ............................................................ 219
1,170 Kaufhof AG ............................................................. 420
2,270 Kloeckner, Humbolt-Deutz AG(b) ......................................... 75
490 Linde AG(b) ............................................................ 290
490 Linotype-Hell AG(b) .................................................... 109
1,060 Man AG ................................................................. 272
3,880 Mannesmann AG .......................................................... 1,184
70 Muenshener Ruechver-Sicherungs Gesellschaft ............................ 132
785 Muenshener Ruechver-Richerung Gesellschaft--Vink ....................... 1,718
2,780 Preussag AG ............................................................ 831
3,177 RWE--Rheinisch-Westfaelisches Elektrizitaetswerk AG .................... 1,103
220 Salamander AG .......................................................... 46
690 SAP AG ................................................................. 916
470 SAP AG--Vorzug ......................................................... 595
4,500 Schering AG ............................................................ 314
6,370 Siemens AG ............................................................. 3,153
3,265 Thyssen AG(b) .......................................................... 608
6,230 Veba AG ................................................................ 2,443
1,550 Viag AG ................................................................ 608
3,670 Volkswagen AG .......................................................... 1,056
580 Volkswagen AG Vorzugsaktien ............................................ 128
-------
32,640
-------
Greece (1.1%):
6,700 Alpha Credit Bank ...................................................... 372
9,931 Commercial Bank of Greece .............................................. 424
6,650 Ergo Bank .............................................................. 306
11,050 Hellenic Bottling ...................................................... 328
8,650 Hellenic Sugar ......................................................... 131
26,960 Heracles General Cement Co. ............................................ 264
</TABLE>
Continued
49
B-170
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<S> <C>
COMMON STOCKS, CONTINUED:
Greece, continued:
2,900 Intracom SA ........................................... $ 80
7,090 Intracom GRD 700 BR Bonus Issue(b) .................... 166
5,900 National Bank of Greece ............................... 322
-------
2,393
-------
Hong Kong (0.8%):
158,400 Applied International Holdings(b) ..................... 16
30,700 Bank of East Asia ..................................... 92
95,000 Cathay Pacific Airways ................................ 139
106,000 Hong Kong Telecommunications .......................... 210
145,000 Hutchison Whampoa ..................................... 701
215,000 Oriental Press Group .................................. 87
68,000 Swire Pacific Ltd. A .................................. 519
13,000 Television Broadcasts ................................. 46
13,440 Wing Lung Bank ........................................ 76
-------
1,886
-------
Indonesia (1.3%):
167,000 Astra International PT--Foreign Registry .............. 296
25,000 Bank International Indonesia PT ....................... 77
136,000 Bank International Indonesia PT--Foreign Registry ..... 318
203,000 Barito Pacific Tim .................................... 292
41,500 Gudang Garam .......................................... 319
69,000 Indocement Tunggal Prakarsa PT--Foreign Registry ...... 271
45,000 Indosat PT ............................................ 171
40,500 Init Indorayon ........................................ 88
1,246,000 Polysindo Eka Perkasa PT(b) ........................... 700
36,000 Sampoerna HS .......................................... 283
86,000 Smart(b) .............................................. 91
53,000 Smart Valorin(b) ...................................... 56
-------
2,962
-------
Ireland (0.2%):
55,400 Allied Irish Banks .................................... 261
27,400 James Crean PLC ....................................... 96
-------
357
-------
Italy (6.6%):
19,800 Acciaerie e Ferriere Lombarde Falck SPA(b) ............ 28
206,000 Alitalia SPA .......................................... 98
103,480 Assicorazioni Generali SPA ............................ 2,432
207,000 Banca Commerciale Italiana ............................ 468
28,200 Banca Nazionale Dell'agricoltura SPA .................. 22
82,800 Banco Ambrosiano Veneto SPA ........................... 274
27,800 Benetton Group SPA .................................... 275
25,500 Burgo ................................................. 168
344,000 Credito Italiano ...................................... 399
69,500 Edison SPA ............................................ 310
506,800 Fiat SPA .............................................. 1,787
149,400 Fiat SPA Privileged(b) ................................ 325
106,100 Fiat SPA di Risp non convertible(b) ................... 229
133,000 Fidis-finanziaria di sviluppo SPA ..................... 284
67,800 Impregilo SPA(b) ...................................... 65
202,300 Ing C Olivetti & C SPA(b) ............................. 198
112,600 Istituto Bancario san Paolo di Torina ................. 610
28,000 Italcementi SPA(b) .................................... 193
106,900 Italgas ............................................... 278
22,600 La Previdenta Assicurazoni SPA ........................ 163
35,600 La Rinascente SPA ..................................... 202
68,720 Mediobanca SPA ........................................ 499
636,000 Montedison SPA ........................................ 455
166,100 Parmalat finanziaria SPA .............................. 148
240,900 Pirelli SPA(b) ........................................ 320
51,300 Ras--Riuniune Adriatici de Sicurta SPA ................ 543
15,200 Ras RNC ............................................... 97
13,600 Riunione Adruatica di Sicurt SPA di Risp .............. 87
18,000 Sai--Societa Assicuratrice Industriale SPA ............ 192
55,700 Saipem ................................................ 112
55,700 Sirti SPA ............................................. 412
87,500 SME Meridionale SPA ................................... 218
994,600 Telecom Italia SPA .................................... 2,696
214,400 Telecom Italia--di Risp ............................... 454
-------
15,041
-------
Japan (30.1%):
13,000 Ajinomoto Co. ......................................... 134
9,000 Amano Corp. ........................................... 106
32,000 Aoki Corp.(b) ......................................... 116
2,000 Arabian Oil Co. ....................................... 85
74,000 Asahi Bank, Ltd. ...................................... 790
3,000 Asahi Breweries Ltd. .................................. 35
72,000 Asahi Chemical Industry ............................... 473
20,000 Asahi Glass Co. Ltd. .................................. 221
27,000 Asahi Optical(b) ...................................... 90
63,000 Asics Corp. ........................................... 175
56,000 Bank of Tokyo ......................................... 898
78,000 Bank of Yokohama ...................................... 662
19,000 Bridgestone Corp. ..................................... 280
27,000 Canon, Inc. ........................................... 439
22,000 Chiba Bank ............................................ 200
9,000 Chugai Pharmaceutical ................................. 91
40,000 Citizen Watch ......................................... 248
26,000 Cosmo Oil Co., Ltd. ................................... 147
18,000 Dai Nippon Printing Co., Ltd. ......................... 287
53,000 Daido Steel Co. ....................................... 250
9,000 Daifuku Co. ........................................... 101
96,000 Dai-Ichi Kangyo Bank .................................. 1,732
15,000 Daikin Industries, Ltd. ............................... 121
9,000 Daishowa Paper Manufacturing Co., Ltd.(b) ............. 40
9,000 Daito Trust ........................................... 84
17,000 Daiwa House Industries................................. 261
</TABLE>
Continued
50
B-171
<PAGE> 379
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<S> <C>
COMMON STOCK, CONTINUED:
Japan, continued:
65,000 Daiwa Securities Co., Ltd. ............................... $ 685
97,000 Denki Kagaku Kogyo(b) .................................... 323
7,000 Ebara Corp. .............................................. 85
8,000 Fanuc Co. ................................................ 345
110,000 Fuji Bank Ltd. ........................................... 2,218
13,000 Fuji Photo Film Ord ...................................... 308
6,000 Fujikura ................................................. 35
22,000 Fujita Corp.(b) .......................................... 104
5,000 Fujita Kanko, Inc. ....................................... 110
65,000 Fujitsu, Ltd. ............................................ 648
32,000 Furukawa Electric Co. .................................... 151
23,000 Gunma Bank ............................................... 274
48,000 Hankyu Corp. ............................................. 288
10,000 Hankyu Department Store .................................. 119
10,000 Haseko ................................................... 76
33,000 Hazama-gumi(b) ........................................... 137
3,000 Hirose Electric .......................................... 186
94,000 Hitachi, Ltd. ............................................ 937
31,000 Honda Motor Co. .......................................... 475
22,000 Honshu Paper Co., Ltd. ................................... 129
4,000 House Food Industry ...................................... 84
78,000 Industrial Bank of Japan ................................. 1,958
6,000 Isetan ................................................... 81
11,000 Ito Yokado Co., Ltd. ..................................... 580
72,000 Itochu Corp. ............................................. 420
10,000 Iwatani & Co. ............................................ 47
119,000 Japan Air Lines(b) ....................................... 764
44,000 Japan Energy Corp. ....................................... 143
66,000 Japan Steel Works ........................................ 147
20,000 Joyo Bank ................................................ 170
14,000 Jusco Co., Ltd. .......................................... 291
33,000 Kajima Corp. ............................................. 328
8,000 Kamigumi Co., Ltd. ....................................... 80
32,000 Kaneka Corp. ............................................. 206
28,000 Kansai Electric Power .................................... 753
14,000 Kao Corp. ................................................ 169
10,000 Kawasaki Kisen(b) ........................................ 26
154,000 Kawasaki Steel Corp.(b) .................................. 512
29,000 Keihin Railway ........................................... 192
9,000 Kinden Corp. ............................................. 168
137,000 Kinki Nippon Railway(b) .................................. 1,202
49,000 Kirin Brewery Co. ........................................ 520
161,000 Kobe Steel, Ltd.(b) ...................................... 384
4,000 Kokuyo Co., Ltd. ......................................... 90
10,000 Komatsu, Ltd. ............................................ 76
53,000 Konica Corp. ............................................. 324
40,000 Koyo Sieko ............................................... 297
26,000 Kubota Corp. ............................................. 166
56,000 Kumagai Gumi Co. ......................................... 234
15,000 Kurabo Industries ........................................ 54
13,000 Kuraray Co., Ltd. ........................................ 141
26,000 Kureha Chemical Industry ................................. 104
8,000 Kyocera Corp. ............................................ 658
20,000 Kyowa Hakko Kogyo ........................................ 194
21,000 Lion Corp. ............................................... 121
4,000 Makita Corp. ............................................. 55
123,000 Marubeni Corp. ........................................... 625
10,000 Marui Co., Ltd. .......................................... 159
67,000 Matsushita Electric Industrial Co. ....................... 1,043
12,000 Meiji Seika .............................................. 70
32,000 Menebea Co., Ltd. ........................................ 205
9,000 Misawa ................................................... 75
48,000 Mitsubishi Corp. ......................................... 546
40,000 Mitsubishi Electric Corp. ................................ 281
51,000 Mitsubishi Estate Co., Ltd. .............................. 574
74,000 Mitsubishi Heavy Industries .............................. 503
36,000 Mitsubishi Kasei Corp. ................................... 154
67,000 Mitsubishi Materials Corp. ............................... 300
17,000 Mitsubishi Oil Co. ....................................... 163
12,000 Mitsubishi Steel Manufacturing(b) ........................ 58
59,000 Mitsubishi Trust & Banking ............................... 835
33,000 Mitsui Engineering & Shipbuilding Co.(b) ................. 72
29,000 Mitsui Fudosan ........................................... 332
14,000 Mitsui Marine & Fire ..................................... 92
30,000 Mitsui Mining & Smelting(b) .............................. 89
18,000 Mitsui O.S.K. Lines, Ltd.(b) ............................. 50
51,000 Mitsui Taotsu Chemical ................................... 188
50,000 Mitsui Trust & Banking Co. ............................... 460
59,000 Mitsui & Co. ............................................. 461
34,000 Mitsui-soko .............................................. 247
4,000 Mori Seiki(b) ............................................ 71
7,000 Murata Manufacturing Co., Ltd. ........................... 265
68,000 NEC Corp. ................................................ 745
28,000 New Oji Paper Co., Ltd. .................................. 269
14,000 NGK Insulators ........................................... 127
33,000 Nichii Co., Ltd. ......................................... 358
58,000 Niigata Engineering(b) ................................... 171
15,000 Nippon Beer Sugar Manufacturing .......................... 59
33,000 Nippon Express Co., Ltd. ................................. 304
11,000 Nippon Fire & Marine ..................................... 69
10,000 Nippon Light Metal Co. ................................... 46
10,000 Nippon Meat Packers ...................................... 146
50,000 Nippon Oil Co. ........................................... 314
44,000 Nippon Paper Industries Co. .............................. 285
31,000 Nippon Sheet Glass ....................................... 139
11,000 Nippon Shinpan Co. ....................................... 71
12,000 Nippon Shokubai K.K. Co. ................................. 106
280,000 Nippon Steel Co. ......................................... 911
27,000 Nippon Yusen Kabushiki Kaisha ............................ 151
24,000 Nippondenso Co., Ltd. .................................... 436
19,000 Nishimatsu ............................................... 226
134,000 Nissan Motors Co., Ltd. .................................. 856
13,000 Nisshinbo Industries ..................................... 103
4,000 Nissin Food Products ..................................... 98
199,000 NKK Corp.(b) ............................................. 467
83,000 Nomura Securities Co., Ltd. .............................. 1,449
22,000 Noritake Co., Ltd. ....................................... 147
</TABLE>
Continued
51
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<PAGE> 380
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<S> <C>
COMMON STOCK, CONTINUED:
Japan, continued:
25,000 NSK, Ltd. ............................................. $ 144
37,000 NTN Corp. ............................................. 218
43,000 Obayashi Corp. ........................................ 331
34,000 Odakyu Electric Railway ............................... 247
18,000 Okumura Corp. ......................................... 171
17,000 Omron Corp. ........................................... 325
6,000 Orix Corp. ............................................ 200
82,000 Osaka Gas Corp. ....................................... 303
20,000 Penta Ocean ........................................... 127
11,000 Pioneer Electronics Corp. ............................. 187
49,000 Ricoh Corp., Ltd. ..................................... 421
5,000 Rohm .................................................. 257
114,000 Sakura Bank Ltd. ...................................... 1,190
14,000 Sankyo Co., Ltd. ...................................... 325
56,000 Sanyo Electric Co., Ltd. .............................. 275
6,000 Secom ................................................. 377
4,000 Sega Enterprises, Ltd. ................................ 142
9,000 Seino Transportation .................................. 152
32,000 Sekisui Chemical ...................................... 379
24,000 Sekisui House, Ltd. ................................... 297
12,000 Seven Eleven Japan .................................... 859
52,000 Sharp Corp. ........................................... 687
25,000 Shimizu Corp. ......................................... 242
8,000 Shin-Etsu Chemical .................................... 141
13,000 Shionogi & Co. ........................................ 115
30,000 Shizuoka Bank ......................................... 375
59,000 Showa Denko K.K.(b) ................................... 174
8,000 Skylark ............................................... 125
11,000 Sony Corp. ............................................ 528
109,000 Sumitomo Bank ......................................... 1,890
33,000 Sumitomo Chemical Co. ................................. 129
31,000 Sumitomo Corp. ........................................ 282
15,000 Sumitomo Electric Industries(b) ....................... 179
22,000 Sumitomo Marine & Fire Insurance ...................... 175
125,000 Sumitomo Metal Industries ............................. 326
14,000 Sumitomo Metal & Mining(b) ............................ 103
43,000 Taisei Corp. .......................................... 254
18,000 Taisho Pharmaceutical ................................. 348
26,000 Takashimaya Co. ....................................... 350
27,000 Takeda Chemical Industries ............................ 357
12,000 Teijin Ltd. ........................................... 57
14,000 Teikoku Oil ........................................... 83
24,000 The Daiei, Inc. ....................................... 292
13,000 The Nichido Fire & Marine Insurance Co., Ltd. ......... 105
18,000 Tobu Railway .......................................... 112
16,000 Tohoku Electric Power ................................. 443
67,000 Tokai Bank ............................................ 743
43,000 Tokio Marine & Fire Insurance ......................... 493
8,000 Tokyo Dome Corp. ...................................... 123
54,000 Tokyo Electric Power .................................. 1,656
6,000 Tokyo Electron, Ltd. .................................. 205
92,000 Tokyo Gas, Ltd. ....................................... 362
34,000 Tokyu Corp. ........................................... 218
35,000 Toppan Printing Co., Ltd. ............................. 458
22,000 Topy Industries ....................................... 96
75,000 Toray Industries, Inc. ................................ 466
72,000 Tosoh ................................................. 271
8,000 Tostem Corp. .......................................... 246
45,000 Toto .................................................. 642
7,000 Toyo Seikan Kaisha .................................... 205
27,000 Toyobo Ltd. ........................................... 89
14,000 Toyoda Auto Loom Works ................................ 253
108,000 Toyota Motor Co. ...................................... 2,140
74,000 UBE Industries(b) ..................................... 258
48,000 Unitika, Ltd.(b) ...................................... 122
18,000 Yamaha Corp. .......................................... 196
10,000 Yamanouchi Pharmaceutical ............................. 225
28,000 Yamato Transport Co., Ltd. ............................ 298
43,000 Yasuda Trust & Banking ................................ 281
23,000 Yokogawa Electric Corp. ............................... 161
-------
68,415
-------
Malaysia (0.4%):
147,500 Faber Group(b) ........................................ 142
8,000 Highlands & Lowlands Berhad ........................... 15
5,000 Idris Hydraulic Berhad(b) ............................. 7
146,000 Industrial Oxygen, Inc. Berhad ........................ 192
20,500 Land & General Holdings ............................... 69
37,000 Nestle Berhad ......................................... 284
18,000 Pan Malaysia Cement Works ............................. 65
2,000 Promet Berhad(b) ...................................... 2
41,000 Rashid Hussain Berhad ................................. 131
16,000 Tenaga Nasional Berhad ................................ 65
-------
972
-------
Mexico (0.4%):
21,330 Cementos de Mexico, Class A ........................... 74
16,200 Cementos de Mexico, Class B(b) ........................ 58
51,000 Cifra S.A. de C.V., Series C .......................... 67
33,500 Grupo Carso S.A., Series A1(b) ........................ 183
29,000 Kimberly-Clark de Mexico Class A ...................... 333
103,000 Telefonos de Mexico S.A., Class L ..................... 152
9,960 Tolmex S.A., Series B2(b) ............................. 39
29,880 Vitro S.A ............................................. 85
-------
991
-------
Netherlands (2.5%):
20,150 ABN Amro Holdings NV .................................. 778
5,500 Akzo Nobel NV ......................................... 657
21,000 Elsevier NV NTFL1 ..................................... 248
1,625 Heineken NV ........................................... 246
7,600 Internationale Nederlanden Group ...................... 420
11,100 Philips Electronics ................................... 470
19,850 Koninklijke Nederlande Petroleum(b) ................... 2,424
3,700 Unilever NV ........................................... 481
-------
5,724
-------
</TABLE>
Continued
52
B-173
<PAGE> 381
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<S> <C>
COMMON STOCK, CONTINUED:
New Zealand (0.4%):
52,200 Fisher & Paykel Industries ............................ $ 153
78,200 Lion Nathan, Ltd. ..................................... 155
115,800 Telecom Corp. of New Zealand .......................... 433
34,837 Wilson & Horton, Ltd. ................................. 199
------
940
------
Norway (0.7%):
5,880 Aker A/S Series B ..................................... 74
8,400 Aker A/S, Series A .................................... 113
12,800 Hafslund Nycomed A/S Series A ......................... 296
6,090 Kvaerner A/S, Series A ................................ 277
16,080 Norsk Hydro A/S ....................................... 675
2,560 Norske SkogsindustrierA/S Series B .................... 85
12,880 Vard A Ord(b) ......................................... 23
------
1,543
------
Phillipines (0.8%):
162,960 Ayala Corp., Class B .................................. 182
278,750 Ayala Land, Inc., Class B ............................. 323
21,450 Manila Electric Co., Class B .......................... 172
7,300 Metropolitan Bank ..................................... 159
357,500 Petron Corp. .......................................... 235
7,400 Philippine Long Distance Telephone Co. ................ 530
15,390 Philippine National Bank(b) ........................... 180
34,970 San Miguel Corp., Class B ............................. 145
------
1,926
------
Portugal (0.9%):
25,070 Banco Commercial Portugues--Registered ................ 332
18,270 Banco Espirito Santo e Commerical de Lisboa ........... 305
10,930 Banco Portuguese de Investimento-Registered ........... 191
3,800 Jeronimo Martins ...................................... 192
2,250 Modelo Contin SGPS .................................... 208
2,900 Modelo SGPS ........................................... 103
13,800 Sonae Industria e Investimentos ....................... 331
5,450 Soporcel(b) ........................................... 141
15,740 Unicer-Unioa Cervejeira ............................... 266
------
2,069
------
Singapore (0.3%):
82,000 Chuan Hup Holdings .................................... 67
243,000 Hotel Properties, Ltd ................................. 430
229,000 Neptune Orient Lines .................................. 269
12,000 Promet Berhad(b) ...................................... 11
------
777
------
Spain (3.2%):
800 Acerinox SA ........................................... 98
15,200 Banco Bilbao Vizcaya .................................. 438
11,300 Banco Central Hispanoamericano ........................ 239
12,900 Banco de Santander .................................... 509
12,300 Corporacion Bancaria de Espana SA(b) .................. 454
5,600 Corporacion Financiera Alba ........................... 289
2,300 Corporacion Mapfre cia International d SA ............. 113
9,600 Ebro Agricolas, Compania de Alimentacion SA ........... 100
4,700 El Aguila SA(b) ....................................... 35
2,000 Empresa Nacional de Celulosa .......................... 51
25,400 Empresa Nacional de Electricidad SA ................... 1,254
23,200 Ercros SA(b) .......................................... 26
2,800 Fabricacion Automovile Renault de Espanola ............ 84
1,500 Fomento de Construcciones y Contrates SA .............. 128
3,000 Gas Natural SDG ....................................... 358
69,600 Iberdrola ............................................. 524
5,400 Inmobiliaria Metropolitana Vasco Central SA ........... 160
20,100 Repsol SA ............................................. 632
16,800 Sarrio SA(b) .......................................... 85
6,000 Tabacalera SA--A ...................................... 224
82,600 Telefonica de Espana .................................. 1,064
48,310 Union Electric Penosa SA .............................. 226
10,800 Uralita SA(b) ......................................... 130
4,200 Vallehermoso SA ....................................... 72
4,000 Viscofan Industria Navarra de Envolturas Celulosica ... 59
------
7,352
------
Sweden (1.7%):
2,350 Asea AB A Free ........................................ 202
800 Asea AB B Free ........................................ 68
19,500 Astra AB A Free ....................................... 601
6,800 Astra AB B Free ....................................... 205
13,300 Atlas Copco AB A Free ................................. 186
1,000 Atlas Copco AB B Free ................................. 14
4,450 Electrolux AB, Class B Free ........................... 202
29,800 Ericsson .............................................. 594
4,600 Esselte AB B Free ..................................... 57
6,400 Hennes & Mauritz AB B Free ............................ 375
4,200 Skandia Forsakrings AB ................................ 81
20,200 Skandiaviska Enskilda Banken Series A Free ............ 105
4,150 Skanska AB Series B ................................... 96
5,750 Stora Kopparberg B .................................... 78
14,000 Stora Kopparbergs ..................................... 188
15,500 Svenska Cellulosa ..................................... 288
800 Svenska Handlesbank B ................................. 11
11,150 Svenska Handlespanken A ............................... 166
1,750 S.K.F. AB Series B Free ............................... 35
7,150 Trelleborg AB B Free .................................. 84
</TABLE>
Continued
53
B-174
<PAGE> 382
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<S> <C>
COMMON STOCKS, CONTINUED:
Sweden, continued:
14,500 Volvo AB B Free.............................................. $ 276
------
3,912
------
Switzerland (2.0%):
150 Alusuisse-Lonza Holding AG .................................. 94
260 BBC Brown Boveri AG ......................................... 269
600 Ciba Geigy AG ............................................... 439
2,250 CS Holdings ................................................. 206
100 Danzas Holding AG--registered(b) ............................ 86
570 Nestle SA--registered ....................................... 593
40 Roche Holdings .............................................. 444
130 Roche Holdings AG Genusscheine .............................. 837
1,000 Sandoz AG--registered ....................................... 689
230 Schweizerischer Bankgesellsacht ............................. 238
320 Schweizerischer Bankverein .................................. 113
390 Schweizerischer Rueckversicherungsgesel ..................... 300
1,150 Societe Suisse pour la Microeletronique et l'Horlogerie ..... 155
------
4,463
------
Thailand (1.1%):
30,000 Advanced Information Systems PLC Foreign Registered Shares .. 443
41,800 Bangkok Bank ................................................ 461
136,290 Krung Thai Bank, Ltd. (Foreign) ............................. 552
235,500 Padaeng Industries .......................................... 313
7,700 Shinawatra Corp. & Co. ...................................... 191
76,700 Telecomasia(b) .............................................. 284
95,200 Thai Airways International .................................. 212
41,000 Thai Airways International Foreign Registered Shares(b) ..... 82
------
2,538
------
Turkey (1.2%):
294,000 Akbank TRL .................................................. 75
102,000 Aksa TRL .................................................... 90
371,100 Arcelik AS TRL Ord(b) ....................................... 113
399,000 Eczacibasi Yatirim(b) ....................................... 199
25,800 Ege Biracilik ve Mal ........................................ 30
1,807,450 Eregli Demir ve Celik Fabrik ................................ 233
100,640 Ericiyas Biracilik .......................................... 87
2,270,500 Izmir Demir Celik(b) ........................................ 87
253,300 Koc Holdings AS ............................................. 250
175,200 Netas Telekomunik TR ........................................ 61
390,000 Petrokimya as TRL ........................................... 349
356,600 Petrol Ofisi TRL ............................................ 105
546,000 Raks Electronik ............................................. 213
220,080 T Garanti Bankasi AS(b) ..................................... 30
171,200 Tofas Turk Otomobil Fabrikas(b) ............................. 151
1,949,865 Tupras Turkiye Petrol Rafinerileri AS ....................... 463
649,800 Turk Hava Yollari AS(b) ..................................... 116
------
2,652
------
United Kingdom (7.2%):
50,900 Abbey National PLC .......................................... 379
37,500 Allied Irish Banks PLC ...................................... 178
42,900 Argyll Group PLC Ord ........................................ 229
24,700 Barclays Bank ............................................... 265
24,700 Barratt Developments PLC .................................... 72
70,400 B.A.T. Industries ........................................... 538
21,900 Bicc PLC .................................................... 103
21,700 The Boots Co. PLC ........................................... 176
28,300 Bowthorpe PLC ............................................... 167
7,400 British Aerospace PLC ....................................... 66
28,200 British Airways PLC ......................................... 185
77,300 British Gas PLC ............................................. 356
18,720 British Land Co., PLC ....................................... 119
135,700 British Petroleum Co., PLC .................................. 972
67,600 British Steel PLC ........................................... 185
148,900 British Telecom PLC ......................................... 928
100,700 BTR PLC ..................................................... 511
56,300 Cable & Wireless PLC ........................................ 385
42,285 Cadbury Schweppes PLC ....................................... 308
67,300 Camas ....................................................... 76
7,500 Commercial Union PLC ........................................ 70
6,960 Costain Group PLC ........................................... 12
24,900 Electrocomponents Ord ....................................... 237
48,900 English China Clays PLC ..................................... 302
47,300 The General Electric Co., PLC ............................... 231
64,000 Glaxo Wellcome PLC .......................................... 785
22,800 Great Universal Stores PLC .................................. 213
31,000 Guinness PLC ................................................ 233
200,900 Hanson PLC .................................................. 702
61,200 Harrison & Crossfield PLC ................................... 138
56,800 HSBC Holdings PLC ........................................... 732
15,700 Imperial Chemical Inds ...................................... 192
48,600 Land Securities PLC ......................................... 470
53,500 Lonrho PLC .................................................. 126
89,900 Marks & Spencer PLC ......................................... 578
33,800 National Power PLC .......................................... 239
22,700 Next PLC .................................................... 123
22,300 Oxford Instruments PLC ...................................... 140
18,600 Peninsular & Oriental Steam Navigation Co. .................. 171
17,600 Pilkington Bros ............................................. 49
33,300 Pilkington PLC .............................................. 92
42,600 Reuters Holdings PLC ........................................ 355
40,900 Rexam PLC ................................................... 314
33,200 Rolls-Royce PLC ............................................. 92
23,500 The Royal Bank of Scotland PLC .............................. 160
19,100 Royal Insurance PLC ......................................... 94
22,500 RTZ Corp. ................................................... 293
54,900 Sainsbury PLC ............................................... 386
12,000 Scottish & Newcastle PLC .................................... 105
35,400 Smithkline Beecham - Class A ................................ 320
36,300 Smithkline Beecham Units .................................... 322
36,700 St. James's Place Capital PLC ............................... 64
41,800 Tarmac PLC .................................................. 75
31,800 Taylor Woodrow PLC .......................................... 58
</TABLE>
Continued
54
B-175
<PAGE> 383
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<S> <C>
COMMON STOCKS, CONTINUED:
United Kingdom, continued:
117,000 Tesco PLC ..................................... $ 539
13,600 Thorn EMI PLC ................................. 282
18,700 Unilever PLC .................................. 378
26,500 Zeneca Group PLC .............................. 447
--------
16,317
--------
U.S. Dollar Denominated (1.5%):
5,883 Banco O'Higgins ADR ........................... 135
6,712 Cervezas ...................................... 179
4,662 Chilectra Metro ............................... 237
11,891 Chilgener ADR ................................. 376
8,500 Cristalerias de Chile ADR ..................... 210
4,066 Embotella Andina ADR .......................... 143
19,962 Endesa ADR .................................... 529
10,028 Enersis ....................................... 296
4,711 Labchile ADR .................................. 89
7,615 Madeco ........................................ 219
11,887 Mader y Sint .................................. 223
6,409 Sociedad Quimic ............................... 303
3,796 Telefonos de ci ............................... 309
1,615 U.S. Industries, Inc. ......................... 22
2,500 Vina Concho ADR ............................... 48
--------
3,318
--------
Total Common Stocks ................................ 221,609
PREFERRED STOCKS (0.3%):
Germany (0.3%):
140 Escada AG - ................................... 27
2,810 RWE -- Rheinisch -- Westfaelisches
Elektrizitaetswerk AG - ..................... 772
--------
Total Preferred Stocks................................. 799
--------
U.S. TREASURY BILLS (0.1%):
$15,000 9/14/95........................................ 15
240,000 9/14/95........................................ 237
25,000 9/14/95........................................ 25
--------
Total U.S. Treasury Bills.............................. 277
--------
Total Investments, at value............................ 222,685
--------
REPURCHASE AGREEMENTS (3.4%):
7,750,000 State Street Bank, 5.50%, dated 6/30/95,
due 7/3/95 (Collateralized by
$7,940,000 U.S. Treasury Notes,
4.75%, 9/20/95, market
value--$7,818)............................... 7,750
--------
Total Repurchase Agreements 7,750
--------
Total (Cost--$217,827)(a $230,435
========
</TABLE>
_______________________
Percentages indicated are based on net assets of $227,014.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses
recognized for financial reporting purposes in excess of federal income
tax reporting of approximately $53 and by the tax cost basis
adjustments of $723 for certain securities. Cost for federal income tax
purposes differs from value by net unrealized appreciation of
securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ....................... $ 23,914
Unrealized depreciation ....................... (12,082)
--------
Net unrealized appreciation ................... $ 11,832
========
</TABLE>
(b) Represents non-income producing security.
ADR--American Depositary Receipt
At June 30, 1995, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
OPENING MARKET
# OF CONTRACT POSITIONS VALUE
CONTRACTS TYPE (000) (000)
--------- ------------------------------------------------- --------- -------
<S> <C> <C> <C>
9 Eurotop 100 ..................................... $1,124 $1,103
11 Nikkei .......................................... 821 798
</TABLE>
See notes to financial statements.
55
B-176
<PAGE> 384
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands except per share amounts)
LARGE
ASSET INCOME EQUITY COMPANY BLUE CHIP
ALLOCATION EQUITY INDEX VALUE EQUITY
FUND FUND FUND FUND FUND
---------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value ............................................... $37,807 $186,634 $228,345 $321,184 $42,526
Repurchase agreements ............................................... 7,207 1,416 9,781 56,533 426
------- -------- -------- -------- -------
45,014 188,050 238,126 377,717 42,952
Interest and dividend receivable .................................... 358 675 483 555 97
Receivable from brokers for investments sold ........................ 75 6,653
Receivable for capital shares issued ................................ 279 404 841 1,848 34
Receivable from advisor ............................................. 7 66 5 8
Organization costs .................................................. 6 2 8 10 15
Prepaid expenses and other assets ................................... 66 1 1 1
------- -------- -------- -------- -------
TOTAL ASSETS ........................................................ 45,664 189,197 239,600 386,789 43,107
------- -------- -------- -------- -------
LIABILITIES:
Cash overdraft ...................................................... 25 30 24 411 9
Dividends payable ................................................... 13 198 99 264 20
Payable to brokers for investments purchased ........................ 15,462
Payable for capital shares redeemed ................................. 154 643 44 336 102
Net payable for variation margin on futures contracts ............... 14 23 6
Options written, at value (premiums received $242) 323
Accrued expenses and other payables:
Investment advisory fees ......................................... 24 115 57 219 27
Administration fees .............................................. 6 26 32 50 6
12b-1 fees (Class A) ............................................. 1 3 1 1 1
12b-1 fees (Class B) ............................................. 2 2 1
Other ............................................................ 3 13 22
------- -------- -------- -------- -------
TOTAL LIABILITIES ................................................... 242 1,017 294 17,072 187
------- -------- -------- -------- -------
NET ASSETS:
Capital ............................................................. 42,867 141,600 199,824 329,025 33,142
Undistributed (distributions in excess of) net investment income .... 8 41 (232) 7 26
Net unrealized appreciation from investments and futures contracts .. 2,751 40,159 38,649 12,852 6,938
Undistributed net realized gains (losses) from investment
transactions ........................................................ (204) 6,380 1,065 27,833 2,814
------- -------- -------- -------- -------
NET ASSETS .......................................................... $45,422 $188,180 $239,306 $369,717 $42,920
======= ======== ======== ======== =======
Net Assets
Fiduciary ........................................................ $37,658 $170,919 $234,895 $365,375 $38,915
Class A .......................................................... 4,745 13,793 3,003 3,481 3,621
Class B .......................................................... 3,019 3,468 1,408 861 384
------- -------- -------- -------- -------
Total ......................................................... $45,422 $188,180 $239,306 $369,717 $42,920
======= ======== ======== ======== =======
Outstanding shares of beneficial interest
Fiduciary ....................................................... 3,509 11,297 16,747 28,396 2,715
Class A ......................................................... 442 913 214 270 253
Class B ......................................................... 281 229 100 66 27
------- -------- -------- -------- -------
Total ......................................................... 4,232 12,439 17,061 28,732 2,995
======= ======== ======== ======== =======
Net asset value
Fiduciary--offering and redemption price per share ............... $10.73 $15.13 $14.03 $12.87 $14.33
======= ======== ======== ======== =======
Class A--redemption price per share .............................. $10.74 $15.11 $14.02 $12.89 $14.32
======= ======== ======== ======== =======
Class B--offering price per share* ............................... $10.76 $15.14 $14.05 $12.96 $14.40
======= ======== ======== ======== =======
Maximum Sales Charge (Class A) ...................................... 4.50% 4.50% 4.50% 4.50% 4.50%
======= ======== ======== ======== =======
Maximum Offering Price (100%/(100%--Maximum Sales Charge) of
net asset value adjusted to nearest cent per share (Class A) ........ $11.25 $15.82 $14.68 $13.50 $14.99
======= ======== ======== ======== =======
Investments, at cost ................................................ $42,377 $147,891 $199,635 $364,832 $36,014
======= ======== ======== ======== =======
</TABLE>
- ----------------
* Redemption price per share varies based on length of time shares are held.
See notes to financial statements.
56
B-177
<PAGE> 385
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands except per share amounts)
INTERNATIONAL
LARGE SMALL EQUITY
COMPANY DISCIPLINED COMPANY INDEX
GROWTH FUND VALUE FUND GROWTH FUND FUND
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value ..................................................... $533,868 $433,138 $407,369 $222,685
Repurchase agreements ..................................................... 31,322 36,243 12,390 7,750
-------- -------- -------- --------
565,190 469,381 419,759 230,435
Interest and dividends receivable ......................................... 1,230 1,268 215 1,362
Foreign currency, at value (Cost $80) ..................................... 81
Receivable for short forward foreign currency contracts ................... 5,605
Long forward foreign currency contracts, at value ......................... 12,477
Receivable from brokers for investments sold .............................. 15,695 22,569 8,533
Receivable for capital shares issued ...................................... 2,276 6,221 923 921
Tax reclaim receivable .................................................... 321
Organization costs ........................................................ 1 8
Prepaid expenses and other assets ......................................... 34 77 14 61
-------- -------- -------- --------
TOTAL ASSETS .............................................................. 568,731 492,642 443,480 259,804
-------- -------- -------- --------
LIABILITIES:
Cash overdraft ............................................................ 387 5,071 94 175
Dividends payable ......................................................... 305 444 38
Short forward foreign currency contracts, at value ........................ 5,603
Payable for long forward foreign currency contracts ....................... 12,498
Payable to brokers for investments purchased .............................. 1,405 13,072 15,259 13,951
Payable for capital shares redeemed ....................................... 268 386 288 265
Payable for variation margin on futures ................................... 5
Accrued expenses and other payables:
Investment advisory fees ............................................. 338 281 256 102
Administration fees .................................................. 77 64 58 31
12b-1 fees (Class A) ................................................. 5 3 2
12b-1 fees (Class B) ................................................. 5 9 2 3
Other ................................................................ 157
-------- -------- -------- --------
TOTAL LIABILITIES ......................................................... 2,790 19,330 15,997 32,790
-------- -------- -------- --------
NET ASSETS:
Capital ................................................................... 488,658 434,987 357,764 209,788
Undistributed (distributions in excess of) net investment income (10) 43 (11) 2,643
Net unrealized appreciation from investments .............................. 74,046 28,361 57,258 12,564
Net unrealized appreciation from translation of assets and
liabilities in foreign currencies ....................................... 16
Undistributed net realized gains from investment and foreign
currency transactions 3,247 9,921 12,472 2,003
-------- -------- -------- --------
NET ASSETS ................................................................ $565,941 $473,312 $427,483 $227,014
======== ======== ======== ========
Net Assets
Fiduciary ............................................................ $531,595 $448,530 $413,518 $218,299
Class A .............................................................. 27,428 13,560 11,178 5,028
Class B .............................................................. 6,918 11,222 2,787 3,687
-------- -------- -------- --------
Total ........................................................... $565,941 $473,312 $427,483 $227,014
======== ======== ======== ========
Outstanding shares of beneficial interest
Fiduciary ............................................................ 39,480 33,982 22,469 15,680
Class A .............................................................. 1,983 1,026 609 361
Class B .............................................................. 507 851 154 269
-------- -------- -------- --------
Total ........................................................... 41,970 35,859 23,232 16,310
======== ======== ======== ========
Net asset value
Fiduciary--offering and redemption price per share ................... $13.47 $13.20 $18.40 $13.93
======== ======== ======== ========
Class A--redemption price per share .................................. $13.83 $13.22 $18.36 $13.92
======== ======== ======== ========
Class B--offering price per share* ................................... $13.63 $13.19 $18.14 $13.73
======== ======== ======== ========
Maximum Sales Charge (Class A) ............................................ 4.50% 4.50% 4.50% 4.50%
======== ======== ======== ========
Maximum Offering Price (100%/(100%--Maximum Sales Charge)of net asset
value adjusted to nearest cent per share (Class A) .. $14.48 $13.84 $19.23 $14.58
======== ======== ======== ========
Investments, at cost ...................................................... $491,144 $441,020 $362,501 $217,827
======== ======== ======== ========
</TABLE>
- ---------------
* Redemption price per share varies based on length of time shares are held.
See notes to financial statements.
57
B-178
<PAGE> 386
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands)
LARGE BLUE
ASSET INCOME EQUITY COMPANY CHIP
ALLOCATION EQUITY INDEX VALUE EQUITY
FUND FUND FUND FUND FUND
---------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income ............................................ $1,687 $ 397 $ 534 $ 1,826 $ 114
Dividend income ............................................ 397 7,297 4,924 6,928 1,423
------ ------- ------- ------- ------
TOTAL INCOME ............................................... 2,084 7,694 5,458 8,754 1,537
------ ------- ------- ------- ------
EXPENSES:
Investment advisory fees ................................... 283 1,474 563 1,731 440
Administration fees ........................................ 73 336 317 394 100
12b-1 fees (Class A) ....................................... 10 43 7 5 13
12b-1 fees (Class B) ....................................... 25 23 6 4 2
Custodian and accounting fees .............................. 53 24 68 57 21
Legal and audit fees ....................................... 14 52 62 37 41
Organization costs ......................................... 3 5 36 9 4
Trustees' fees and expenses ................................ 4 4 5 7 4
Transfer agent fees ........................................ 56 60 54 62 54
Registration and filing fees ............................... 31 37 55 41 27
Printing costs ............................................. 16 18 45 20 17
Other ...................................................... 39 5 41 8 61
------ ------- ------- ------- ------
TOTAL EXPENSES BEFORE WAIVERS/REIMBURSEMENTS ............... 607 2,081 1,259 2,375 784
Less Waivers/Reimbursements ................................ (112) (19) (626) (29) (161)
------ ------- ------- ------- ------
NET EXPENSES ............................................... 495 2,062 633 2,346 623
------ ------- ------- ------- ------
Net Investment Income ...................................... 1,589 5,632 4,825 6,408 914
------ ------- ------- ------- ------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from investment transactions.... (178) 11,040 2,042 28,406 5,053
Change in unrealized appreciation from investments ......... 4,764 20,447 37,018 20,089 2,533
------ ------- ------- ------- ------
Net realized/unrealized gains from investments ............. 4,586 31,487 39,060 48,495 7,586
------ ------- ------- ------- ------
Change in net assets resulting from operations ............. $6,175 $37,119 $43,885 $54,903 $8,500
====== ======= ======= ======= ======
</TABLE>
See notes to financial statements.
58
B-179
<PAGE> 387
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands)
LARGE SMALL INTERNATIONAL
COMPANY DISCIPLINED COMPANY EQUITY
GROWTH VALUE GROWTH INDEX
FUND FUND FUND FUND
------- ----------- ------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income ................................................ $ 1,563 $ 1,679 $ 2,665 $ 273
Dividend income ................................................ 7,674 12,663 2,882 4,904
Less foreign withholding taxes ................................. (853)
------- ------- ------- ------
TOTAL INCOME ................................................... 9,237 14,342 5,547 4,324
------- ------- ------- ------
EXPENSES:
Investment advisory fees ....................................... 2,516 3,306 3,031 1,035
Administration fees ............................................ 572 753 691 318
12b-1 fees (Class A) ........................................... 32 40 31 11
12b-1 fees (Class B) ........................................... 23 86 18 31
12b-1 fees (Service) ........................................... 2 1 2 2
Custodian and accounting fees .................................. 54 80 78 364
Legal and audit fees ........................................... 50 49 38 50
Organization costs ............................................. 3
Trustees' fees and expenses .................................... 6 6 7 6
Transfer agent fees ............................................ 76 117 91 88
Registration and filing fees ................................... 61 101 34 58
Printing costs ................................................. 42 37 21 26
Other .......................................................... 21 39 13 9
------- ------- ------- ------
TOTAL EXPENSES BEFORE WAIVERS/REIMBURSEMENTS ................... 3,455 4,615 4,055 2,001
Less Waivers/Reimbursements .................................... (9) (40) (16) (3)
------- ------- ------- ------
NET EXPENSES ................................................... 3,446 4,575 4,039 1,998
------- ------- ------- ------
Net Investment Income .......................................... 5,791 9,767 1,508 2,326
------- ------- ------- ------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gains from investment transactions ................ 4,792 9,989 18,881 3,368
Net realized gains from foreign currency transactions .......... 5
Change in unrealized appreciation from investments and
translation of assets and liabilities in foreign currencies .. 70,757 46,373 53,633 2,455
------- ------- ------- ------
Net realized/unrealized gains from investments and foreign
currency ..................................................... 75,549 56,362 72,514 5,828
------- ------- ------- ------
Change in net assets resulting from operations ................. $81,340 $66,129 $74,022 $8,154
======= ======= ======= ======
</TABLE>
See notes to financial statements.
59
B-180
<PAGE> 388
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
ASSET
ALLOCATION FUND INCOME EQUITY FUND EQUITY INDEX FUND
------------------- ------------------- ---------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994 1995 1994
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income ......................... $ 1,589 $ 1,171 $ 5,632 $ 6,752 $ 4,825 $ 3,287
Net realized gains (losses) from investment
transactions ................................ (178) 398 11,040 7,053 2,042 2,030
Net change in unrealized appreciation
(depreciation) from investments ............. 4,764 (2,296) 20,447 (9,083) 37,018 (7,445)
-------- -------- -------- -------- -------- ---------
Change in net assets resulting from operations ..... 6,175 (727) 37,119 4,722 43,885 (2,128)
-------- -------- -------- -------- -------- ---------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income .................... (1,408) (1,129) (5,247) (6,384) (4,390) (3,267)
In excess of net investment income ............ (231) (381)
From net realized gains from investment
transactions ................................ (151) (4,994) (2,449) (1,009)
In excess of net realized gains from investment
transactions ................................ (175)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income .................... (97) (34) (261) (333) (43) (20)
In excess of net investment income ............ (2) (1) (67) (15) (2)
From net realized gains from investment
transactions ................................ (12) (5) (329) (25) (6)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income .................... (69) (9) (43) (12) (1) (1)
In excess of net investment income ............ (2) (3) (8)
From net realized gains from investment
transactions ................................ (1) (61) (6)
In excess of net realized gains from investment
transactions ................................ (12)
DISTRIBUTIONS TO SERVICE SHAREHOLDERS:
From net investment income .................... (2) (1)
From net realized gains from investment
transactions .................................. (1)
-------- -------- -------- -------- -------- ---------
Change in net assets from shareholder distributions (1,779) (1,330) (11,005) (6,744) (7,155) (4,686)
-------- -------- -------- -------- -------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued ................... 19,304 38,988 39,566 144,396 81,505 118,354
Dividends reinvested .......................... 1,579 1,254 5,343 3,318 5,467 3,627
Cost of shares redeemed ....................... (26,161) (22,893) (95,398) (95,794) (51,442) (45,079)
-------- -------- -------- -------- -------- ---------
Change in net assets from share transactions ....... (5,278) 17,349 (50,489) 51,920 35,530 76,902
-------- -------- -------- -------- -------- ---------
Change in net assets ............................... (882) 15,292 (24,375) 49,898 72,260 70,088
NET ASSETS:
Beginning of period ........................... 46,304 31,012 212,555 162,657 167,046 96,958
-------- -------- -------- -------- -------- ---------
End of period ................................. $ 45,422 $ 46,304 $188,180 $212,555 $239,306 $ 167,046
======== ======== ======== ======== ======== =========
SHARE TRANSACTIONS:
Issued ........................................ 1,931 3,869 2,823 10,640 6,330 9,794
Reinvested .................................... 158 124 398 244 445 300
Redeemed ...................................... (2,658) (2,276) (6,867) (7,113) (4,129) (3,811)
-------- -------- -------- -------- -------- ---------
Change in shares ................................... (569) 1,717 (3,646) 3,771 2,646 6,283
======== ======== ======== ======== ======== =========
Undistributed (distributions in excess of net
investment income included in net assets:
End of period .................................... $ 8 $ (1) $ 41 $ 30 $ (232) $ (383)
======== ======== ======== ======== ======== =========
</TABLE>
See notes to financial statements.
60
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
LARGE COMPANY BLUE CHIP LARGE COMPANY
VALUE FUND EQUITY FUND GROWTH FUND
-------------------- -------------------- --------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994 1995 1994
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income ................................... $ 6,408 $ 2,512 $ 914 $ 1,841 $ 5,791 $ 1,231
Net realized gains from investment transactions ......... 28,406 12,637 5,053 200 4,792 1,213
Change in unrealized appreciation (depreciation) from
investments ............................................ 20,089 (13,847) 2,533 (2,841) 70,757 594
-------- -------- -------- -------- -------- --------
Change in net assets resulting from operations ............. 54,903 1,302 8,500 (800) 81,340 3,038
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income .............................. (6,371) (2,395) (848) (1,752) (5,634) (1,247)
In excess of net investment income ...................... (3) (4)
From net realized gains from investment transactions .... (10,281) (3,372) (313) (1,852) (1,094)
In excess of net realized gains from investment
transactions ........................................... (9)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income .............................. (39) (9) (45) (63) (135) (1)
In excess of net investment income ...................... (2) (9) (5) (4)
From net realized gains from investment transactions .... (85) (13) (21) (16)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income .............................. (7) (1) (17) (1)
In excess of net investment income ...................... (1) (1)
From net realized gains from investment transactions .... (20) (1) (13)
DISTRIBUTIONS TO SERVICE SHAREHOLDERS:
From net investment income .............................. (2)
From net realized gains from investment transactions .... (2)
-------- -------- -------- -------- -------- --------
Change in net assets from shareholder distributions ........ (16,805) (5,789) (1,239) (1,820) (7,688) (2,347)
-------- -------- -------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued ............................. 212,431 109,753 7,650 61,078 286,721 115,011
Proceeds from shares issued in connection with
acquisition ........................................... 131,599
Dividends reinvested .................................... 10,331 4,038 663 1,329 4,561 2,015
Cost of shares redeemed ................................. (61,136) (72,594) (56,072) (88,528) (81,352) (8,274)
-------- -------- -------- -------- -------- --------
Change in net assets from share transactions ............... 161,626 41,197 (47,759) (26,121) 341,529 108,752
-------- -------- -------- -------- -------- --------
Change in net assets ....................................... 199,724 36,710 (40,498) (28,741) 415,181 109,443
NET ASSETS:
Beginning of period .................................... 169,994 133,284 83,418 112,159 150,760 41,317
-------- -------- -------- -------- -------- --------
End of period .......................................... $369,718 $169,994 $ 42,920 $ 83,418 $565,941 $150,760
======== ======== ======== ======== ======== ========
SHARE TRANSACTIONS:
Issued .................................................. 17,984 9,506 585 4,743 23,461 10,078
Issued in connection with acquisition ................... 11,070
Reinvested .............................................. 924 352 52 103 371 177
Redeemed ................................................ (5,160) (6,322) (4,303) (6,872) (6,247) (724)
-------- -------- -------- -------- -------- --------
Change in shares ........................................... 13,748 3,536 (3,666) (2,026) 28,655 9,531
======== ======== ======== ======== ======== ========
Undistributed (distributions in excess of) net investment
income included in net assets:
End of period ............................................ $ 7 $ 18 $ 31 $ 21 $ (9) $ (4)
======== ======== ======== ======== ======== ========
</TABLE>
See notes to financial statements.
61
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
DISCIPLINED SMALL COMPANY INTERNATIONAL
VALUE FUND GROWTH FUND EQUITY INDEX FUND
------------------- ------------------- ------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994 1995 1994
--------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income ........................................ $ 9,767 $ 7,264 $ 1,508 $ 1,409 $ 2,326 $ 1,170
Net realized gains (losses) from investment and
foreign currency transactions .............................. 9,989 17,202 18,881 15,467 3,373 (47)
Net change in unrealized
appreciation (depreciation) from investments and translation
of assets and liabilities in foreign currencies ............ 46,373 (21,756) 53,633 (26,137) 2,455 7,846
--------- -------- --------- -------- -------- --------
Change in net assets resulting from operations .................. 66,129 2,710 74,022 (9,261) 8,154 8,969
--------- -------- --------- -------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income ................................... (9,376) (7,105) (1,520) (1,327) (1,053) (754)
From net realized gains from investment
transactions ............................................... (9,434) (27,343) (12,826) (17,239) (537) (69)
In excess of net realized gains from investment
transactions ............................................... (54)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income ................................... (225) (142) (8) (25) (18) (7)
In excess of net investment income ........................... (3) (3) (9) (6)
From net realized gains from investment
transactions ............................................... (246) (534) (287) (406) (10) (1)
In excess of net realized gains .............................. (18) (22)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income ................................... (107) (4) (17)
In excess of net investment income ........................... (11) (1)
From net realized gains from investment
transactions ............................................... (194) (17) (59) (10)
DISTRIBUTIONS TO SERVICE SHAREHOLDERS:
From net investment income ................................... (3) (1)
From net realized gains from investment
transactions ............................................... (3) (8) (1)
--------- -------- --------- -------- -------- --------
Change in net assets from shareholder distributions ............. (19,620) (35,171) (14,717) (19,003) (1,647) (885)
--------- -------- --------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued .................................. 129,890 297,230 138,252 244,555 111,465 128,540
Dividends reinvested ......................................... 11,866 24,127 9,304 13,115 845 150
Cost of shares redeemed ...................................... (149,012) (70,057) (178,208) (69,231) (41,784) (22,330)
--------- -------- --------- -------- -------- --------
Change in net assets from share transactions .................... (7,256) 251,300 (30,652) 188,439 70,526 106,360
--------- -------- --------- -------- -------- --------
Change in net assets ............................................ 39,253 218,839 28,653 160,175 77,033 114,444
NET ASSETS:
Beginning of period .......................................... 434,059 215,220 398,830 238,655 149,981 35,537
--------- -------- --------- -------- -------- --------
End of period ................................................ $ 473,312 $434,059 $ 427,483 $398,830 $227,014 $149,981
========= ======== ========= ======== ======== ========
SHARE TRANSACTIONS:
Issued ....................................................... 10,433 23,203 8,268 14,235 8,193 9,792
Reinvested ................................................... 980 1,946 595 783 63 11
Redeemed ..................................................... (12,030) (5,536) (10,620) (4,096) (3,090) (1,672)
--------- -------- --------- -------- -------- --------
Change in shares ................................................ (617) 19,613 (1,757) 10,922 5,166 8,131
========= ======== ========= ======== ======== ========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of period ................................................. $ 51 $ 9 $ (5) $ 24 $ 2,060 $ 822
========= ======== ========= ======== ======== ========
</TABLE>
See notes to financial statements.
62
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<PAGE> 391
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1995
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as a diversified, open-end investment
company established as a Massachusetts business trust. The Trust is
registered to offer five classes of shares: Fiduciary, Class A, Class B,
Institutional and Service. The Trust currently offers twenty-four funds.
The accompanying financial statements and financial highlights are those of
the Asset Allocation Fund, the Income Equity Fund, the Equity Index Fund,
the Large Company Value Fund, the Blue Chip Equity Fund, the Large Company
Growth Fund, the Disciplined Value Fund, the Small Company Growth Fund and
the International Equity Index Fund (individually, a "Fund"; collectively,
the "Funds") only.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies in conformity
with generally accepted accounting principles consistently followed by the
Trust in preparation of its financial statements.
SECURITY VALUATION
Listed securities are valued at the last sales price on the principal
exchange where such securities are traded. Unlisted securities or listed
securities for which last sales prices are not available are valued at
the mean of the latest bid and asked priced in the principal market where
such securities are traded. Short-term investments maturing in 60 days
or less are valued at amortized cost, which approximates market value.
Investments for which there are no such quotations or valuations are
carried at fair value as determined in good faith by or at the direction
of the Board of Trustees. Futures contracts are valued at the settlement
price established each day by the board of trade or exchange on which
they are traded. Options traded on an exchange are valued using the last
sale price or, in the absence of a sale, the last offering price. Options
traded over-the-counter are valued using dealer-supplied valuations.
FOREIGN CURRENCY TRANSLATION
Investment valuations, other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars
based upon current exchange rates. Purchases and sales of foreign
investments and income and expenses are converted into U.S. dollars based
upon exchange rates prevailing on the respective dates of such
transactions. That portion of unrealized gains or losses in investments
due to fluctuations in foreign currency exchange rates is not separately
disclosed.
FORWARD FOREIGN CURRENCY CONTRACTS
Forward foreign currency contracts are valued by the daily exchange rate
of the underlying currency. Purchases and sales of forward foreign
currency contracts having the same settlement date and broker are
presented net on the Statements of Assets and Liabilities. Gains or
losses on the purchase or sale of forward foreign currency contracts
having the same settlement date and broker are recognized on the date of
offset; otherwise gains or losses are recognized on settlement date.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that the
Fund's investment advisor has determined are creditworthy. Each
repurchase agreement is recorded at cost. The Fund requires that the
securities purchased in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a counterparty default. The seller, under the
repurchase agreement, is required to maintain the value of the securities
held at not less than the repurchase price, including accrued interest.
Continued
63
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<PAGE> 392
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
WRITTEN OPTIONS
The Funds may write covered call or put options for which premiums
received are recorded as liabilities and are subsequently adjusted to the
current value of the options written. Premiums received from writing
options which expire are treated as realized gains. Premiums received
from writing options which are exercised or are closed are offset against
the proceeds received or amount paid on the transaction to determine
realized gain or loss.
FUTURES CONTRACTS
The Funds may enter into futures contracts for the delayed delivery of
securities at a fixed price at some future date or the change in the
value of a specified financial index over a predetermined time period.
Cash or securities are deposited with brokers in order to maintain a
position. Subsequent payments made or received by the fund based on the
daily change in the market value of the position are recorded as
unrealized gain or loss until the contract is closed out, at which time
the gain or loss is realized.
INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked either
directly or inversely to changes in foreign currencies, interest rates,
commodities, indices or other reference instruments. Indexed securities
may be more volatile than the referenced instrument itself, but any loss
is limited to the amount of the original investment.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net
realized gains or losses on sales of securities are determined on the
specific identification cost method. Interest income and expenses are
recognized on the accrual basis. Dividends are recorded on the
ex-dividend date. Interest income, including any discount or premium, is
accrued as earned using the effective interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one fund of
the Trust are allocated among the respective Funds. Each class of shares
bears its pro-rata portion of expenses attributable to its series, except
that each class separately bears expenses related specifically to that
class, such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid monthly for
all Funds, except the International Equity Index Fund, which declares and
distributes net investment income annually. Net realized capital gains,
if any, are distributed at least annually. Dividends are declared
separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences
in separate class expenses.
Net investment income and net capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for expiring capital loss carryforwards, foreign
currency transactions, and deferrals of certain losses.
Continued
64
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<PAGE> 393
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
ORGANIZATION COSTS
Costs incurred by the Trust in connection with its organization,
including the fees and expenses of registering and qualifying its shares
for distribution have been deferred and are being amortized using the
straight-line method over a period of five years beginning with the
commencement of each Fund's operations. All such costs have been
allocated among the funds of the Trust pro-rata, based on the relative
net assets of each fund. In the event that any of the initial shares are
redeemed during such period by any holder thereof, the related fund will
be reimbursed by such holder for any unamortized organization costs in
the proportion as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of redemption.
FEDERAL INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment
company by complying with the provisions available to certain investment
companies as defined in applicable sections of the Internal Revenue Code,
and to make distributions of net investment income and net realized
capital gains sufficient to relieve it from all, or substantially all,
federal income taxes. Withholding taxes on foreign dividends have been
paid or provided for in accordance with the applicable country's tax
rules and rates.
RECLASSIFICATIONS:
Certain reclassifications have been made to the 1994 financial statements
and financial highlights in order to conform to the 1995 presentation.
3. SHARES OF BENEFICIAL INTEREST:
The Trust is authorized to issue an unlimited number of shares of
beneficial interest, with no par value which may, without shareholder
approval, be divided into an unlimited number of series of such shares and
any series may be classified or reclassified into one or more classes.
Currently, shares of the Trust are registered to be offered through thirty
series and five classes: Fiduciary, Class A, Class B, Institutional and
Service. The Service Shares commenced offering on January 17, 1994 when
they were designated as "Retirement" Shares. On April 4, 1995, the name of
the Retirement Shares was changed to "Service" Shares. During the year
ended June 30, 1995, Service Shares transferred to Class A Shares, and as
of June 30, 1995, there were no shareholders in the Service Class.
Shareholders are entitled to one vote for each full share held and will
vote in the aggregate and not by class or series, except as otherwise
expressly required by law or when the Board of Trustees has determined that
the matter to be voted on affects only the interest of shareholders of a
particular class or series. The following is a summary of transactions in
Fund shares for the fiscal years ending June 30, 1995 and 1994:
Continued
65
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<PAGE> 394
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
Transactions in capital shares for the Group were as follows:
<TABLE>
<CAPTION>
(Amounts in Thousands)
ASSET ALLOCATION FUND INCOME EQUITY FUND EQUITY INDEX FUND
------------------------ ------------------------ ------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994 1995 1994
------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued ...... $ 14,294 $ 35,322 $ 32,862 $138,221 $ 71,441 $116,441
Dividends reinvested ............. 1,386 1,183 4,624 2,965 5,401 3,602
Shares redeemed .................. (24,526) (22,264) (89,484) (93,619) (43,482) (44,372)
-------- -------- -------- -------- -------- --------
Change in net assets from
Fiduciary Share transactions ... $ (8,846) $ 14,241 $(51,998) $ 47,567 $ 33,360 $ 75,671
======== ======== ======== ======== ======== ========
CLASS A SHARES:
Proceeds from shares issued ...... $ 3,680 $ 1,738 $ 5,144 $ 4,413 $ 8,926 $ 1,649
Dividends reinvested ............. 111 61 614 341 49 24
Shares redeemed .................. (1,101) (624) (5,677) (2,149) (7,817) (706)
-------- -------- -------- -------- -------- --------
Change in net assets from
Class A Share transactions ..... $ 2,690 $ 1,175 $ 81 $ 2,605 $ 1,158 $ 967
======== ======== ======== ======== ======== ========
CLASS B SHARES:
Proceeds from shares issued .. ... $ 1,238 $ 1,928 $ 1,560 $ 1,762 $ 1,047 $ 251
Dividends reinvested ......... ... 80 10 105 12 15 1
Shares redeemed .................. (432) (5) (237) (26) (27)
-------- -------- -------- -------- -------- --------
Change in net assets from
Class B Share transactions ..... $ 886 $ 1,933 $ 1,428 $ 1,748 $ 1,035 $ 252
======== ======== ======== ======== ======== ========
SERVICE SHARES:
Proceeds from shares issued ...... $ 92 $ 91 $ 13
Dividends reinvested ............. 2 2
Shares redeemed .................. (102) (116) (1)
-------- -------- --------
Change in net assets from
Service Share transactions ..... $ (8) $ (23) $ 12
======== ======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued ........................... 1,433 3,503 2,362 10,186 5,555 9,633
Reinvested ....................... 139 117 343 218 440 298
Redeemed ......................... (2,496) (2,214) (6,450) (6,955) (3,519) (3,749)
-------- -------- -------- -------- -------- --------
Change in Fiduciary Shares ....... (924) 1,406 (3,745) 3,449 2,476 6,182
======== ======== ======== ======== ======== ========
CLASS A SHARES:
Issued ........................... 364 174 353 323 688 139
Reinvested ....................... 11 6 47 25 4 2
Redeemed ......................... (108) (62) (400) (156) (600) (62)
-------- -------- -------- -------- -------- --------
Change in Class A Shares ......... 267 118 0 192 92 79
======== ======== ======== ======== ======== ========
CLASS B SHARES:
Issued ........................... 124 192 108 131 80 21
Reinvested ....................... 8 1 8 1 1
Redeemed ......................... (44) (17) (2) (2)
-------- -------- -------- -------- -------- --------
Change in Class B Shares ......... 88 193 99 130 79 21
======== ======== ======== ======== ======== ========
SERVICE SHARES:
Issued ........................... 10 7 1
Reinvested .......................
Redeemed ......................... (10) (8)
-------- -------- --------
Change in Service Shares ......... 0 (1) 1
======== ======== ========
</TABLE>
Continued
66
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<PAGE> 395
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands)
LARGE COMPANY BLUE CHIP EQUITY LARGE COMPANY
VALUE FUND FUND GROWTH FUND
--------------------- --------------------- ---------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994 1995 1994
--------------------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued................ $ 201,943 $109,238 $ 7,015 $ 60,337 $264,563 $114,284
Proceeds from shares issued in
connection with acquisition.............. 119,883
Dividends reinvested....................... 10,183 4,015 589 1,252 4,370 2,013
Shares redeemed............................ (53,653) (72,500) (54,774) (86,345) (77,903) (8,273)
--------- -------- -------- --------- -------- --------
Change in net assets from
Fiduciary Share transactions........... $ 158,473 $ 40,753 $(47,170) $ (24,756) $310,913 $108,024
========= ======== ======== ========= ======== ========
CLASS A SHARES:
Proceeds from shares issued................ $ 9,809 $ 324 $ 391 $ 626 $ 15,491 $ 368
Proceeds from shares issued in
connection with acquisition.............. 11,716
Dividends reinvested....................... 121 22 71 77 154 1
Shares redeemed............................ (7,394) (89) (1,289) (2,183) (2,767)
--------- -------- -------- --------- -------- --------
Change in net assets from
Class A Share transactions............... $ 2,536 $ 257 $ (827) $ (1,480) $ 24,594 $ 369
========= ======== ======== ========= ======== ========
CLASS B SHARES:
Proceeds from shares issued................ $ 679 $ 191 $ 244 $ 115 $ 6,304 $ 335
Dividends reinvested....................... 27 1 3 32 1
Shares redeemed............................ (89) (5) (9) (247) (1)
--------- -------- -------- --------- -------- --------
Change in net assets from
Class B Share transactions............... $ 617 $ 187 $ 238 $ 115 $ 6,089 $ 335
========= ======== ======== ========= ======== ========
SERVICE SHARES:
Proceeds from shares issued................ $ 363 $ 24
Dividends reinvested....................... 5
Shares redeemed............................ (435)
-------- --------
Change in net assets from
Service Share transactions............... $ (67) $ 24
======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued..................................... 17,128 9,463 537 4,689 21,755 10,015
Issued in connection with acquisition...... 10,108
Reinvested................................. 911 350 46 97 357 177
Redeemed................................... (4,551) (6,314) (4,204) (6,707) (5,992) (724)
--------- -------- -------- --------- -------- --------
Change in Fiduciary Shares................. 13,488 3,499 (3,621) (1,921) 26,228 9,468
========= ======== ======== ========= ======== ========
CLASS A SHARES:
Issued..................................... 800 27 29 45 1,182 32
Issued in connection with acquisition...... 962
Reinvested................................. 11 2 6 6 12
Redeemed................................... (601) (8) (98) (165) (205)
--------- -------- -------- --------- -------- --------
Change in Class A Shares................... 210 21 (63) (114) 1,951 32
========= ======== ======== ========= ======== ========
CLASS B SHARES:
Issued..................................... 56 16 19 9 494 29
Reinvested................................. 2 2
Redeemed................................... (8) (1) (18)
--------- -------- -------- --------- -------- --------
Change in Class B Shares................... 50 16 18 9 478 29
========= ======== ======== ========= ======== ========
SERVICE SHARES:
Issued..................................... 30 2
Reinvested.................................
Redeemed................................... (32)
-------- --------
Change in Service Shares .................. (2) 2
======== ========
</TABLE>
Continued
67
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<PAGE> 396
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERNATIONAL
DISCIPLINED VALUE SMALL COMPANY EQUITY INDEX
VALUE FUND GROWH FUND FUND
----------------------- ------------------------ ------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994 1995 1994
----------------------- ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued ...... $ 117,175 $ 283,462 $ 120,166 $ 238,831 $ 104,876 $ 124,128
Dividends reinvested ............. 11,069 23,408 8,942 12,686 788 147
Shares redeemed .................. (142,398) (68,767) (162,832) (67,230) (39,348) (21,984)
--------- --------- --------- --------- --------- ---------
Change in net assets from
Fiduciary Share transactions ... $ (14,154) $ 238,103 $ (33,724) $ 184,287 $ 66,316 $ 102,291
========= ========= ========= ========= ========= =========
CLASS A SHARES:
Proceeds from shares issued ...... $ 6,626 $ 8,097 $ 16,237 $ 4,402 $ 3,817 $ 1,905
Dividends reinvested ............. 482 696 296 429 28
Shares redeemed .................. (5,134) (1,257) (14,784) (1,917) (1,301) (31)
--------- --------- --------- --------- --------- ---------
Change in net assets from
Class A Share transactions ..... $ 1,974 $ 7,536 $ 1,749 $ 2,914 $ 2,544 $ 1,874
========= ========= ========= ========= ========= =========
CLASS B SHARES:
Proceeds from shares issued ...... $ 5,594 $ 5,622 $ 1,368 $ 1,284 $ 2,243 $ 2,433
Dividends reinvested ............. 309 23 58 27 3
Shares redeemed .................. (903) (33) (45) (83) (506) (315)
--------- --------- --------- --------- --------- ---------
Change in net assets from
Class B Share transactions ..... $ 5,000 $ 5,612 $ 1,381 $ 1,201 $ 1,764 $ 2,121
========= ========= ========= ========= ========= =========
SERVICE SHARES:
Proceeds from shares issued ...... $ 495 $ 49 $ 481 $ 38 $ 529 $ 74
Dividends reinvested ............. 6 8 2
Shares redeemed .................. (577) (547) (1) (629)
--------- --------- --------- --------- --------- ---------
Change in net assets from
Service Share transactions ..... $ (76) $ 49 $ (58) $ 37 $ (98) $ 74
========= ========= ========= ========= ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued ........................... 9,425 22,092 7,209 13,900 7,711 9,457
Reinvested ....................... 913 1,888 571 757 59 11
Redeemed ......................... (11,504) (5,429) (9,719) (3,977) (2,910) (1,646)
--------- --------- --------- --------- --------- ---------
Change in Fiduciary Shares ....... (1,166) 18,551 (1,939) 10,680 4,860 7,822
========= ========= ========= ========= ========= =========
CLASS A SHARES:
Issued ........................... 521 656 949 257 277 187
Reinvested ....................... 40 56 19 26 2
Redeemed ......................... (409) (104) (867) (114) (96) (24)
--------- --------- --------- --------- --------- ---------
Change in Class A Shares ......... 152 608 101 169 183 163
========= ========= ========= ========= ========= =========
CLASS B SHARES:
Issued ........................... 447 451 82 76 165 142
Reinvested ....................... 26 2 4 2
Redeemed ......................... (72) (3) (3) (5) (38) (2)
--------- --------- --------- --------- --------- ---------
Change in Class B Shares ......... 401 450 83 71 129 140
========= ========= ========= ========= ========= =========
SERVICE SHARES:
Issued ........................... 40 4 28 2 40 6
Reinvested ....................... 1 1
Redeemed ......................... (45) (31) (46)
--------- --------- --------- --------- --------- ---------
Change in Service Shares ....... (4) 4 (2) 2 (6) 6
========= ========= ========= ========= ========= =========
</TABLE>
Continued
68
B-189
<PAGE> 397
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and Banc One Investment Advisors Corporation (the "Advisor") are
parties to an investment advisory agreement under which the Advisor is
entitled to a fee, computed daily and paid monthly, at the annual rate of
0.74% of the average net assets of the Income Equity Fund, the Disciplined
Value Fund, the Small Company Growth Fund, the Blue Chip Equity Fund, the
Large Company Value Fund, and the Large Company Growth Fund; 0.65% of the
average daily net assets of the Asset Allocation Fund; 0.55% of the average
daily net assets of the International Equity Index Fund; and 0.30% of the
average daily net assets of the Equity Index Fund.
The Trust and 440 Financial Group of Worcester ("440 Financial") are
parties to an administrative agreement under which 440 Financial (the
"Administrator") provides services for a fee that is computed daily and
payable monthly, at an annual rate of 0.20% on the first $1.5 billion of
the combined average net assets of the Funds and other funds offered by the
Trust; 0.18% on the next $0.5 billion of the combined average net assets
and 0.16% on the combined average net assets over $2 billion. Effective
April 1, 1995, The Shareholder Services Group, Inc, d/b/a 440 Financial
became the Administrator to the Trust. Also effective April 1, 1995, the
Advisor became the Sub-Administrator pursuant to an agreement between the
Administrator and the Advisor. The Advisor assumed many of the
administrative duties, for which it receives a fee paid by the
Administrator.
The Trust has adopted a distribution and shareholder services plan (the
"Plan") on behalf of the Class A, Class B and Service Class Shares pursuant
to Rule 12b-1 under the 1940 Act. 440 Financial Distributors, Inc. (the
"Distributor") acts as the distributor of the Trust's shares. The
Distributor receives an annual fee for its services of 0.35%, 1.00%, and
0.75% of the average daily net assets of the Class A, Class B, and Service
Class Shares, respectively. These fees are used by the Distributor to pay
banks, including affiliates of the Advisor, other institutions and
broker/dealers, or to reimburse the Distributor for expenses incurred for
providing distribution or shareholder assistance. The Distributor has
voluntarily agreed to limit its fees for the Class A Shares to an annual
rate of 0.25% of the average daily net assets of the Class A Shares of each
Fund.
Certain officers of the Trust are also officers of the Administrator and/or
Distributor. Such officers receive no compensation from the Funds for
serving in their respective roles.
The Advisor, Administrator, and Distributor voluntarily agreed to waive a
portion of their fees and to reimburse the Funds for certain expenses so
that total expenses of each Fund would not exceed certain annual expense
limitations. For the year ended June 30, 1995, fees is the following
amounts were waived or reimbursed to the Funds:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
----------------------------------------
ASSET INCOME
ALLOCATION EQUITY EQUITY INDEX
FUND FUND FUND
---------- ------- ------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Waivers/reimbursements ......... $104 $ 7 $428
ADMINISTRATION FEES:
Waivers/reimbursements ......... $ 5 $196
12b-1 FEES (CLASS A):
Waivers/reimbursements ......... $ 3 $12 $ 2
</TABLE>
Continued
69
B-190
<PAGE> 398
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
<TABLE>
<CAPTION>
LARGE LARGE
COMPANY BLUE CHIP COMPANY
VALUE EQUITY GROWTH
FUND FUND FUND
------- --------- -------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Waivers/reimbursements ............. $158
ADMINISTRATION FEES:
Waivers/reimbursements ............. $ 27
12b-1 FEES (CLASS A):
Waivers/reimbursements ............. $ 2 $ 3 $ 9
<CAPTION>
SMALL
DISCIPLINED COMPANY INTERNATIONAL
VALUE GROWTH EQUITY INDEX
FUND FUND FUND
----------- ------- -------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Waivers/reimbursements ............. $ 29 $ 7
12b-1 FEES (CLASS A):
Waivers/reimbursements ............. $ 11 $ 9 $ 3
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the year
ended June 30, 1995 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES OTHER SECURITIES
--------------------- ---------------------
PURCHASES SALES PURCHASES SALES
--------- ------- --------- -------
<S> <C> <C> <C> <C>
Asset Allocation Fund .............. $11,983 $17,908 $28,959 $33,031
Income Equity Fund ................. 7,902 62,561
Equity Index Fund .................. 35,702 4,867
Large Company Value Fund ........... 532,400 422,145
Blue Chip Equity Fund .............. 1,502 45,874
Large Company Growth Fund .......... 361,714 45,549
Disciplined Value Fund ............. 742,291 777,887
Small Company Growth Fund .......... 484,291 504,311
International Equity Index Fund .... 99,661 22,646
</TABLE>
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as written options, futures and
sales of forward foreign currency contracts involves risk in excess of the
amounts reflected in the Statements of Assets and Liabilities. The face or
contract amounts reflect the extent of the involvement the Funds have in
the particular class of instrument. Risks associated with these instruments
include an imperfect correlation between the movements in the price of the
instruments and the price of the underlying securities and interest rates,
an illiquid secondary market for the instruments or inability of
counterparties to perform under the terms of the contract, and changes in
the value of currency relative to the U.S. dollar. The Funds enter into
these contracts primarily as a means to hedge against adverse fluctuation
in securities.
Continued
70
B-191
<PAGE> 399
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
The following is a summary of written option activity for the year ended
June 30, 1995 by the Large Company Value Fund (amounts in thousands):
<TABLE>
<CAPTION>
PRINCIPAL AMOUNTS
OF CONTRACTS PREMIUMS
----------------- --------
<S> <C> <C>
Balance at beginning of year ...................... 50 $ 77
Options written ................................... 1,399 2,199
Options closed .................................... (1,111) (1,678)
Options exercised ................................. (233) (356)
------ -------
Options outstanding at end of period .............. 105 $ 242
====== =======
<CAPTION>
PRINCIPAL AMOUNTS
OF CONTRACTS VALUE
----------------- --------
<S> <C> <C>
Options outstanding at end of period consist of:
Apple Computer, $45, 7/24/95 .................. 25 $ 63
Apple Computer, $40, 7/24/95 .................. 25 165
ASA LTD, $45, 7/24/95 ......................... 25 6
Chrysler Corp, $45, 7/24/95 ................... 25 75
Temple Inland, $45, 7/24/95 ................... 5 14
------ -------
Total ...................................... 105 $ 323
====== =======
</TABLE>
7. CONCENTRATION OF CREDIT RISK:
The International Equity Index Fund has a relatively large concentration of
securities invested in companies domiciled in Japan. The Fund may be more
susceptible to the political, social and economic events adversely
affecting the Japanese companies than funds not so concentrated.
8. FEDERAL TAX INFORMATION:
The accompanying table below details distributions from long-term capital
gains for the following funds for the fiscal year ended June 30, 1995
(amounts in thousands):
<TABLE>
<S> <C>
Asset Allocation Fund ..................................................... $ 111
Income Equity Fund ........................................................ 5,384
Equity Index Fund ......................................................... 2,456
Large Company Value Fund .................................................. 5,759
Blue Chip Equity Fund ..................................................... 335
Large Company Growth Fund ................................................. 999
Disciplined Value Fund .................................................... 2,079
Small Company Growth Fund ................................................. 13,180
International Equity Index Fund ........................................... 395
</TABLE>
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following fiscal
year. The Asset Allocation Fund had approximately $247,000 deferred losses
that will be treated as arising on the first day of the fiscal year ended
June 30, 1996.
Continued
71
B-192
<PAGE> 400
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
9. REORGANIZATION:
On October 7, 1994, the Board of Trustees approved an agreement and plan of
reorganization for the acquisition of the Trademark Funds by the Trust.
Under the agreement and plan of reorganization, all assets and liabilities
of the Trademark Equity Fund (the "Acquired Fund") were acquired by the
Large Company Growth Fund in exchange for shares of the Large Company
Growth Fund. The reorganization, which qualified as a tax-free exchange for
federal income tax purposes, was completed following approval by the
shareholders of the Trademark Equity Fund. The following is a summary of
Shares Outstanding, Net Assets, Unrealized Appreciation and Net Asset Value
per share immediately before and after the reorganization (amounts in
thousands except net asset value):
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
-------------------------------- --------------
LARGE LARGE
TRADEMARK EQUITY COMPANY COMPANY
FUND GROWTH FUND GROWTH FUND
---------------- ----------- --------------
<S> <C> <C> <C>
Shares: ................ * 12,666 23,627 34,697
Net Assets: ............ *$ 131,599 $ 280,424 $ 412,023
Net Asset Value:
Fiduciary ............ *$ 10.39 $ 11.87 $ 11.87
Class A .............. 12.18 12.18
Unrealized Appreciation: $ 3,072 $ 11,501 $ 14,573
</TABLE>
- --------
* Before the reorganization, the Acquired Fund offered only one class of shares.
On May 22, 1995, the Board of Trustees approved a Plan of Reorganization
pursuant to which the Blue Chip Equity Fund would be merged with and into the
Large Company Growth Fund on or about September 1, 1995. On the exchange date,
the Blue Chip Equity Fund will transfer all of its assets and liabilities to the
Large Company Growth Fund in exchange for shares of the Large Company Growth
Fund. The reorganization, which qualifies as a tax-free exchange for federal
income tax purposes, must be approved by the shareholders of the Blue Chip
Equity Fund, at a shareholders' meeting on August 28, 1995.
Continued
72
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<PAGE> 401
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
10. ELIGIBLE DISTRIBUTIONS (UNAUDITED):
The Trust designates the following eligible distributions for the dividends
received deductions for corporations:
<TABLE>
<CAPTION>
ASSET INCOME
ALLOCATION EQUITY EQUITY
FUND FUND INDEX FUND
----------- ----------- -----------
<S> <C> <C> <C>
Dividend Income ........................ $ 396,726 $ 7,296,582 $ 4,924,307
Dividend Income Per Share--Fiduciary ... 0.070 0.379 0.280
Dividend Income Per Share--Class A ..... 0.063 0.038 0.253
Dividend Income Per Share--Class B ..... 0.053 0.256 0.171
<CAPTION>
LARGE
LARGE BLUE CHIP COMPANY
COMPANY EQUITY GROWTH
VALUE FUND FUND FUND
----------- ----------- -----------
<S> <C> <C> <C>
Dividend Income ........................ $ 6,927,555 $ 1,422,529 $ 7,673,650
Dividend Income Per Share--Fiduciary ... 0.253 0.194 0.166
Dividend Income Per Share--Class A ..... 0.230 0.176 0.141
Dividend Income Per Share--Class B ..... 0.135 0.120 0.075
<CAPTION>
SMALL
COMPANY
DISCIPLINED GROWTH
VALUE FUND FUND
----------- -----------
<S> <C> <C>
Dividend Income ........................................... $12,662,513 $ 2,881,817
Dividend Income Per Share--Fiduciary ...................... 0.238 0.031
Dividend Income Per Share--Class A ........................ 0.212 0.016
Dividend Income Per Share--Class B ........................ 0.141 0.000
</TABLE>
The International Equity Index Fund elects to pass on the benefits of the
foreign tax credit to its shareholders for the year ended June 30, 1995. The
following information is provided with respect to the election:
<TABLE>
<S> <C>
Gross Income From Foreign Countries ................................................. $ 4,904,720
Gross Income From Foreign Countries Per Share ....................................... $ 0.30
Income Taxes Paid To Foreign Countries .............................................. $ 853,438
Income Taxes Paid To Foreign Countries Per Share .................................... $ 0.05
</TABLE>
73
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------------------------------
1995 1994
--------------------------------------------------- ----------------------------
FIDUCIARY CLASS A CLASS B SERVICE (f) FIDUCIARY CLASS A
--------- ------- ------- ----------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ......................... $ 9.64 $ 9.65 $ 9.67 $ 9.62 $ 10.06 $ 10.06
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income ....................... 0.38 0.35 0.27 0.22 0.29 0.27
Net realized and unrealized gains(losses)
from investments ......................... 1.12 1.13 1.14 1.05 (0.38) (0.38)
------- ------- ------- ------- ------- -------
Total from Investment Activities .............. 1.50 1.48 1.41 1.27 (0.09) (0.11)
------- ------- ------- ------- ------- -------
Distributions
Net investment income ....................... (0.37) (0.34) (0.27) (0.22) (0.29) (0.26)
In excess of net investment income .......... (0.01) (0.01) (0.02)
Net realized gains .......................... (0.04) (0.04) (0.04)
In excess of net realized gains ............. (0.04) (0.04) (0.04)
------- ------- ------- ------- ------- -------
Total Distributions ........................... (0.41) (0.39) (0.32) (0.28) (0.33) (0.30)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD ............................... $ 10.73 $ 10.74 $ 10.76 $ 10.61 $ 9.64 $ 9.65
======= ======= ======= ======= ======= =======
Total Return (excludes sales charge) .......... 16.06% 15.76% 14.90% (f) (1.01)% (1.19)%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) ........... $37,658 $ 4,745 $ 3,019 $42,751 $ 1,691
Ratio of expenses to average net assets ..... 1.06% 1.31% 2.07% 1.72%(b) 1.06% 1.33%
Ratio of net investment income to average net
assets ................................... 3.72% 3.57% 2.77% 3.06%(b) 2.91% 2.68%
Ratio of expenses to average net assets* .... 1.31% 1.66% 2.31% 1.98%(b) 1.33% 1.67%
Ratio of net investment income to average net
assets* .................................. 3.47% 3.23% 2.52% 2.79%(b) 2.64% 2.34%
Portfolio turnover .......................... 115.36% 115.36% 115.36% 115.36% 56.55% 56.55%
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
-------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------
1994 1993
-------------------------------------------
CLASS B(d) FIDUCIARY (a) CLASS A (c)
---------- ------------- -----------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ......................... $ 10.37 $ 10.00 $ 10.00
------- ------- -------
Investment Activities
Net investment income ....................... 0.08 0.07 0.05
Net realized and unrealized gains(losses)
from investments ......................... (0.70) 0.06 0.07
------- ------- -------
Total from Investment Activities .............. (0.62) 0.13 0.12
------- ------- -------
Distributions
Net investment income ....................... (0.08) (0.07) (0.06)
In excess of net investment income ..........
Net realized gains ..........................
In excess of net realized gains .............
------- ------- -------
Total Distributions ........................... (0.08) (0.07) (0.06)
------- ------- -------
NET ASSET VALUE,
END OF PERIOD ............................... $ 9.67 $ 10.06 $ 10.06
======= ======= =======
Total Return (excludes sales charge) .......... (5.98)%(e) 5.45%(b) 5.23%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) ........... $ 1,862 $30,441 $ 571
Ratio of expenses to average net assets ..... 2.40%(b) 0.90%(b) 1.15%(b)
Ratio of net investment income to average net
assets ................................... 1.99%(b) 3.03%(b) 2.84%(b)
Ratio of expenses to average net assets* .... 2.40%(b) 1.34%(b) 1.62%(b)
Ratio of net investment income to average net
assets* .................................. 1.99%(b) 2.59%(b) 2.37%(b)
Portfolio turnover .......................... 56.55% 4.05% 4.05%
</TABLE>
- ----------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Fiduciary Shares commenced offering on April 5, 1993.
(b) Annualized.
(c) Class A Shares commenced offering on April 2, 1993.
(d) Class B Shares commenced offering on January 14, 1994.
(e) Not Annualized
(f) The Service Shares commenced offering on January 17, 1994 when they were
designated as "Retirement" Shares. On April 4, 1995, the name of the
Retirement Shares was changed to "Service" Shares. As of June 1, 1995,
Service Shares transferred to Class A Shares, and as of June 30, 1995,
there were no shareholders in the Service Class. The return for the period
from July 1, 1994 to June 1, 1995 for the Service Shares was 13.25%.
See notes to financial statements.
74
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<PAGE> 403
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
----------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------
1995 1994
------------------------------------- -------------------------------------
FIDUCIARY CLASS A CLASS B FIDUCIARY CLASS A CLASS B(c)
--------- ------- ------- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ......................... $ 13.22 $ 13.20 $ 13.23 $ 13.21 $ 13.20 $ 13.83
-------- -------- -------- -------- -------- --------
Investment Activities
Net investment income ....................... 0.40 0.03 0.26 0.39 0.36 0.11
Net realized and unrealized gains(losses)
from investments ......................... 2.28 2.29 2.29 0.01 (0.60)
-------- -------- -------- -------- -------- --------
Total from Investment Activities .............. 2.68 2.32 2.55 0.40 0.36 (0.49)
-------- -------- -------- -------- -------- --------
Distributions
Net investment income ....................... (0.40) (0.03) (0.25) (0.39) (0.34) (0.11)
In excess of net investment income .......... (0.01) (0.02) (0.02)
Net realized gains .......................... (0.37) (0.37) (0.37)
-------- -------- -------- -------- -------- --------
Total Distributions ........................... (0.77) (0.41) (0.64) (0.39) (0.36) (0.11)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD ............................... $ 15.13 $ 15.11 $ 15.14 $ 13.22 $ 13.20 $ 13.23
======== ======== ======== ======== ======== ========
Total Return (excludes sales charge) .......... 21.04% 20.79% 19.91% 3.27% 2.95% (3.37)%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) ........... $170,919 $ 13,793 $ 3,468 $198,787 $ 12,054 $ 1,714
Ratio of expenses to average net assets ..... 1.01% 1.26% 2.01% 0.98% 1.23% 1.95%(b)
Ratio of net investment income to average net
assets ................................... 2.85% 2.61% 1.88% 3.18% 3.01% 2.70%(b)
Ratio of expenses to average net assets* .... 1.01% 1.36% 2.02% 1.05% 1.40% 1.95%(b)
Ratio of net investment income to average net
assets* .................................. 2.85% 2.51% 1.87% 3.11% 2.84% 2.70%(b)
Portfolio turnover .......................... 4.03% 4.03% 4.03% 22.69% 22.69% 22.69%
</TABLE>
<TABLE>
<CAPTION>
INCOME EQUITY FUND
--------------------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------------------
1993 1992 1991
------------------------ ------------------------ ---------
FIDUCIARY CLASS A FIDUCIARY CLASS A(a) FIDUCIARY
--------- ------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ......................... $ 12.24 $ 12.23 $ 11.35 $ 12.34 $ 11.06
-------- -------- -------- ------- ----------
Investment Activities
Net investment income ....................... 0.43 0.40 0.49 0.20 0.54
Net realized and unrealized gains(losses)
from investments ......................... 0.97 0.98 0.90 (0.10) 0.26
-------- -------- -------- ------- ----------
Total from Investment Activities .............. 1.40 1.38 1.39 0.10 0.80
-------- -------- -------- ------- ----------
Distributions
Net investment income ....................... (0.43) (0.41) (0.50) (0.21) (0.51)
In excess of net investment income ..........
Net realized gains ..........................
-------- -------- -------- ------- ----------
Total Distributions ........................... (0.43) (0.41) (0.50) (0.21) (0.51)
-------- -------- -------- ------- ----------
NET ASSET VALUE,
END OF PERIOD ............................... $ 13.21 $ 13.20 $ 12.24 $ 12.23 $ 11.35
======== ======== ======== ======= ==========
Total Return (excludes sales charge) .......... 11.56% 11.38% 12.36% 2.16%(b) 7.48%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) ........... $153,144 $ 9,513 $125,050 $ 118 $ 73,552
Ratio of expenses to average net assets ..... 0.90% 1.11% 0.70% 1.29%(b) 0.42%
Ratio of net investment income to average net
assets ................................... 3.37% 3.32% 4.12% 3.97%(b) 4.80%
Ratio of expenses to average net assets* .... 1.07% 1.43% 1.23% 1.49%(b) 1.16%
Ratio of net investment income to average net
assets* .................................. 3.20% 3.00% 3.59% 3.77%(b) 4.06%
Portfolio turnover .......................... 7.53% 7.53% 5.99% 5.99% 9.36%
</TABLE>
- ----------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on February 18, 1992.
(b) Annualized.
(c) Class B Shares commenced offering on January 14, 1994.
(d) Not Annualized.
See notes to financial statements.
75
B-196
<PAGE> 404
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
-----------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------------------
1995 1994
----------------------------------------- ------------------------------------
FIDUCIARY CLASS A CLASS B SERVICE(f) FIDUCIARY CLASS A CLASS B(d)
--------- ------- ------- ---------- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ...................... $ 11.59 $11.59 $11.61 $11.51 $ 11.92 $11.91 $12.39
-------- ------ ------ ------ -------- ------ ------
Investment Activities
Net investment income .................... 0.32 0.29 0.18 0.13 0.29 0.28 0.09
Net realized and unrealized gains (losses)
from investments ...................... 2.59 2.58 2.61 2.36 (0.20) (0.20) (0.78)
-------- ------ ------ ------ -------- ------ ------
Total from Investment Activities ........... 2.91 2.87 2.79 2.49 0.09 0.08 (0.69)
-------- ------ ------ ------ -------- ------ ------
Distributions
Net investment income .................... (0.29) (0.28) (0.19) (0.19) (0.29) (0.27) (0.09)
In excess of net investment income ....... (0.02) (0.01) (0.04) (0.04)
Net realized gains ....................... (0.16) (0.16) (0.16) (0.10) (0.09) (0.09)
In excess of net realized gains .......... (0.06)
-------- ------ ------ ------ -------- ------ ------
Total Distributions ........................ (0.47) (0.44) (0.35) (0.36) (0.42) (0.40) (0.09)
-------- ------ ------ ------ -------- ------ ------
NET ASSET VALUE,
END OF PERIOD ............................ $ 14.03 $14.02 $14.05 $13.64 $ 11.59 $11.59 $11.61
======== ====== ====== ====== ======== ====== ======
Total Return (excludes sales charge) ....... 25.79% 25.43% 24.58% (f) 0.63% 0.56% (5.57)%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) ........ $234,895 $3,003 $1,408 $165,370 $1,416 $ 248
Ratio of expenses to average
net assets ............................ 0.33% 0.56% 1.34% 1.01%(b) 0.46% 0.62% 1.10%(b)
Ratio of net investment income to average
net assets ............................ 2.57% 2.38% 1.60% 2.18%(b) 2.44% 2.37% 2.08%(b)
Ratio of expenses to average net assets* 0.66% 1.01% 1.67% 1.37%(b) 0.59% 0.94% 1.15%(b)
Ratio of net investment income to average
net assets* ........................... 2.24% 1.94% 1.27% 1.82%(b) 2.31% 2.05% 2.03%(b)
Portfolio turnover ....................... 2.71% 2.71% 2.71% 2.71% 11.81% 11.81% 11.81%
</TABLE>
<TABLE>
<CAPTION>
EQUITY INDEX FUND
--------------------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------------------
1994 1993 1992
----------- --------------------- -------------------------
RETIREMENT FIDUCIARY CLASS A FIDUCIARY(a) CLASS A(c)
---------- --------- ------- ------------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ...................... $12.36 $ 10.92 $10.92 $ 10.00 $10.94
------ ------- ------ ------- ------
Investment Activities
Net investment income .................... 0.05 0.30 0.30 0.26 0.08
Net realized and unrealized gains (losses)
from investments ...................... (0.85) 1.13 1.10 0.95
------ ------- ------ ------- ------
Total from Investment Activities ........... (0.80) 1.43 1.40 1.21 0.08
------ ------- ------ ------- ------
Distributions
Net investment income .................... (0.05) (0.30) (0.28) (0.26) (0.10)
In excess of net investment income .......
Net realized gains ....................... (0.13) (0.13) (0.03)
In excess of net realized gains ..........
------ ------- ------ ------- ------
Total Distributions ........................ (0.05) (0.43) (0.41) (0.29) (0.10)
------ ------- ------ ------- ------
NET ASSET VALUE,
END OF PERIOD ............................ $11.51 $ 11.92 $11.91 $ 10.92 $10.92
====== ======= ====== ======= ======
Total Return (excludes sales charge) ....... (6.52)%(e) 13.04% 12.75% 12.14%(b) 1.32%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) ........ $ 11 $96,446 $ 512 $62,150 $ 5
Ratio of expenses to average
net assets ............................ 1.42%(b) 0.50% 0.52% 0.73%(b) 1.09%(b)
Ratio of net investment income to average
net assets ............................ 1.83%(b) 2.46% 2.51% 2.43%(b) 1.97%(b)
Ratio of expenses to average net assets* 1.69%(b) 0.87% 0.99% 1.16%(b) 1.27%(b)
Ratio of net investment income to average
net assets* ........................... 1.56%(b) 2.09% 2.04% 2.00%(b) 1.79%(b)
Portfolio turnover ....................... 11.81% 2.71% 2.71% 21.90% 21.90%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been
as indicated.
(a) The Fund commenced operations on July 2, 1991.
(b) Annualized.
(c) Class A Shares commenced offering on February 18, 1992.
(d) Class B Shares commenced offering on January 14, 1994.
(e) Not Annualized
(f) The Service Shares commenced offering on January 17, 1994 when they
were designated as "Retirement" Shares. On April 4, 1995, the name of
the Retirement Shares was changed to "Service" Shares. As of June 1,
1995, Service Shares transferred to Class A Shares, and as of June 30,
1995, there were no Shareholders in the Service class. The return for
the period from July 1, 1994 to June 1, 1995 for the Service Shares was
22.83%.
See notes to financial statements.
76
B-197
<PAGE> 405
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND
------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------------------------------
1995 1994 1993
---------------------------- -------------------------------- ------------------
FIDUCIARY CLASS A CLASS B FIDUCIARY CLASS A CLASS B(d) FIDUCIARY CLASS A
--------- ------- ------- --------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ...... $ 11.34 $ 11.34 $ 11.41 $ 11.64 $ 11.64 $ 11.87 $ 11.34 $11.33
-------- ------- ------- -------- ------- ------- -------- ------
Investment Activities
Net investment income .... 0.31 0.28 0.17 0.20 0.17 0.05 0.18 0.16
Net realized and
unrealized gains
(losses) from
investments ........... 2.18 2.20 2.19 (0.01) (0.01) (0.46) 0.58 0.59
-------- ------- ------- -------- ------- ------- -------- ------
Total from Investment
Activities ............... 2.49 2.48 2.36 0.19 0.16 (0.41) 0.76 0.75
-------- ------- ------- -------- ------- ------- -------- ------
Distributions
Net investment income .... (0.32) (0.27) (0.17) (0.19) (0.16) (0.05) (0.18) (0.16)
In excess of net
investment income ...... (0.02)
Net realized gains ....... (0.64) (0.64) (0.64) (0.30) (0.30) (0.28) (0.28)
-------- ------- ------- -------- ------- ------- -------- ------
Total Distributions ........ (0.96) (0.93) (0.81) (0.49) (0.46) (0.05) (0.46) (0.44)
-------- ------- ------- -------- ------- ------- -------- ------
NET ASSET VALUE,
END OF PERIOD ............ $ 12.87 $ 12.89 $ 12.96 $ 11.34 $ 11.34 $ 11.41 $ 11.64 $11.64
======== ======= ======= ======== ======= ======= ======== ======
Total Return (excludes sales
charge) .................. 23.42% 22.64% 22.28% (1.59)% 1.35% 3.48%(e) 6.73% 6.64%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000) ........... $365,375 $ 3,481 $ 861 $169,127 $ 698 $ 182 $132,833 $ 451
Ratio of expenses to
average net assets .... 1.00% 1.25% 2.00% 0.95% 1.20% 2.00%(b) 0.86% 1.10%
Ratio of net investment
income to average net
assets ................ 2.74% 2.52% 1.74% 1.72% 1.57% 1.06%(b) 1.62% 1.41%
Ratio of expenses to
average net assets* ... 1.01% 1.37% 2.01% 1.02% 1.37% 2.00%(b) 1.12% 1.50%
Ratio of net investment
income to average net
assets* ............... 2.73% 2.41% 1.72% 1.65% 1.40% 1.06%(b) 1.36% 1.01%
Portfolio turnover ....... 203.13% 203.37% 203.13% 111.72% 111.72% 111.72% 51.75% 51.75%
</TABLE>
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND
-------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------
1992 1991
---------------------- ------------
FIDUCIARY CLASS A(c) FIDUCIARY(a)
--------- ---------- ------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ...... $ 10.07 $11.42 $ 10.00
-------- ------ --------
Investment Activities
Net investment income .... 0.21 0.07 0.08
Net realized and
unrealized gains
(losses) from
investments ........... 1.34 (0.08) 0.07
-------- ------ --------
Total from Investment
Activities ............... 1.55 (0.01) 0.15
-------- ------ --------
Distributions
Net investment income .... (0.21) (0.08) (0.08)
In excess of net
investment income ......
Net realized gains ....... (0.07)
-------- ------ --------
Total Distributions ........ (0.28) (0.08) (0.08)
-------- ------ --------
NET ASSET VALUE,
END OF PERIOD ............ $ 11.34 $11.33 $ 10.07
======== ====== ========
Total Return (excludes sales
charge) .................. 15.53% (0.33)%(b) 4.47%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000) ........... $ 62,075 $ 12 $ 36,237
Ratio of expenses to
average net assets .... 0.82% 1.02%(b) 0.52%(b)
Ratio of net investment
income to average net
assets ................ 1.91% 2.12%(b) 2.48%(b)
Ratio of expenses to
average net assets* ... 1.34% 1.22%(b) 1.26%(b)
Ratio of net investment
income to average net
assets* ............... 1.39% 1.92%(b) 1.74%(b)
Portfolio turnover ....... 55.90% 55.90% 19.87%
</TABLE>
- -------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on March 1, 1991.
(b) Annualized.
(c) Class A Shares commenced offering on February 18, 1992.
(d) Class B Shares commenced offering on January 14, 1994.
(e) Not Annualized.
See notes to financial statements.
77
B-198
<PAGE> 406
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
BLUE CHIP EQUITY FUND
------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------------------------------
1995 1994 1993
---------------------------- --------------------------------- ------------------
FIDUCIARY CLASS A CLASS B FIDUCIARY CLASS A CLASS B(d) FIDUCIARY CLASS A
--------- ------- ------- --------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............... $ 12.53 $12.52 $12.62 $ 12.91 $12.91 $13.50 $ 12.95 $12.95
------- ------ ------ ------- ------ ------ -------- ------
Investment Activities
Net investment income............. 0.23 0.17 0.10 0.22 0.18 0.03 0.23 0.21
Net realized and unrealized gains
(losses) from invest ments...... 1.85 1.89 1.88 (0.38) (0.38) (0.87) (0.04) (0.04)
------- ------ ------ ------- ------ ------ -------- ------
Total from Investment Activities.... 2.08 2.06 1.98 (0.16) (0.20) (0.84) 0.19 0.17
------- ------ ------ ------- ------ ------ -------- ------
Distributions
Net investment income............. (0.21) (0.16) (0.08) (0.22) (0.19) (0.04) (0.23) (0.21)
In excess of net investment income (0.03) (0.05)
Net realized gains................ (0.07) (0.07) (0.07)
------- ------ ------ ------- ------ ------ -------- ------
Total Distributions................. (0.28) (0.26) (0.20) (0.22) (0.19) (0.04) (0.23) (0.21)
------- ------ ------ ------- ------ ------ -------- ------
NET ASSET VALUE,
END OF PERIOD..................... $ 14.33 $14.32 $14.40 $ 12.53 $12.52 $12.62 $ 12.91 $12.91
======= ====== ====== ======= ====== ====== ======== ======
Total Return (excludes sales charge) 16.90% 16.71% 15.86% (1.30)% (1.61)% (6.24)%(e) 1.42% 1.23%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000).................... $38,915 $3,621 $ 384 $79,357 $3,950 $ 111 $106,619 $5,540
Ratio of expenses to average net
assets.......................... 1.03% 1.28% 2.05% 0.95% 1.20% 2.04%(b) 0.89% 1.11%
Ratio of net investment income
to average net assets........... 1.56% 1.34% 0.65% 1.64% 1.50% 0.95%(b) 1.74% 1.57%
Ratio of expenses to average net
assets*........................ 1.29% 1.65% 2.31% 1.05% 1.40% 2.08%(b) 1.11% 1.45%
Ratio of net investment income to
average net assets*............. 1.30% 0.98% 0.39% 1.54% 1.30% 0.91%(b) 1.52% 1.23%
Portfolio turnover................ 2.66% 2.66% 2.66% 25.31% 25.31% 25.31% 32.91% 32.91%
</TABLE>
<TABLE>
<CAPTION>
BLUE CHIP EQUITY FUND
-------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------
1992 1991
----------------------- ------------
FIDUCIARY CLASS A(c) FIDUCIARY(a)
--------- ----------- ------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............... $ 11.69 $13.08 $ 10.00
------- ------ -------
Investment Activities
Net investment income............. 0.26 0.09 0.23
Net realized and unrealized gains
(losses) from invest ments...... 1.30 (0.12) 1.68
------- ------ -------
Total from Investment Activities.... 1.56 (0.03) 1.91
------- ------ -------
Distributions
Net investment income............. (0.27) (0.10) (0.22)
In excess of net investment income
Net realized gains................ (0.03)
------- ------ -------
Total Distributions................. (0.30) (0.10) (0.22)
------- ------ -------
NET ASSET VALUE,
END OF PERIOD..................... $ 12.95 $12.95 $ 11.69
======= ====== =======
Total Return (excludes sales charge) 13.36% (0.64)%(b) 25.72%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000).................... $88,618 $ 50 $32,509
Ratio of expenses to average net
assets.......................... 0.78% 1.30%(b) 0.64%(b)
Ratio of net investment income
to average net assets........... 2.12% 1.87%(b) 2.80%(b)
Ratio of expenses to average net
assets*........................ 1.26% 1.50%(b) 1.38%(b)
Ratio of net investment income to
average net assets*............. 1.64% 1.67%(b) 2.06%(b)
Portfolio turnover................ 5.33% 5.33% 1.76%
</TABLE>
- -------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on October 1, 1990.
(b) Annualized.
(c) Class A Shares commenced offering on February 18, 1992.
(d) Class B Shares commenced offering on January 14, 1994.
(e) Not Annualized.
See notes to financial statements.
78
B-199
<PAGE> 407
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH FUND
---------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------------
1995 1994
---------------------------------------------------------------------------------
FIDUCIARY CLASS A CLASS B SERVICE (f) FIDUCIARY CLASS A (b) CLASS B (c)
--------- ------- ------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................. $ 11.32 $ 11.62 $11.47 $11.42 $ 10.92 $11.78 $11.57
-------- ------- ------ ------ -------- ------ ------
Investment Activities
Net investment income............... 0.20 0.17 0.09 0.11 0.20 0.04 0.03
Net realized and unrealized gains
(losses) from investments......... 3.04 3.10 3.06 2.85 0.67 (0.16) (0.10)
-------- ------- ------ ------ -------- ------ ------
Total from Investment Activities...... 3.24 3.27 3.15 2.96 0.87 (0.12) (0.07)
-------- ------- ------ ------ -------- ------ ------
Distributions
Net investment income............... (0.20) (0.16) (0.09) (0.11) (0.20) (0.04) (0.03)
In excess of net investment income.. (0.01) (0.01)
Net realized gains.................. (0.89) (0.89) (0.89) (0.89) (0.27)
-------- ------- ------ ------ -------- ------ ------
Total Distributions................... (1.09) (1.06) (0.99) (1.00) (0.47) (0.04) (0.03)
-------- ------- ------ ------ -------- ------ ------
NET ASSET VALUE,
END OF PERIOD....................... $ 13.47 $ 13.83 $13.63 $13.38 $ 11.32 $11.62 $11.47
======== ======= ====== ====== ======== ====== ======
Total Return (excludes sales charge).. 21.85% 21.52% 20.65% (f) 8.04% (1.02)%(d) (0.66)%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)... $531,595 $27,428 $6,918 $150,035 $ 368 $ 334
Ratio of expenses to average net
assets............................ 1.00% 1.26% 2.01% 1.90%(e) 0.78% 1.25% (e) 1.99% (e)
Ratio of net investment income to
average net assets................ 1.72% 1.49% 0.74% 1.05%(e) 1.78%(e) 0.96% (e) 1.02% (e)
Ratio of expenses to average net
assets*........................... 1.00% 1.36% 2.01% 1.90%(e) 1.13% 1.35% (e) 1.99% (e)
Ratio of net investment income to
average net assets*............... 1.72% 1.39% 0.74% 1.05%(e) 1.52% 1.68% (e) 0.96% (e)
Portfolio turnover.................. 14.22% 14.22% 14.22% 14.22% 9.04% 9.04% 9.04%
</TABLE>
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH FUND
-------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------
1994 1993 1992
-------------------------------------
RETIREMENT FIDUCIARY FIDUCIARY (a)
---------- --------- -------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................. $11.58 $ 9.85 $ 10.00
------ ------- -------
Investment Activities
Net investment income............... 0.03 0.23 0.08
Net realized and unrealized gains
(losses) from investments......... (0.16) 1.12 (0.16)
------ ------- -------
Total from Investment Activities...... (0.13) 1.35 (0.08)
------ ------- -------
Distributions
Net investment income............... (0.03) (0.23) (0.07)
In excess of net investment income..
Net realized gains.................. (0.05)
------ ------- -------
Total Distributions................... (0.03) (0.28) (0.07)
------ ------- -------
NET ASSET VALUE,
END OF PERIOD....................... $11.42 $ 10.92 $ 9.85
====== ======= =======
Total Return (excludes sales charge).. (1.13)%(d) 13.92% (0.80)%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)... $ 24 $41,317 $25,019
Ratio of expenses to average net
assets............................ 1.75% (e) 0.39% 0.30%
Ratio of net investment income to
average net assets................ 2.24% 2.37%
Ratio of expenses to average net
assets*........................... 1.75% (e) 1.43% 1.49%
Ratio of net investment income to
average net assets*............... 1.02% (e) 1.21% 1.12%
Portfolio turnover.................. 9.04% 10.61% 3.09%
</TABLE>
- --------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on February 28, 1992.
(b) Class A Shares commenced offering on January 1, 1994.
(c) Class B Shares commenced offering on January 14, 1994.
(d) Not Annualized.
(e) Annualized.
(f) The Service Shares commenced offering on January 17, 1994 when they were
designated as "Retirement" Shares. On April 4, 1995, the name of the
Retirement Shares was changed to "Service" Shares. As of June 1, 1995,
Service Shares transferred to Class A Shares, and as of June 30, 1995,
there were no shareholders in the Service Class. The return for the period
from July 1, 1994 to June 1, 1995 for the Service Shares was 19.19%.
See notes to financial statements.
79
B-200
<PAGE> 408
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND
----------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------------
1995 1994
----------------------------------------------------------------------------------------
FIDUCIARY CLASS A CLASS B SERVICE (e) FIDUCIARY CLASS A CLASS B (c) RETIREMENT
--------- ------- ------- ----------- --------- ------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................. $ 11.90 $ 11.91 $ 11.90 $ 11.90 $ 12.76 $ 12.75 $12.60 $12.59
-------- ------- ------- ------- -------- ------- ------ ------
Investment Activities
Net investment income............... 0.28 0.24 0.15 0.17 0.26 0.24 0.07 0.06
Net realized and unrealized gains
(losses) from investments......... 1.57 1.59 1.58 1.37 0.29 0.30 (0.70) (0.69)
-------- ------- ------- ------- -------- ------- ------ ------
Total from Investment Activities...... 1.85 1.83 1.73 1.54 0.55 0.54 (0.63) (0.63)
-------- ------- ------- ------- -------- ------- ------ ------
Distributions
Net investment income............... (0.27) (0.24) (0.15) (0.16) (0.26) (0.23) (0.06) (0.06)
In excess of net investment income.. (0.01) (0.01) (0.01)
Net realized gains.................. (0.28) (0.26) (0.28) (0.28) (1.15) (1.10)
In excess of net realized gains..... (0.02) (0.05)
-------- ------- ------- ------- -------- ------- ------ ------
Total Distributions................... (0.55) (0.52) (0.44) (0.45) (1.41) (1.38) (0.07) (0.06)
-------- ------- ------- ------- -------- ------- ------ ------
NET ASSET VALUE,
END OF PERIOD....................... $ 13.20 $ 13.22 $ 13.19 $ 12.99 $ 11.90 $ 11.91 $11.90 $11.90
======== ======= ======= ======= ======== ======= ====== ======
Total Return (excludes sales charge).. 16.03% 15.43% 14.92% (e) 4.04% 3.95% (5.00)%(d) (5.03)%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)... $448,530 $13,560 $11,222 $418,238 $10,448 $5,356 $ 47
Ratio of expenses to average net
assets............................ 1.00% 1.26% 2.00% 1.90%(b) 0.93% 1.18% 1.96% (b) 1.84% (b)
Ratio of net investment income to
average net assets................ 2.21% 1.99% 1.26% 1.89%(b) 2.14% 2.00% 1.80% (b) 1.83% (b)
Ratio of expenses to average net
assets*........................... 1.10% 1.36% 2.01% 1.90%(b) 0.98% 1.33% 1.96% (b) 1.84% (b)
Ratio of net investment income to
average net assets*............... 2.11% 1.89% 1.25% 1.89%(b) 2.09% 1.85% 1.80% (b) 1.83% (b)
Portfolio turnover.................. 176.66% 176.66% 176.66% 176.66% 56.33% 56.33% 56.33% 56.33%
</TABLE>
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND
---------------------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------------------
1993 1992 1991
---------------------------------------------------------
FIDUCIARY CLASS A FIDUCIARY CLASS A (a) FIDUCIARY
--------- ------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................. $ 11.49 $ 11.49 $ 10.20 $11.45 $ 10.42
-------- ------- -------- ------ -------
Investment Activities
Net investment income............... 0.28 0.25 0.34 0.12 0.39
Net realized and unrealized gains
(losses) from investments......... 1.27 1.26 1.29 0.06 (0.23)
-------- ------- -------- ------ -------
Total from Investment Activities...... 1.55 1.51 1.63 0.18 0.16
-------- ------- -------- ------ -------
Distributions
Net investment income............... (0.28) (0.25) (0.34) (0.14) (0.38)
In excess of net investment income..
Net realized gains..................
In excess of net realized gains.....
-------- ------- -------- ------ -------
Total Distributions................... (0.28) (0.25) (0.34) (0.14) (0.38)
-------- ------- -------- ------ -------
NET ASSET VALUE,
END OF PERIOD....................... $ 12.76 $ 12.75 $ 11.49 $11.49 $ 10.20
======== ======= ======== ====== =======
Total Return (excludes sales charge).. 13.58% 13.27% 16.24% 1.56%(b) 1.75%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)... $211,785 $ 3,435 $115,234 $ 35 $74,481
Ratio of expenses to average net
assets............................ 0.89% 1.12% 0.69% 1.29%(b) 0.41%
Ratio of net investment income to
average net assets................ 2.30% 2.06% 3.17% 2.43%(b) 3.92%
Ratio of expenses to average net
assets*........................... 1.08% 1.46% 1.23% 1.49%(b) 1.15%
Ratio of net investment income to
average net assets*............... 2.11% 1.72% 2.63% 2.23%(b) 3.18%
Portfolio turnover.................. 108.79% 108.79% 25.32% 25.32% 49.62%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on February 18, 1992.
(b) Annualized.
(c) Class B Shares commenced offering on January 14, 1994.
(d) Not Annualized.
(e) The Service Shares commenced offering on January 17, 1994 when they were
designated as "Retirement" Shares. On April 4, 1995, the name of the
Retirement Shares was changed to "Service" Shares. As of June 1, 1995,
Service Shares transferred to Class A Shares, and as of June 30, 1995,
there were no shareholders in the Service Class. The return for the period
from July 1, 1994 to June 1, 1995 for the Service Shares was 13.14%.
See notes to financial statements.
80
B-201
<PAGE> 409
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND
-------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------------
1995 1994
-------------------------------------------------------------------------------------------
FIDUCIARY CLASS A CLASS B SERVICE (e) FIDUCIARY CLASS A CLASS B (c) RETIREMENT
--------- ------- ------- ----------- --------- ------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................. $ 15.96 $ 15.93 $ 15.85 $ 15.95 $ 16.96 $16.96 $17.44 $17.47
-------- ------- ------- ------- -------- ------ ------ ------
Investment Activities
Net investment income............... 0.06 0.02 (0.07) (0.03) 0.07 0.04 (0.02) (0.01)
Net realized and unrealized gains
(losses) from investments......... 2.98 2.98 2.90 2.14 (0.05) (0.08) (1.56) (1.50)
-------- ------- ------- ------- -------- ------ ------ ------
Total from Investment Activities...... 3.04 3.00 2.83 2.11 0.02 (0.04) (1.58) (1.51)
-------- ------- ------- ------- -------- ------ ------ ------
Distributions
Net investment income............... (0.06) (0.01) (0.07) (0.03) (0.01) (0.01)
In excess of net investment income.. (0.02) (0.01)
Net realized gains.................. (0.54) (0.54) (0.54) (0.54) (0.95) (0.95)
-------- ------- ------- ------- -------- ------ ------ ------
Total Distributions................... (0.60) (0.57) (0.54) (0.54) (1.02) (0.99) (0.01) (0.01)
-------- ------- ------- ------- -------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD....................... $ 18.40 $ 18.36 $ 18.14 $ 17.52 $ 15.96 $15.93 $15.85 $15.95
======== ======= ======= ======= ======== ====== ====== ======
Total Return (excludes sales charge).. 19.75% 19.50% 18.47% (e) (0.16)% (0.52)% (9.07)%(d) (8.64)%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)... $413,518 $11,178 $ 2,787 $389,567 $8,097 $1,131 $ 35
Ratio of expenses to average net
assets............................ 0.98% 1.23% 1.98% 1.87% (b) 0.98% 1.22% 2.12% (b) 1.91% (b)
Ratio of net investment income to
average net assets................ 0.38% 0.12% (0.63)% (0.39)%(b) 0.42% 0.27% (0.55)%(b) (0.36)%(b)
Ratio of expenses to average net
assets*........................... 0.98% 1.33% 1.98% 1.87% (b) 1.03% 1.38% 2.12% (b) 1.91% (b)
Ratio of net investment income to
average net assets*............... 0.38% 0.02% (0.63)% (0.39)%(b) 0.37% 0.11% (0.55)%(b) (0.36)%(b)
Portfolio turnover.................. 132.63% 132.63% 132.63% 132.63% 70.67% 70.67% 70.67% 70.67%
</TABLE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND
---------------------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------------------
1993 1992 1991
---------------------------------------------------------
FIDUCIARY CLASS A FIDUCIARY CLASS A (a) FIDUCIARY
--------- ------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................. $ 14.54 $14.54 $ 12.92 $ 16.53 $ 12.14
-------- ------ -------- ------- -------
Investment Activities
Net investment income............... 0.06 0.03 0.09 0.01 0.21
Net realized and unrealized gains
(losses) from investments......... 2.99 3.00 1.87 (1.99) 0.92
-------- ------ -------- ------- -------
Total from Investment Activities...... 3.05 3.03 1.96 (1.98) 1.13
-------- ------ -------- ------- -------
Distributions
Net investment income............... (0.06) (0.04) (0.08) (0.01) (0.21)
In excess of net investment income..
Net realized gains.................. (0.57) (0.57) (0.26) (0.14)
-------- ------ -------- ------- -------
Total Distributions................... (0.63) (0.61) (0.34) (0.01) (0.35)
-------- ------ -------- ------- -------
NET ASSET VALUE,
END OF PERIOD....................... $ 16.96 $16.96 $ 14.54 $ 14.54 $ 12.92
======== ====== ======== ======= =======
Total Return (excludes sales charge).. 21.36% 21.70% 15.15% (34.00)%(b) 9.85%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)... $232,898 $5,757 $131,533 $ 84 $53,831
Ratio of expenses to average net
assets............................ 0.89% 1.11% 0.75% 1.31% (b) 0.45%
Ratio of net investment income to
average net assets................ 0.41% 0.25% 0.51% 0.12% (b) 1.75%
Ratio of expenses to average net
assets*........................... 1.11% 1.48% 1.23% 1.50% (b) 1.19%
Ratio of net investment income to
average net assets*............... 0.19% (0.12)% 0.03% (0.07)%(b) 1.01%
Portfolio turnover.................. 64.64% 64.64% 42.77% 42.77% 68.83%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on February 18, 1992.
(b) Annualized.
(c) Class B Shares commenced offering on January 14, 1994.
(d) Not Annualized.
(e) The Service Shares commenced offering on January 17, 1994 when they were
designated as "Retirement" Shares. On April 4, 1995, the name of the
Retirement Shares was changed to "Service" Shares. As of June 1, 1995,
Service Shares transferred to Class A Shares, and as of June 30, 1995,
there were no shareholders in the Service Class. The return for the period
from July 1, 1994 to June 1, 1995 for the Service Shares was 13.12%.
See notes to financial statements.
81
B-202
<PAGE> 410
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX FUND
-------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------
1995 1994
-------------------------------------------------------------------------------------
FIDUCIARY CLASS A CLASS B SERVICE (f) FIDUCIARY CLASS A CLASS B (d) RETIREMENT
--------- ------- ------- ----------- --------- ------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................. $ 13.46 $13.49 $13.40 $13.44 $ 11.80 $11.80 $13.00 $12.98
-------- ------ ------ ------ -------- ------ ------ ------
Investment Activities
Net investment income............... 0.13 0.12 0.03 0.11 0.11 0.09 0.06 (0.25)
Net realized and unrealized gains
(losses) from investments......... 0.46 0.43 0.41 0.50 1.68 1.67 0.34 0.71
-------- ------ ------ ------ -------- ------ ------ ------
Total from Investment Activities...... 0.59 0.55 0.44 0.61 1.79 1.76 0.40 0.46
-------- ------ ------ ------ -------- ------ ------ ------
Distributions
Net investment income............... (0.08) (0.08) (0.07) (0.07) (0.11) (0.05)
Net realized gains.................. (0.04) (0.04) (0.04) (0.04) (0.01) (0.02)
In excess of net realized gains..... (0.01)
-------- ------ ------ ------ -------- ------ ------ ------
Total Distributions................... (0.12) (0.12) (0.11) (0.11) (0.13) (0.07)
-------- ------ ------ ------ -------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD....................... $ 13.93 $13.92 $13.73 $13.94 $ 13.46 $13.49 $13.40 $13.44
======== ====== ====== ====== ======== ====== ====== ======
Total Return (excludes sales charge).. 4.20% 3.87% 3.17% (f) 15.44% 15.18% 3.23% 3.78%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)... $218,299 $5,028 $3,687 $145,640 $2,395 $1,872 $ 74
Ratio of expenses to average net
assets............................ 1.04% 1.28% 2.04% 1.90%(c) 1.02% 1.26% 2.00% 10.85%(c)
Ratio of net investment income to
average net assets................ 1.25% 1.09% 0.25% 0.92%(c) 1.27% 1.15% 1.37% 1.97%(c)
Ratio of expenses to average net
assets*........................... 1.04% 1.38% 2.04% 1.90%(c) 1.02% 1.36% 2.00% 1.85%(c)
Ratio of net investment income to
average net assets*............... 1.25% 0.99% 0.25% 0.92%(c) 1.27% 1.05% 1.37% 1.97%(c)
Portfolio turnover.................. 4.67% 4.67% 4.67% 4.67% 7.74% 7.74% 7.74% 7.74%
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX FUND
-------------------------------
YEAR ENDED JUNE 30,
-------------------------------
1993
--------------------------
FIDUCIARY (a) CLASS A (b)
------------- -----------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................. $ 10.00 $11.74
------- ------
Investment Activities
Net investment income............... 0.06 0.02
Net realized and unrealized gains
(losses) from investments......... 1.75 0.04
------- ------
Total from Investment Activities...... 1.81 0.06
------- ------
Distributions
Net investment income............... (0.01)
Net realized gains..................
In excess of net realized gains.....
------- ------
Total Distributions................... (0.01)
------- ------
NET ASSET VALUE,
END OF PERIOD....................... $ 11.80 $11.80
======= ======
Total Return (excludes sales charge).. 26.96%(c) 2.87%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)... $35,384 $ 153
Ratio of expenses to average net
assets............................ 1.22%(c) 1.47%(c)
Ratio of net investment income to
average net assets................ 1.37%(c) 2.10%(c)
Ratio of expenses to average net
assets*........................... 2.34%(c) 2.35%(c)
Ratio of net investment income to
average net assets*............... 0.25%(c) 1.22%(c)
Portfolio turnover.................. 3.10% 3.10%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on October 28, 1992.
(b) Class A Shares commenced offering on April 23, 1993.
(c) Annualized.
(d) Class B Shares commenced offering on January 14, 1994.
(e) Not Annualized.
(f) The Service Shares commenced offering on January 17, 1994 when they were
designated as "Retirement" Shares. On April 4, 1995, the name of the
Retirement Shares was changed to "Service" Shares. As of June 1, 1995,
Service Shares transferred to Class A Shares, and as of June 30, 1995,
there were no Shareholders in the Service Class. The return for the period
from July 1, 1994 to June 1, 1995 for the Service Shares was 4.22%.
See notes to financial statements.
82
B-203
<PAGE> 411
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1995
To the Shareholders and Board of Trustees
of The One Group:
We have audited the accompanying statements of assets and liabilities of the
Asset Allocation Fund, the Income Equity Fund, the Equity Index Fund, the Large
Company Value Fund, the Blue Chip Equity Fund, the Large Company Growth Fund,
the Disciplined Value Fund, the Small Company Growth Fund, and the International
Equity Index Fund (nine series of The One Group), including the schedule of
portfolio investments, as of June 30, 1995, and the related statements of
operations for the year then ended, the statements of changes in net assets and
financial highlights for each of the periods indicated herein. These financial
statements and financial highlights are the responsibility of The One Group's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights for the year ended June 30, 1993 and for the period from February 28,
1992 (commencement of operations) to June 30, 1992 for the Large Company Growth
Fund were audited by other auditors whose report dated August 25, 1993 expressed
an unqualified opinion on the financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Asset Allocation Fund, the Income Equity Fund, the Equity Index Fund, the Large
Company Value Fund, the Blue Chip Equity Fund, the Large Company Growth Fund,
the Disciplined Value Fund, the Small Company Growth Fund, and the International
Equity Index Fund of The One Group as of June 30, 1995, the results of their
operations for the year then ended, the changes in their net assets and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
August 18, 1995
83
B-204
<PAGE> 412
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GOVERNMENT ARM FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- -------
<S> <C>
U.S. GOVERNMENT AGENCIES (97.6%):
Federal Home Loan Mortgage Corp.:
$ 7,878 7.03%*, 11/15/20 . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,954
1,150 7.22%*, 8/15/08 Pool # 1561 CMO . . . . . . . . . . . . . . . . . . 1,152
3,497 7.54%*, 5/1/18 Pool # 840160 . . . . . . . . . . . . . . . . . . . 3,614
Federal National Mortgage Assoc.:
2,312 7.47%*, 9/1/21 Pool # 124289 . . . . . . . . . . . . . . . . . . . 2,377
4,760 6.63%*, 12/25/20 . . . . . . . . . . . . . . . . . . . . . . . . . 4,735
686 8.50%*, 5/25/20 . . . . . . . . . . . . . . . . . . . . . . . . . . 692
11,023 7.75%*, 1/1/31 Pool # 124945 . . . . . . . . . . . . . . . . . . . 11,361
2,271 7.43%*, 11/1/21 Pool # 124510 . . . . . . . . . . . . . . . . . . . 2,318
1,418 7.32%*, 12/1/18 Pool # 70169 . . . . . . . . . . . . . . . . . . . 1,449
2,569 7.20%*, 4/1/21 Pool # 70983 . . . . . . . . . . . . . . . . . . . . 2,621
9,160 7.50%*, 7/1/20 Pool # 133558 . . . . . . . . . . . . . . . . . . . 9,365
6,726 7.31%*, 7/1/27 Pool # 70179 . . . . . . . . . . . . . . . . . . . . 6,862
-------
Total U.S. Government Agencies 54,500
-------
Total Investments, at value 54,500
-------
REPURCHASE AGREEMENTS (1.9%):
$ 1,061 J.P. Morgan, 6.18%, dated 6/30/95, due 7/3/95
(Collateralized by $1,295 Federal Home Loan Mortgage
Corp., 5.28%, 10/7/23, market value-$1,270) . . . . . . . . . . . 1,061
-------
Total Repurchase Agreements 1,061
-------
Total (Cost--$56,256)(a) $55,561
=======
</TABLE>
- -------
Percentages indicated are based on net assets of $55,841.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation . . . . . . . . . . . $ 61
Unrealized depreciation . . . . . . . . . . . (756)
-----
Net unrealized depreciation . . . . . . . . . $(695)
=====
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity arrangements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect on June 30, 1995.
CMO -- Collateralized Mortgage Obligations
As of June 30, 1995, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
OPENING CURRENT
# OF POSITIONS MARKET
CONTRACTS FUTURES CONTRACT TYPE (000) VALUE (000)
--------- --------------------- --------- -----------
<S> <C> <C>
LONG CONTRACTS
23 US 2-year Note . . . . . . . . . . . . . . . . . $ 4,772 $ 4,770
13 90-day Eurodollar . . . . . . . . . . . . . . . . 3,042 3,066
20 90-day Eurodollar . . . . . . . . . . . . . . . . 4,715 4,717
15 90-day Eurodollar . . . . . . . . . . . . . . . . 3,538 3,538
SHORT CONTRACTS
1 September 1995, U.S. Long Bond . . . . . . . . . (115) (114)
23 5-year U.S. Treasury Note, September 1995 . . . . (2,459) (2,470)
</TABLE>
See notes to financial statements.
23
B-205
<PAGE> 413
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Limited Volatility Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- --------
<S> <C>
ASSET BACKED SECURITIES (14.0%):
$ 4,620 CIT Group Securitization Corp., Class A1 7.70%, 8/15/20 . . . . . . . . . . . . . . . . . . . . . $ 4,728
5,000 Green Tree Home Improvement Loan Trust 6.20%, 7/15/20 . . . . . . . . . . . . . . . . . . . . . . 4,987
2,665 Merrill Lynch Corp., Pool #1992-A A 5.50%, 5/15/98 . . . . . . . . . . . . . . . . . . . . . . . 2,654
5,000 National Premier Funding 7.00%, 6/1/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,026
700 Premier Auto Trust, Pool #1992-2A 6.38%, 9/15/97 . . . . . . . . . . . . . . . . . . . . . . . . 702
959 Premier Auto Trust, Pool #1992-3A 5.90%, 11/15/97 . . . . . . . . . . . . . . . . . . . . . . . . 955
533 Shawmut National Bank, Grantor Trust, Pool #1992-A A 5.55%, 11/15/97 . . . . . . . . . . . . . . 533
7,000 Standard Credit Card, Class A 8.63%, 1/7/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,303
10,000 Standard Credit Card Master Trust, Pool #1991-1A 8.50%, 6/7/96 . . . . . . . . . . . . . . . . . 10,226
5,712 UCFC, 1995-A, Tranche A-1 7.55%, 7/10/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,770
7,000 UCFC Home Equity Loan 8.38%, 3/10/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,210
5,466 Union Federal Savings Bank, Grantor Trust, Pool #1993-C, 4.88%, 2/15/00 . . . . . . . . . . . . . 5,331
785 Union Federal Savings Bank, Grantor Trust, Pool #1992-A A, 6.70%, 11/15/97 . . . . . . . . . . . 785
3,638 Union Federal Savings Bank, Grantor Trust, Pool #1993-A, 4.53%, 5/15/99 . . . . . . . . . . . . . 3,554
-------
Total Asset Backed Securities 59,764
-------
CORPORATE BONDS (16.9%):
Automotive (0.8%):
3,179 Chrysler Corp. 10.40%, 8/1/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,394
-------
Finance (7.9%):
7,000 Ford Motor Credit 1/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,481
5,000 GMAC Financial 7.00%, 3/1/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,050
5,200 International Lease Finance 6.63%, 6/1/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,227
10,000 International Lease Finance 5.54%, 5/5/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,888
6,000 Paccar Financial 6.45%, 3/25/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,018
-------
33,664
-------
Foreign (1.9%):
10,000 Westpac Banking Perpetual Note A2/A, 6.65%* . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,100
-------
Pharmaceutical (1.2%):
5,000 American Home Products, 7.70%, 2/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,225
-------
Retail (0.4%):
1,500 Dayton Hudson Corp., 6.06%, 12/15/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
-------
Securities Brokers and Dealers (4.7%):
7,000 Lehman Brothers, Inc., 7.00%, 5/15/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,053
3,000 Lehman Brothers, Inc. 10.00%, 5/15/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,285
4,500 Lehman Brothers Holding, 8.88%, 11/1/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,748
5,000 Smith Barney, 6.00%, 3/15/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,969
-------
20,055
-------
Total Corporate Bonds 71,938
-------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (29.6%):
Federal Home Loan Bank:
7,500 6.55%, 4/17/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,515
5,000 7.35%, 5/24/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,009
10,000 7.78%, 10/19/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,724
Federal Home Loan Mortgage Corp.:
636 9.00%, 1/1/05 Pool #E00012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663
626 9.00%, 12/1/05 Pool #E00005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653
1,155 8.00%, 10/1/06 Pool #E00052 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,187
3,318 7.00%, 3/1/07, Pool #E34594, Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,326
3,024 7.00%, 4/1/07 Pool #E00087, Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,032
4,234 7.50%, 4/1/07 Pool #E00084 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,304
5,087 7.50%, 11/1/07 Pool #E00165 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,172
9,169 8.50%, 2/1/08 Pool #G10133, Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,495
4,890 8.00%, 1/1/10 Pool #E00355 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,026
12,735 8.00%, 2/1/10 Pool #G10382 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,089
7,550 5.50%, 10/15/13 Class C Pool, #1546-C REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,384
10,000 5.25%, 9/15/15 Pool #1638 BC, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,641
10,000 8.25%, 12/15/16 Pool #1770 PD, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,459
10,000 7.25%, 4/15/18 Pool #1254 F, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,036
Federal National Mortgage Assoc.:
3,000 8.20%, 3/10/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,151
373 9.00%, 9/1/05 Pool #50340 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389
420 9.00%, 11/1/05 Pool #50361 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438
421 8.50%, 4/1/06 Pool #116875 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436
6,000 7.00%, 6/1/10 Pool #315928 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,011
1,679 6.00%, 9/25/18 Pool #1989-94E, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,666
Government National Mortgage Assoc.:
6 8.00%, 2/15/02 Pool #192917 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
43 8.00%, 3/15/02 Pool #209172 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
16 9.00%, 6/15/02 Pool #229311 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
127 9.00%, 10/15/02 Pool #229569 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
29 8.00%, 6/15/05 Pool #288827 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17 9.00%, 9/15/05 Pool #292569 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
129 9.00%, 10/15/05 Pool #292589 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
39 8.00%, 5/15/06 Pool #303851 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11 8.00%, 7/15/06 Pool #307231 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
59 8.00%, 8/15/06 Pool #311166 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
415 8.00%, 10/15/06 Pool #316915 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429
76 8.00%, 11/15/06 Pool #311131 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
766 8.00%, 11/15/06 Pool #312210 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 791
440 8.00%, 11/15/06 Pool #313528 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454
196 8.00%, 11/15/06 Pool #315078 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
204 8.00%, 11/15/06 Pool #316671 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
58 8.00%, 12/15/06 Pool #311301 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
382 8.00%, 12/15/06 Pool #311384 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393
314 8.00%, 1/15/07 Pool #317663 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323
669 8.00%, 2/15/07, Pool #316086 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690
</TABLE>
Continued
24
B-206
<PAGE> 414
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Limited Volatility Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- --------
<S> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS, CONTINUED
Government National Mortgage Assoc., continued:
$ 291 8.00%, 3/15/07 Pool #318825 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 300
122 8.00%, 3/15/07 Pool #178684 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
254 8.00%, 4/15/07 Pool #316441 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262
U.S. Government Backed Bonds:
552 Resolution Trust Corporation, Series 1992 5.90%, 7/25/23 . . . . . . . . . . . . . . . . . . . . 550
2,018 U.S. Government Guaranteed Overseas Private Investment Corp.:
5.55%, 1/13/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,005
--------
Total U.S. Government and Agency Obligations 126,176
--------
U.S. TREASURY NOTES (35.7%):
5,000 7.50%, 1/31/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,050
10,000 6.25%, 8/31/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,047
15,000 7.25%, 8/31/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,238
15,000 6.88%, 10/31/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,200
10,000 6.50%, 11/30/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,091
20,000 6.50%, 5/15/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,225
4,000 6.75%, 5/31/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,063
10,000 8.25%, 7/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,635
7,000 7.13%, 10/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,245
10,000 6.33%, 7/15/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,133
10,000 6.38%, 1/15/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,133
5,000 7.75%, 11/30/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,331
1,000 8.88%, 5/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,121
3,000 8.50%, 11/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,336
6,000 7.50%, 11/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,440
10,000 7.50%, 5/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,774
7,000 6.33%, 2/15/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,020
--------
Total U.S. Treasury Notes 152,082
--------
Total Investments, at value 409,960
--------
REPURCHASE AGREEMENTS (3.6%):
15,252 Lehman Brothers, 6.15%, dated 6/30/95, due 7/3/95, (Collateralized by $15,030 U.S. Treasury
Notes, 6.75%, 2/28/97, market value--$15,570) . . . . . . . . . . . . . . . . . . . . . . . . . . 15,252
--------
Total Repurchase Agreements 15,252
--------
Total (Cost--$418,851)(a) $425,212
========
</TABLE>
- --------
Percentages indicated are based on net assets of $426,168.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . $ 7,376
Unrealized depreciation . . . . . . . . . . . . . . . . . (1,015)
-------
Net unrealized appreciation . . . . . . . . . . . . . . . $ 6,361
=======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity arrangements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect on June 30, 1995.
REMIC--Real Estate Mortgage Investment Conduit
See notes to financial statements.
25
B-207
<PAGE> 415
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C>
ASSET-BACKED SECURITIES (7.6%):
$1,123 Union Federal Savings 1992-BA, 4.90%, 4/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,106
3,000 UCFC, Home Equity Loan 1994-A AZ 5.48%, 8/10/06 . . . . . . . . . . . . . . . . . . . . . . . . . 2,912
2,810 Advanta Mortgage Loan Trust 1994-4 A1, 8.55%, 11/25/12 . . . . . . . . . . . . . . . . . . . . . 2,891
4,442 Aircraft Lease Portfolio Securitization 1994-1 AZ, 7.15%, 9/15/04 . . . . . . . . . . . . . . . . 4,484
3,000 Green Tree Home Improvement Loan Trust 1995-C A1, 6.20%, 7/15/20 . . . . . . . . . . . . . . . . 2,992
73 Collateralized Mortgage Obligation Trust 47A, 9.00%, 7/1/14 . . . . . . . . . . . . . . . . . . . 73
538 Morgan Stanley Mortgage Trust Y3, 8.95%, 3/1/16 . . . . . . . . . . . . . . . . . . . . . . . . . 551
-------
Total Asset-Backed Securities 15,009
-------
CORPORATE BONDS (15.0%):
Automotive (1.0%):
2,000 General Motors, 7.63%, 2/15/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,038
-------
Banking (1.6%):
3,000 Fleet/Norstar, 8.13%, 7/1/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,188
-------
Finance (3.9%):
500 Associates Corp. North America 8.38%, 6/1/96 . . . . . . . . . . . . . . . . . . . . . . . . . . 510
4,000 Liberty Mutual, 8.20%, 5/4/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,240
3,000 Metropolitan Life Surplus, 6.30%, 11/1/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,831
-------
7,581
-------
Industrial (0.8%):
1,430 DuPont, 8.50%, 2/15/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,550
-------
Oil & Gas Production (1.1%):
2,000 Occidental Petroleum, 11.75%, 3/15/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,160
-------
Securities Brokers and Dealers (5.3%):
4,000 Goldman Sachs Group L.P., 6.38%, 3,895
6/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,000 Lehman Brothers Holdings, 8.80%, 3,240
3/1/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,000 Lehman Brothers, Inc. 9.88%, 10/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,364
-------
10,499
-------
Tobacco (1.3%):
2,500 Philip Morris 7.50%, 3/15/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,541
-------
Total Corporate Bonds 29,557
-------
Foreign Bonds (6.4%):
4,000 Midland Bank 6.78%*, Perpetual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,230
5,000 National Bank of Australia 6.59%*, Perpetual . . . . . . . . . . . . . . . . . . . . . . . . . . 4,100
5,000 Quebec Province 7.50%, 7/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,163
-------
Total Foreign Bonds 12,493
-------
U.S. GOVERNMENT AGENCIES (35.2%):
Government National Mortgage Assoc.:
3 10.50%, 4/15/98, Pool #66627 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
27 10.50%, 7/15/98, Pool #69629 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5 10.50%, 9/15/98, Pool #10357 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
22 11.00%, 6/15/99, Pool #11094 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10 10.00%, 12/15/00, Pool #13621 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
13 11.00%, 3/15/00, Pool #12375 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
85 10.00%, 1/15/01, Pool #14516 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
85 10.00%, 1/15/01, Pool #14532 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11 8.50%, 6/15/01, Pool #16244 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
96 8.50%, 6/15/01, Pool #13705 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
5 9.00%, 6/15/01, Pool #16443 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
10 9.00%, 6/15/01, Pool #16144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
36 9.00%, 6/15/01, Pool #16698 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
24 9.00%, 7/15/01, Pool #15582 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
83 9.00%, 8/15/01, Pool #17346 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
66 8.50%, 8/15/01, Pool #16420 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
18 9.00%, 9/15/01, Pool #17712 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9 9.00%, 10/15/01, Pool #17763 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
20 9.00%, 10/15/01, Pool #18559 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
73 9.00%, 10/15/01, Pool #17985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
7 8.50%, 11/15/01, Pool #18346 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
34 9.00%, 11/15/01, Pool #17436 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
61 9.00%, 11/15/01, Pool #19181 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
42 8.50%, 12/15/01, Pool #19918 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
24 9.00%, 1/15/02, Pool #20500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
20 8.00%, 3/15/02, Pool #21006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
42 8.00%, 3/15/02, Pool #20593 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
86 8.00%, 5/15/02, Pool #20304 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
28 8.50%, 5/15/02, Pool #21377 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
29 8.00%, 5/15/02, Pool #18029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
83 9.00%, 8/15/02, Pool #23242 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
53 9.00%, 10/15/02, Pool #24630 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
26 9.50%, 11/15/02, Pool #23555 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
14 9.00%, 6/15/03, Pool #24786 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
96 8.50%, 10/15/04, Pool #27746 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
42 9.00%, 10/15/04, Pool #28165 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
45 8.50%, 11/15/04, Pool #25347 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
29 9.00%, 10/15/05, Pool #29258 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
80 9.00%, 5/15/05, Pool #28877 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
107 9.00%, 8/15/05, Pool #29703 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
17 9.00%, 11/15/05, Pool #29261 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
84 9.00%, 11/15/05, Pool #29916 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
99 9.00%, 12/15/05, Pool #29956 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
68 8.50%, 4/15/06, Pool #30748 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
128 8.00%, 5/15/09, Pool #385676 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
32 8.00%, 8/15/09, Pool #37214 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
313 7.50%, 5/15/07, Pool #329528 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
812 8.00%, 10/15/09, Pool #380639 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 838
3,891 8.50%, 11/15/17, Pool #780086, Platinum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,057
5,981 9.00%, 4/15/25, Pool #405444 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,286
</TABLE>
Continued
26
B-208
<PAGE> 416
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C>
FEDERAL NATIONAL MORTGAGE ASSOC.:
$2,923 8.50%, 7/1/04, Pool #250103 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,018
4,000 7.00%, 6/1/10, Pool #312903 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,008
2,869 8.00%, 5/1/24, Pool #250066 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,925
3,412 7.50%, 10/1/24, Pool #303031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,426
510 7.50%, 5/1/25, Pool #293928 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512
1,062 7.50%, 5/1/25, Pool #311810 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,066
Federal National Mortgage Assoc. REMIC:
1,000 6.75%, 12/15/04, Pool #1994-6C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,004
500 8.00%, 9/25/04, Pool #1991-155G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523
2,846 8.09%*, 10/25/23, Pool #1994-6F CMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,419
Federal Home Loan Mortgage Assoc.:
1,461 7.50%, 8/1/08, Pool #250103, Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,485
3,898 8.50%, 1/1/10, Pool #E00356, Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,037
989 8.00%, 7/1/20, Pool #A01047, Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,008
3,973 8.00%, 11/1/24, Pool #C00376, Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,051
4,991 8.50%, 5/1/25, Pool #00399, Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,154
Federal Home Loan Mortgage Assoc.--REMIC:
2,000 7.25%, 4/15/18, Pool #1254-F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,007
4,000 8.00%, 2/15/20, Pool #1770-PE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,207
3,000 6.50%, 10/15/21, Pool #1590-GA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,893
2,000 6.50%, 1/15/22, Pool #1573-PI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,926
1,000 7.00%, 6/15/06, Pool #1457-PH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 999
Federal Home Loan Bank:
3,000 6.65% through 7/17/95, 7.05% through 10/17/95, 7.65% through 1/17/96, 4/17/96 . . . . . . . . . . 3,006
4,210 7.35%, 5/24/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,218
--------
Total U.S. Government Agencies 69,122
--------
U.S. TREASURY BONDS (4.7%):
$8,000 8.13%, 8/15/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,316
--------
Total U.S. Treasury Bonds 9,316
--------
U.S. TREASURY NOTES (26.7%):
1,000 6.75%, 2/28/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,015
4,000 5.50%, 9/30/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,970
3,500 5.13%, 3/31/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,433
5,000 8.25%, 7/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,318
1,700 7.13%, 10/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,761
3,500 7.13%, 10/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,623
3,000 8.88%, 11/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,263
2,000 6.00%, 10/15/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,001
4,500 6.00%, 10/15/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,502
5,000 5.50%, 4/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,900
3,000 8.50%, 11/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,336
8,000 7.50%, 11/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,586
3,000 7.25%, 5/15/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,204
3,000 8.75%, 11/15/08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,453
--------
Total U.S. Treasury Notes 52,365
--------
Total Investments, at Value 187,862
--------
REPURCHASE AGREEMENTS (3.5%):
6,785 Lehman Brothers 6.15%, dated 6/30/95, due 7/3/95 (Collateralized by $6,685 U.S. Treasury Notes,
6.75%, 2/28/97, market value-$6,925) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,785
--------
Total Repurchase Agreements 6,785
--------
Total (Cost--$191,699)(a) $194,647
========
</TABLE>
- ----------
Percentages indicated are based on net assets of $196,423.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . $ 4,997
Unrealized depreciation . . . . . . . . . . . . . . . . (2,049)
------
Net unrealized appreciation . . . . . . . . . . . . . . $ 2,948
======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity arrangements. The interest rate, which will change
periodically, is based on bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the rate
in effect June 30, 1995.
CMO--Collateralized Mortgage Obligation
REMIC--Real Estate Mortgage Investment Conduit
See notes to financial statements.
27
B-209
<PAGE> 417
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C>
CORPORATE BONDS (0.4%):
Finance (0.2%):
$ 400 International Bank for Reconstruction and
Development Medium Term Note
COLTS, 7.65%, 2/28/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 409
400 Transamerica Financial Corp., 7.88%,
2/15/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412
---------
821
---------
Pharmaceuticals (0.1%):
350 Becton Dickinson and Co., 8.38%, 6/1/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357
---------
Utilities (0.1%):
300 Southern Railway Co., 8.25%, 6/1/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304
---------
Total Corporate Bonds 1,482
---------
U.S. GOVERNMENT AGENCIES (68.7%):
Federal Home Loan Bank:
5,000 0.00%*, 3/18/96, Accrual Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,789
7,000 6.55%, through 7/17/95, 7.05% through
10/17/95, 7.65% through 1/17/96,
4/17/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,014
3,923 6.05%, 6/24/97 IAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,923
550 8.25%, 6/25/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560
Federal Home Loan Mortgage Corp.:
5,000 7.35%, 3/9/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,027
7,756 7.50%, 4/1/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,885
7,729 8.50%, 12/1/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,004
492 9.00%, 10/1/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
370 9.00%, 4/1/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386
8,000 7.25%, 4/15/18, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,029
175 9.00%, 6/1/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
67 9.00%, 8/1/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
95 9.00%, 10/1/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
102 9.00%, 1/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
10,000 7.00%, 3/15/21, REMIC, CMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,708
93 9.00%, 4/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
190 9.00%, 7/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
268 9.00%, 9/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
179 9.00%, 11/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
54 9.00%, 11/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
167 9.00%, 11/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
251 9.00%, 5/1/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262
319 9.00%, 5/1/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333
10,000 7.50%, 9/15/22, CMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,186
8,012 10.00%, 10/15/23, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,973
7,089 8.50%, 5/1/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,319
6,705 8.50%, 7/1/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,923
9,833 7.50%, 9/1/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,873
9,933 8.00%, 11/1/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,128
3,405 7.50%, 5/1/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,419
6,595 7.50%, 6/1/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,622
10,000 8.00%, 6/1/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,197
Federal National Mortgage Assoc.:
9,094 6.35%, 12/25/23, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,546
5,000 4.85%, 6/23/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,931
4,500 6.45% through 5/10/95, 6.60% through
5/10/96, 6.90% through 5/10/97,
5/10/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,484
8,000 6.00%, 6/25/09, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,347
10,000 6.25%, 2/25/13, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,891
5,430 7.50%, 6/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,452
4,244 7.50%, 7/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,261
249 10.00%, 10/1/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
771 10.00%, 10/1/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 836
10,000 7.00%, 5/25/20, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,937
436 10.00%, 7/1/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473
1,043 10.00%, 11/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,132
852 10.00%, 11/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 925
5,000 6.55%, 12/25/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,874
5,042 7.00%, 1/25/24, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,024
6,343 7.84%*, 2/25/24, REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,455
Government National Mortgage Assoc.:
17 10.50%, 4/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
55 10.00%, 9/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
13 10.00%, 12/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
20 10.00%, 1/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
135 8.50%, 6/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
10 8.50%, 7/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
135 9.00%, 9/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
14 9.00%, 9/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
111 9.50%, 9/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
116 8.50%, 11/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
86 9.50%, 11/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
159 9.00%, 12/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
107 8.50%, 12/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
142 8.00%, 3/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
302 9.00%, 5/15/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316
257 9.00%, 6/15/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
97 9.00%, 8/15/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
102 9.00%, 9/15/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
53 9.00%, 9/15/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
99 8.00%, 7/15/06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
47 7.50%, 7/15/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
125 8.00%, 8/15/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
116 8.00%, 8/15/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
489 7.50%, 12/15/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499
74 9.00%, 11/15/08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
127 9.00%, 4/15/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
32 9.00%, 5/15/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
16 9.50%, 7/15/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
199 9.50%, 9/15/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
54 9.50%, 10/15/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
51 11.00%, 11/15/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
24 12.00%, 8/15/13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2 12.00%, 4/15/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
13 11.00%, 6/15/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
Continued
28
B-210
<PAGE> 418
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C>
U.S.GOVERNMENT AGENCIES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 113 9.00%, 5/15/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 118
171 9.00%, 6/15/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
19 9.50%, 7/15/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
149 9.00%, 7/15/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
103 9.50%, 8/15/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
192 9.00%, 9/15/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
37 9.50%, 1/15/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
357 9.00%, 2/15/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376
313 9.00%, 6/15/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329
84 9.50%, 8/15/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
33 9.00%, 8/15/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
47 9.50%, 8/15/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
121 9.00%, 6/15/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
126 9.50%, 8/15/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
34 9.00%, 10/15/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
242 9.50%, 12/15/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257
6 9.00%, 10/15/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
76 9.00%, 11/15/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
87 9.00%, 1/15/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
105 9.00%, 2/15/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
127 9.00%, 3/15/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
124 9.50%, 9/15/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
122 9.50%, 12/15/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
416 9.00%, 6/15/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437
45 7.50%, 2/15/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
752 8.00%, 7/15/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 770
838 7.50%, 8/15/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844
47 7.00%, 10/15/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
253 7.00%, 11/15/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
48 7.00%, 12/15/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
45 7.00%, 1/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
566 7.00%, 1/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558
428 7.00%, 1/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422
599 7.00%, 1/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590
273 7.00%, 1/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
55 7.00%, 3/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
730 7.00%, 5/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 719
70 7.00%, 5/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
922 7.00%, 5/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909
374 6.50%, 5/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360
942 7.00%, 5/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 928
857 7.00%, 5/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844
101 6.50%, 6/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
498 6.50%, 6/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479
64 6.50%, 6/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
69 6.50%, 6/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
276 6.50%, 7/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266
293 7.00%, 7/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288
954 7.00%, 7/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 940
28 7.00%, 7/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
373 7.00%, 7/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367
42 7.00%, 7/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
250 7.00%, 7/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
564 7.00%, 7/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556
691 7.00%, 7/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 681
591 7.00%, 7/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 582
921 7.00%, 7/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 907
348 6.50%, 8/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334
500 6.50%, 8/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481
731 6.50%, 8/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
263 6.50%, 8/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
187 6.50%, 8/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
323 6.50%, 8/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311
65 6.50%, 9/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
809 6.50%, 9/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 778
239 6.50%, 10/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
452 6.00%, 10/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424
35 6.00%, 10/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
472 6.00%, 10/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443
5,054 8.00%, 10/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,178
739 6.50%, 11/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 711
24 6.50%, 11/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
158 6.50%, 12/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
1,003 6.50%, 12/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 965
162 6.50%, 12/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
753 6.50%, 12/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 724
39 6.50%, 12/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
942 6.50%, 1/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 906
415 6.50%, 2/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
192 6.50%, 2/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
1,331 6.50%, 2/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,281
361 6.50%, 2/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
419 6.50%, 2/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403
891 7.50%, 6/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 897
106 7.50%, 6/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
1,103 8.50%, 8/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,146
5,364 8.50%, 8/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,574
1,186 8.50%, 8/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,233
4,946 8.00%, 9/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,068
487 8.00%, 9/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499
2,002 8.50%, 11/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,080
10,000 8.50%, 4/15/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,391
--------
Total U.S. Government Agencies 268,352
--------
U.S. TREASURY BONDS (8.3%):
5,000 7.25%, 5/15/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,309
1,500 8.88%, 8/15/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,868
15,000 8.13%, 8/15/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,468
700 7.88%, 2/15/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 796
7,500 6.25%, 8/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,088
--------
Total U.S. Treasury Bonds 32,529
--------
U.S. TREASURY NOTES (17.6%):
1,800 8.88%, 11/15/94 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,958
</TABLE>
Continued
29
B-211
<PAGE> 419
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C>
U.S. TREASURY NOTES, CONTINUED:
$ 7,000 6.00%, 11/30/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,018
8,000 8.25%, 7/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,508
2,200 8.88%, 2/15/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,406
3,000 6.38%, 7/15/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,040
5,000 7.50%, 10/31/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,279
2,000 7.88%, 11/15/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,141
2,000 5.50%, 4/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,960
5,500 7.50%, 11/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,903
14,500 7.50%, 5/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,623
1,000 6.38%, 8/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,012
5,600 6.25%, 2/15/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,616
8,500 5.88%, 2/15/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,295
--------
Total U.S. Treasury Notes $ 68,759
--------
Total Investments, at value 371,122
--------
REPURCHASE AGREEMENTS (4.3%):
$ 16,852 Lehman Brothers 6.15%, dated 6/30/95,
due 7/3/95 (Collateralized by $16,720
U.S. Treasury Notes, 6.63%, 3/31/97,
market value--$17,201). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,852
--------
Total Repurchase Agreements 16,852
--------
Total (Cost--$380,326)(a) $387,974
========
</TABLE>
_________________
Percentages indicated are based on net assets of $390,469.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,069
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,421)
-------
Net unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,648
=======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity arrangements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect on June 30, 1995.
CMO--Collateralized Mortgage Obligation
COLTS--Continuously Offered Long-Term Securities
IAN--Indexed Amortization Note
REMIC--Real Estate Mortgage Investment Conduit
See notes to financial statements.
30
B-212
<PAGE> 420
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Income Bond Fund
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C>
CORPORATE BONDS (57.1%):
Automotive (2.3%):
$ 10,000 General Motors Corp. 9.13%, 7/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,125
--------
Banking & Finance (23.9%):
7,500 Advanta Mortgage Trust 8.32%, 8/25/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,862
7,108 Aircraft Lease Portfolio Securitization 1994-1 AZ, 7.15%, 9/15/04 . . . . . . . . . . . . . . . . 7,174
6,000 Associates Corp. N.A. 8.15%, 8/1/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,690
5,000 Associates Corp. Medium Term Note 8.34%, 11/25/99 . . . . . . . . . . . . . . . . . . . . . . . . 5,344
5,000 BankAmerica Corp. 9.50%, 4/1/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,650
5,000 Banco Central Hispano 7.5%, 6/15/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,988
5,000 BBV International 6.88%, 7/1/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,966
7,000 Fleet/Norstar 8.13%, 7/1/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,437
8,000 General Motors Acceptance Corp. 7.00%, 3/1/00 . . . . . . . . . . . . . . . . . . . . . . . . . . 8,080
2,609 Green Tree Acceptance 6.35%, 12/15/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,607
5,000 Nationwide 7.50%, 2/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,663
5,000 Scotland International 8.80%, 1/27/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,481
5,000 Security Pacific Corp. 11.00%, 3/1/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,987
17,000 Standard Credit Card Trust 9.50%, 5/10/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,974
15,000 Sears Credit Account Trust 8.65%, 7/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,369
5,000 Wharf Capital 8.88%, 11/1/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,212
--------
115,484
--------
Equipment (1.1%):
5,000 Tenneco, Inc. 10.00%, 8/1/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,462
--------
Industrial (11.9%):
5,000 Carnival Corp. 7.05%, 5/15/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,019
9,440 Grand Metro Investment 7.45%, 4/15/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,971
5,000 Hertz-Penske Truck Leasing 8.25%, 11/1/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,244
5,000 Lockheed Corp. 5.65%, 4/1/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,950
6,300 McDonnell Douglas 8.63%, 4/1/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,505
5,000 Occidental Petroleum 7.00%, 4/15/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,638
8,500 RJR Nabisco, Inc. 8.63%, 12/1/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,914
6,000 Sun Co., Inc. 8.13%, 11/1/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,308
5,000 Valassis Communication 9.55%, 12/1/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,544
--------
57,093
--------
Insurance (1.2%):
6,000 Massachusetts Mutual Life 7.50%, 3/1/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,730
--------
Oil & Gas (2.0%):
9,500 Centra Gas 10.65%, 9/30/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,809
--------
Processed Foods (0.4%):
2,000 Nabisco, Inc. 6.70%, 6/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,975
--------
Securities Brokers & Dealers (8.0%):
5,000 Bear Stearns Co. 9.13%, 4/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,325
5,000 Bear Stearns Co. 8.25%, 2/2/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,325
10,00 Lehman Brothers Holdings 8.88%, 3/1/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,750
5,000 Lehman Brothers Holdings 8.80%, 3/1/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400
5,000 Lehman Brothers Holdings 11.63%, 5/15/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,350
6,000 Morgan Stanley 6.13%, 10/1/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,640
--------
38,790
--------
Tobacco (1.0%):
5,000 Philip Morris 7.25%, 1/15/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,069
--------
Transportation (4.2%):
5,000 Canadian National Railway 7.00%, 3/15/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
6,140 Daimler-Benz Vehicle 5.95%, 12/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,137
7,902 Northwest Air 9.25%, 6/21/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,958
--------
20,095
--------
Utilities (1.1%):
5,000 Tenega Nasional Berhad 7.88%, 6/15/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,238
--------
Total Corporate Bonds 275,870
--------
U.S. GOVERNMENT AGENCIES (21.8%):
Federal Home Loan Bank:
15,000 7.10%, 3/16/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,370
Federal Home Loan Mortgage Assoc.:
5,707 7.00%, 6/1/09 Pool # L00313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,721
28,778 8.00%, 12/1/09 Pool # 250168 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,578
12,700 7.00%, 4/15/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,762
18,649 7.00%, 10/1/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,358
8,450 7.50%, 10/1/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,484
1,445 7.50%, 10/1/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,451
Federal National Mortgage Assoc.:
3,000 8.63%, 9/10/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,089
7,750 4.82%, 10/21/98, Medium Term Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,408
Tennessee Valley Authority:
3,000 8.25%, 11/15/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,086
--------
Total U.S. Government Agencies 105,307
--------
U.S. TREASURY BONDS (4.0%):
5,000 6.75%, 4/30/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,149
2,000 10.75%, 2/15/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,548
10,000 8.13%, 5/15/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,673
--------
Total U.S. Treasury Bonds 19,370
--------
U.S. TREASURY NOTES (9.7%):
10,000 7.50%, 1/31/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,248
29,000 9.00%, 11/15/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,676
--------
Total U.S. Treasury Notes 46,924
--------
Total Investments, at value 447,471
--------
</TABLE>
Continued
31
B-213
<PAGE> 421
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Income Bond Fund
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C>
REPURCHASE AGREEMENTS (7.3%):
$ 35,061 Hong Kong Shanghai Bank Corp. 6.17%, dated 6/30/95, due 7/3/95 (Collateralized by $35,818 various
Federal National Mortgage Assoc., 0.00%, 7/3/95 to 7/31/95, market value--$35,765) . . . . . . . $ 35,061
--------
Total Repurchase Agreements 35,061
--------
Total (Cost--$458,047)(a) $482,532
========
</TABLE>
_____________
Percentages indicated are based on net assets of $482,807.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows
<TABLE>
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,720
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . (235)
-------
Net unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . $24,485
=======
</TABLE>
See notes to financial statements.
32
B-214
<PAGE> 422
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
-------- ----------- ------
<S> <C>
MUNICIPAL BONDS (95.0%):
Alaska (0.5%):
$ 1,000 Anchorage, Alaska, General Purpose, Series 1995-A, 6.00%, 2/1/11, FGIC . . . . . . . . . . . . $ 1,004
--------
Arizona (0.7%):
1,500 Phoenix Arizona Airport Revenue, 6.00%, 7/1/06, MBIA . . . . . . . . . . . . . . . . . . . . . 1,568
--------
California (7.6%):
2,500 Alameda, California United School District, 6.10%, 7/1/13, Series A, AMBAC . . . . . . . . . . 2,519
2,000 California, Series 1991-A, 7.15%, 2/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,143
3,060 California Public Works Board Community Series 1992-A, 6.05%, 12/1/12, AMBAC . . . . . . . . . 3,060
1,000 California State University Fresno, 6.00%, 2/1/09, MBIA . . . . . . . . . . . . . . . . . . . . 1,016
1,597 Costa California Crescent Park Apartments, 7.80%, 12/20/09 . . . . . . . . . . . . . . . . . . 1,746
1,000 San Francisco, California, 6.30%, 5/1/11, AMBAC . . . . . . . . . . . . . . . . . . . . . . . . 1,026
5,000 Sacramento, California Municipal Utility District, 5.26%, 11/1/06, FSA . . . . . . . . . . . . 4,944
--------
16,454
--------
Colorado (4.8%):
2,000 Adams County, Colorado School District, Series B, 6.25%, 12/15/06, MBIA . . . . . . . . . . . . 2,150
1,000 Adams County, Colorado School District, Series A, No. 12 Thornton, 6.75%, 12/15/07, MBIA . . . 1,105
1,600 Aurora Community College, 6.00%, 10/15/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,607
3,325 Colorado, Series 1994-A, 6.40%, 8/1/06, MBIA . . . . . . . . . . . . . . . . . . . . . . . . . 3,454
2,210 Fort Collins, Colorado Revenue, 5.25%, 12/1/07, FGIC . . . . . . . . . . . . . . . . . . . . . 2,177
--------
10,493
--------
Delaware (1.8%):
3,750 Delaware State Health Facilities Authority, 6.50%, 10/1/13, MBIA . . . . . . . . . . . . . . . 3,994
--------
District of Columbia (1.0%):
1,350 District of Columbia 4.05%, 7/1/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,350
875 District of Columbia, GO, Series B, 5.40%, 6/1/02 . . . . . . . . . . . . . . . . . . . . . . . 873
--------
2,223
--------
Florida (6.5%):
1,590 Brevard County, Florida, 5.80%, 9/1/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,592
1,500 Cape Coral, Florida, 6.38%, 6/1/09, FSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,573
1,000 Dade County, Florida, 6.00%, 10/1/08, AMBAC . . . . . . . . . . . . . . . . . . . . . . . . . . 1,040
2,000 Escambia, Florida, 5.75%, 10/1/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,003
1,000 Florida State Division Bond Financial Department, Series A, 5.13%, 7/1/07, FSA . . . . . . . . 974
2,555 Palm Beach County, Florida, Series 1994, 6.38%, 10/1/06 . . . . . . . . . . . . . . . . . . . . 2,654
2,300 Pinellas County, Florida, Series 1994, 5.75%, 8/1/01 . . . . . . . . . . . . . . . . . . . . . 2,296
2,000 Port St. Lucie, Florida, 6.00%, 9/1/14, FGIC . . . . . . . . . . . . . . . . . . . . . . . . . 2,005
--------
14,137
--------
Georgia (3.4%):
1,000 Atlanta, Georgia Airport Facilities, Series A, 6.50%, 1/1/07, AMBAC . . . . . . . . . . . . . . 1,095
1,215 Columbus, Georgia Water & Sewer, 6.30%, 5/1/06, FGIC . . . . . . . . . . . . . . . . . . . . . 1,305
2,000 Georgia State Municipal Electric Authority, Series B, 6.20%, 1/1/10 . . . . . . . . . . . . . . 2,063
2,000 Metro Atlanta Rapid Transit Authority Revenue, Series P, 6.10%, 7/1/06, AMBAC . . . . . . . . . 2,128
1,000 Monroe County, Georgia, Revenue, 2nd Series, 3.65%, 9/1/24 . . . . . . . . . . . . . . . . . . 1,000
--------
7,591
--------
Hawaii (0.5%):
1,000 Honolulu, Hawaii, 5.60%, 4/1/07, FSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,003
--------
Idaho (1.1%):
1,000 Idaho Student Loan, Revenue, 6.25%, 4/1/98 . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
1,380 Idaho Student Loan, 6.40%, 10/1/99, Callable 4/1/95 @ 100 . . . . . . . . . . . . . . . . . . . 1,380
--------
2,380
--------
Illinois (13.4%):
5,675 Chicago, Illinois, Metro Water Reclamation, 6.25%, 12/1/14 . . . . . . . . . . . . . . . . . . 5,810
1,000 Chicago, Illinois, Metro Water Reclamation, 7.25%, 12/1/12 . . . . . . . . . . . . . . . . . . 1,149
3,045 Chicago, Illinois Park District, 6.35%, 11/15/08, MBIA . . . . . . . . . . . . . . . . . . . . 3,228
1,450 Chicago, Illinois, Revenue, Series 95, 0.00%, 10/1/09, Callable 10/1/05 @ 103, MBIA . . . . . . 556
1,240 Evanston, Illinois, Series 92, 6.38%, 1/1/09, Callable 7/1/02 @ 102 AMBAC . . . . . . . . . . . 1,347
2,325 Harvey, Illinois, GO 6.70%, 2/1/09, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,372
2,095 Harvey, Illinois Roadway Improvement Revenue, 6.40%, 11/1/12, FGIC . . . . . . . . . . . . . . 2,160
</TABLE>
33
B-215
<PAGE> 423
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
-------- ----------- ------
MUNICIPAL BONDS, CONTINUED:
Illinois, continued:
<S> <C>
$ 1,645 Illinois Health Facilities Authority Revenue, 6.13%, 11/15/07, MBIA . . . . . . . . . . . . . . $ 1,711
620 Illinois State, Revenue, 7.90%, 8/15/03, MBIA . . . . . . . . . . . . . . . . . . . . . . . . . 634
220 Illinois State, 7.90%, 8/15/03, MBIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
6,200 Illinois State Toll Highway Priority Revenue, Series A, 6.30%, 1/1/12 . . . . . . . . . . . . . 6,464
4 Illinois Health Facility Revenue (Prerefunded 8/15/95), Community-A, 7.90%, 8/15/03, MBIA . . . 4
2,000 Kane County, Illinois, 6.25%, 6/1/09, FGIC . . . . . . . . . . . . . . . . . . . . . . . . . . 2,095
1,485 Northlake, Illinois, 5.40%, 12/1/08, MBIA . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,450
--------
29,226
--------
Indiana (3.9%):
1,000 Ft. Wayne, Indiana, Revenue, 7.50%, 12/15/11, FGIC . . . . . . . . . . . . . . . . . . . . . . 1,080
1,000 Greater Clark, Indiana, 6.70%, 1/1/03, AMBAC . . . . . . . . . . . . . . . . . . . . . . . . . 1,083
1,000 Indiana State Vocational Technical, 6.50%, 7/1/07, AMBAC . . . . . . . . . . . . . . . . . . . 1,079
2,910 Indianapolis, Indiana, Knob in the Woods, 6.38%, 12/1/24 . . . . . . . . . . . . . . . . . . . 3,099
2,035 Whitley County, Indiana Middle School Building Corp., 6.25%, 7/15/10 . . . . . . . . . . . . . 2,081
--------
8,422
--------
Iowa (1.8%):
600 Des Moines, Iowa, Hospital Facilities Revenue, 4.50%,* 8/1/15, LOC Fuji Bank Ltd. . . . . . . . 600
1,650 Iowa, Revenue Bonds, Series F, 6.15%, 7/1/04 . . . . . . . . . . . . . . . . . . . . . . . . . 1,751
1,500 Iowa State, Student Loan Liquidity Revenue, 6.50%, 12/1/99, AMBAC . . . . . . . . . . . . . . . 1,571
--------
3,922
--------
Kansas (0.8%):
1,750 Wichita, Kansas Hospital Revenue, St. Francis-III-A-3, 6.25%, 10/1/10, MBIA . . . . . . . . . . 1,800
--------
Louisiana (1.6%):
267 Louisiana Housing Finance Agency, 7.80%, 12/1/09 . . . . . . . . . . . . . . . . . . . . . . . 294
3,250 Louisiana, Series 94-A, 6.00%, 5/1/13, AMBAC . . . . . . . . . . . . . . . . . . . . . . . . . 3,258
--------
3,552
--------
Maryland (0.6%):
1,150 Anne Arundel County, Maryland-B, Second Issue, 7.70%, 3/15/06 . . . . . . . . . . . . . . . . . 1,266
--------
Massachusetts (2.8%):
1,550 Chelsea, Massachusetts, GO 6.00%, 6/15/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,540
1,070 Lowell, Massachusetts, Limited GO, 5.90%, 4/1/09 . . . . . . . . . . . . . . . . . . . . . . . 1,077
2,000 Massachusetts State, Series B, 5.38%, 7/1/07, MBIA . . . . . . . . . . . . . . . . . . . . . . 1,995
1,465 Worcester, Series 95-A, 6.15%, 5/1/08, MBIA . . . . . . . . . . . . . . . . . . . . . . . . . . 1,509
--------
6,121
--------
Minnesota (1.4%):
1,500 Detroit Lakes, Minnesota Health Care Facilities, 6.00%, 2/15/12 . . . . . . . . . . . . . . . . 1,506
1,500 Northern Municipal Power Agency Minnesota Electric, Series A, 5.90%, 1/1/07, AMBAC . . . . . . 1,539
--------
3,045
--------
Missouri (2.2%):
1,500 Missouri State Health & Educational Facilities Authority, Series AA, 6.25% 6/1/16 . . . . . . 1,528
2,250 Kansas City Missouri, Metro Community Colleges Building Corporation, Series A, 5.10%, 7/1/06,
FGIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,185
1,150 Warrensburg, Missouri Public Facilities Authority, 6.00%, 3/1/09, FGIC . . . . . . . . . . . . 1,172
--------
4,885
--------
Nevada (2.0%):
1,000 Nevada State, Limited Tax General Obligation, 7.00%, 7/1/01 . . . . . . . . . . . . . . . . . . 1,116
3,010 Washoe County, Nevada School District, 6.13%, 8/1/07, MBIA . . . . . . . . . . . . . . . . . . 3,108
--------
4,224
--------
New Hampshire (0.6%):
1,225 New Hampshire, St. Joseph Hospital, 6.25%, 1/1/06 . . . . . . . . . . . . . . . . . . . . . . . 1,272
--------
New Mexico (3.1%):
1,405 New Mexico Educational Assistance, Student Loan Revenue, 6.45%, 4/1/99, AMBAC . . . . . . . . . 1,459
5,040 New Mexico Educational Assistance, Series, 1992-A, 6.85%, 4/1/05, AMBAC . . . . . . . . . . . . 5,298
--------
6,757
--------
New York (1.6%):
1,000 New York City, 4.55%,* 10/1/23, LOC Norinchukin Bank . . . . . . . . . . . . . . . . . . . . . 1,000
</TABLE>
34
B-216
<PAGE> 424
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
-------- ----------- ------
MUNICIPAL BONDS, CONTINUED:
New York, continued:
<S> <C>
$ 800 New York, New York City Revenue, Series A, 4.50%,* 6/15/25 . . . . . . . . . . . . . . . . . . $ 800
200 New York, New York City Revenue, 4.05%,* 10/1/21 . . . . . . . . . . . . . . . . . . . . . . . 200
1,350 Triborough Bridge & Tunnel Authority, 9.00%, 1/1/11 (Prerefunded 7/1/95) . . . . . . . . . . . 1,377
--------
3,377
--------
North Carolina (0.3%):
600 Person County, North Carolina, 4.75*, 11/1/16, LOC Fuji Bank . . . . . . . . . . . . . . . . . 600
--------
Ohio (1.4%):
1,790 Fairfield, Ohio, City School District, 7.20%, 12/1/10, Callable 12/1/05 @ 103 . . . . . . . . . 2,005
1,000 Montgomery County, Ohio, Various Purpose Limited Tax, 6.65%, 9/1/08 . . . . . . . . . . . . . . 1,100
--------
3,105
--------
Oregon (1.7%):
1,435 Portland, Oregon, Airport, 6.75%, 7/1/09, MBIA . . . . . . . . . . . . . . . . . . . . . . . . 1,544
2,075 Washington County, Oregon, GO Unlimited, 6.10%, 6/1/05 . . . . . . . . . . . . . . . . . . . . 2,228
--------
3,772
--------
Pennsylvania (0.7%):
1,600 Dauphincty, Pennsylvania, Revenue, 6.00%, 1/1/08, MBIA . . . . . . . . . . . . . . . . . . . . 1,602
--------
Puerto Rico (0.5%):
1,000 Puerto Rico Commonwealth 5.65%, 7/1/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 982
--------
Rhode Island (1.0%):
1,000 Rhode Island, Revenue Bond, 6.10%, 10/1/05, MBIA . . . . . . . . . . . . . . . . . . . . . . . 1,021
1,000 Rhode Island, Revenue Bond, 6.20%, 10/1/06, MBIA . . . . . . . . . . . . . . . . . . . . . . . 1,048
--------
2,069
--------
South Carolina (0.7%):
1,455 Richland County, South Carolina, Unlimited Tax GO, 6.60%, 3/1/04 . . . . . . . . . . . . . . . 1,595
--------
South Dakota (0.2%):
500 South Dakota State, Housing Development Authority, 6.50%, 5/1/96 . . . . . . . . . . . . . . . 506
--------
Tennessee (0.7%):
550 Metropolitan Government, Nashville & Davidson County, Series A, 6.80%, 7/1/95 . . . . . . . . . 550
1,000 Shelby County, Tennessee, 7.50%, 6/1/07, MBIA . . . . . . . . . . . . . . . . . . . . . . . . . 1,084
--------
1,634
--------
Texas (9.0%):
2,800 Austin, Texas Housing Finance Corp., 0.00%, 12/1/11, MBIA . . . . . . . . . . . . . . . . . . . 1,029
1,000 Bexar County, Revenue, 6.63%, 8/15/04, Callable 8/15/14 @ 102 . . . . . . . . . . . . . . . . . 1,059
5,000 Coastal Bend Health Facilities Development, Texas, Series C, 5.93%, 11/15/13, AMBAC . . . . . . 4,906
2,000 Grand Prairie, Texas Health Facilities, 6.50%, 11/1/04, AMBAC . . . . . . . . . . . . . . . . . 2,113
1,740 Houston, Texas, Housing Finance Corporation, Series A, 5.35%, 6/1/02, FSA . . . . . . . . . . . 1,747
1,200 Lubbock, Texas, 4.20%,* 7/1/13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
1,000 San Antonio, Texas, 7.00%, 8/1/09, FSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,049
4,955 Texas Health Facilities Development Corp. , 6.25%, 8/15/12, MBIA . . . . . . . . . . . . . . . 5,054
1,285 Texas, Revenue, 8.40%, 1/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,360
--------
19,517
--------
Utah (2.8%):
800 Carbon, County, Utah Pollution Control, 4.20%*, 11/1/24 , AMBAC . . . . . . . . . . . . . . . . 800
2,000 Intermountain Power Agency, Utah, 6.50%, 7/1/09, MBIA . . . . . . . . . . . . . . . . . . . . . 2,105
1,250 Utah State, Revenue, 7.05%, 3/1/05, FSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,353
1,900 Utah State Housing Finance Agency, 6.35%, 7/1/12 . . . . . . . . . . . . . . . . . . . . . . . 1,902
--------
6,160
--------
Virginia (2.5%):
1,750 Virginia Public School Building, 6.13%, 8/1/09, FSA . . . . . . . . . . . . . . . . . . . . . . 1,811
2,000 Virginia State Housing Development Authority, Series 95-A, Sub Series A-1, 6.80%, 7/1/06,
AMBAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,133
1,340 Virginia State Housing Development Authority, Series J, Sub Series J-1, 6.65%, 7/1/10 . . . . . 1,390
--------
5,334
--------
Washington (6.1%):
4,160 King County, Washington, 6.13%, 12/1/13, FSA . . . . . . . . . . . . . . . . . . . . . . . . . 4,170
2,000 Kitsap County Washington School District, 6.13%, 12/1/08, MBIA . . . . . . . . . . . . . . . . 2,110
5,000 Shohomish County, Washington Public Utility, 6.00%, 1/1/13, FGIC . . . . . . . . . . . . . . . 5,038
</TABLE>
35
B-217
<PAGE> 425
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
-------- ----------- ------
MUNICIPAL BONDS, CONTINUED:
Washington, continued:
<S> <C>
$ 2,000 Spokane, Washington, Revenue, 5.50%, 12/1/10, AMBAC . . . . . . . . . . . . . . . . . . . . . . $ 1,920
--------
13,238
--------
Wyoming (3.8%):
600 Big Horn County, Wyoming School District No. 3, 6.05%, 6/1/14 . . . . . . . . . . . . . . . . . 599
4,765 Natrona County, Wyoming Hospital Revenue, 6.00%, 9/15/15, AMBAC . . . . . . . . . . . . . . . . 4,717
1,395 Sweetwater, Wyoming Greenriver, 7.00%, 6/1/04, MBIA . . . . . . . . . . . . . . . . . . . . . . 1,562
1,300 Wyoming Student Loan Corporation, 4.62%,* 12/1/05 . . . . . . . . . . . . . . . . . . . . . . . 1,300
--------
8,178
--------
Total Municipal Bonds 207,008
--------
Total (Cost--$203,934)(a) $207,008
========
</TABLE>
- -----------
Percentages indicated based on net assets of $217,959.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,613
Unrealized depreciaton . . . . . . . . . . . . . . . . . . . . . . . . . . . (539)
------
Net unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . $3,074
======
</TABLE>
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments
is the effective rate at June 30, 1995.
AMBAC--American Municipal Bond Assurance Corp.
FGIC--Financial Guaranty Insurance Corp.
FSA--Financial Security Assurance
GO--General Obligation
LOC--Letter of Credit
MBIA--Municipal Bond Insurance Association
See notes to financial statements.
36
B-218
<PAGE> 426
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
-------- ----------- ------
MUNICIPAL BONDS (98.6%):
Alaska (1.2%)
<S> <C>
$ 500 Alaska Muni Bond 6.75%, 7/1/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500
68 Alaska State Housing Finance 8.20%, 12/1/97 . . . . . . . . . . . . . . . . . . . . . . . . . . 70
1,750 Alaska State Housing Finance Single Family Mortgage Backed Securities Program 8.00%, 3/1/09 . . 1,868
60 Alaska State Housing Finance Corp. 8.25%, 12/1/98 . . . . . . . . . . . . . . . . . . . . . . . 61
60 Alaska State Housing Finance Corp. 8.25%, 12/1/00 . . . . . . . . . . . . . . . . . . . . . . . 62
--------
2,561
--------
Arizona (2.0%):
4,000 Phoenix, Arizona Single Family Mortgage Revenue 6.10%, 12/1/17 . . . . . . . . . . . . . . . . 4,015
--------
Arkansas (4.2%):
105 Arkansas 8.00%, 8/15/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
980 Arkansas Development Finance Authority Single Family Mortgage Revenue, Series 89-A 7.75%,
4/1/21, Callable 12/1/98 @ 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,034
3,650 Arkansas State Development Finance Authority, Series 1 0.00%, 12/1/11 . . . . . . . . . . . . . 1,173
140 Arkansas State Development Finance Authority Single Family Mortgage Revenue, Series B 7.70%,
12/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
497 Drew County Public Facilities Board Single Family Mortgage Revenue, Series A-2
7.90%, 8/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533
209 Drew County Public Facilities Board Single Family Mortgage Revenue, Series 1993-B
7.75%, 8/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
744 Jacksonville Residential Housing Facilities Board Single Family Mortgage Revenue, Series 93A-2
7.90%, 1/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 808
347 Jacksonville Residential Housing Facilities Board Single Family Mortgage Revenue, Series B
7.75%, 1/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369
834 Lonoke County Residential Housing Facilities Board Single Family Mortgage Revenue, Series A-2 905
7.90%, 4/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
406 Lonoke County Residential Housing Facilities Board Single Family Mortgage Revenue, Series 1993B
7.38%, 4/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417
1,803 Pope County Residential Housing Facilities Board Single Family Mortgage Revenue, Series B
7.75%, 9/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,920
714 Stuttgart Public Facilities Board Single Family Mortgage Revenue, Series A, Class A-2 7.90%,
9/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751
334 Stuttgart Public Facilities Board Single Family Mortgage Revenue, Series B 7.75%, 9/1/11 . . . 348
--------
8,732
--------
California (4.2%):
810 California, Series 85-B 8.63%, 8/1/15 Insured: MBIA . . . . . . . . . . . . . . . . . . . . . . 828
1,250 California Multi-Family Mortgage, Series 84-A 9.00%, 10/1/96 . . . . . . . . . . . . . . . . . 1,289
75 California Housing Finance Agency Home Mortgage Revenue, Series 91-C 7.45%, 8/1/11 . . . . . . 78
2,000 California, PCR Waste Management, Inc., Series 91-A 7.15%, 2/1/11 . . . . . . . . . . . . . . . 2,143
350 California Rural Home 7.25%, 12/1/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375
1,115 California State Housing Finance Agency Home Mortgage Revenue, Series F 7.88%, 8/1/19 . . . . . 1,151
2,000 Northern California Transmission Revenue, 5.50%, 4/29/24 . . . . . . . . . . . . . . . . . . . 1,830
1,040 Redondo Beach Redevelopment Agency Residential Mortgage Revenue, Series B 6.25%, 6/1/11 . . . . 1,044
--------
8,738
--------
Colorado (16.9%):
80 Adams County Single Family Mortgage Revenue, Series C 8.25%, 11/1/07 . . . . . . . . . . . . . 84
650 Arapahoe County Single Family Mortgage Revenue, Series 83A 0.00%, 12/1/09 . . . . . . . . . . . 137
5,225 Aurora Single Family Mortgage Revenue, Series 93A 7.30%, 5/1/10 . . . . . . . . . . . . . . . . 5,408
1,000 Aurora, 0.00% 9/1/15 Prerefunded 3/1/13 @ 75 . . . . . . . . . . . . . . . . . . . . . . . . . 269
1,985 Aurora Single Family Mortgage Revenue, Series 93B 7.50%, 5/1/11 . . . . . . . . . . . . . . . . 2,079
2,520 Brush Creek Co. 6.70%, 11/15/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,555
1,410 Central City 7.40%, 12/1/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,477
655 Central City 7.50%, 12/1/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 670
400 Central City 8.63%, 9/15/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426
1,000 Colorado Housing Finance Authority Single Family Mortgage Revenue 6.25%, 12/1/09 . . . . . . . 1,010
</TABLE>
37
B-219
<PAGE> 427
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C>
MUNICIPAL BONDS, CONTINUED
Colorado, continued:
$410 Colorado Housing Finance Authority, Series 91 6.90%, 5/1/01 . . . . . . . . . . . . . . . . . . . . $ 430
1,000 Colorado Housing Finance Authority 7.50%, 11/1/24, Callable 11/1/04 @ 105 . . . . . . . . . . . . . 1,076
1,090 Colorado Housing Finance Authority Single Family Mortgage Revenue, Series 94-B 6.13%, 11/1/13 . . . 1,100
1,750 Colorado Housing Finance Authority 6.80%, 8/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . 1,785
210 Colorado Housing Finance Authority Single Family Mortgage Revenue, Series 91B-2 7.25%, 8/1/11 . . . 219
330 Colorado Housing Finance Authority Single Family Mortgage Revenue, Series 91B-2 6.90%, 8/1/17 . . . 337
600 Colorado Housing Finance Authority Single Family Mortgage Revenue, 1985 Series A 0.00%, 9/1/14 . . 77
190 Colorado Housing Finance Authority Single Family Mortgage Revenue, Series C 8.75%, 9/1/17 . . . . . 200
1,250 Colorado Housing Finance Authority, Series 95-B 7.50%, 12/1/16 . . . . . . . . . . . . . . . . . . 1,366
500 Colorado Housing Finance Authority Single Family, Series A 6.50%, 12/1/02 . . . . . . . . . . . . . 503
2,605 Colorado State Housing Finance Authority Multi-Family Mortgage Revenue 6.00%, 10/1/25 . . . . . . . 1,882
965 Colorado State Housing Finance Authority Multi-Family Mortgage Revenue 9.00%, 10/1/25 . . . . . . . 885
585 Colorado State Housing Finance Authority Single Family Mortgage Revenue,
Series 91D-1 6.60%, 8/1/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589
935 Colorado State Post-Secondary Educational Facilities Authority National Technological
University Project 7.75%, 12/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 943
1,250 Eagles Nest, GO 6.50%, 11/15/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
410 El Paso County Home Mortgage Revenue, Series C 8.30%, 9/20/18 . . . . . . . . . . . . . . . . . . . 449
1,475 Englewood Co., Series 85-B 6.00%, 12/15/18, Callable 11/15/09 @ 100 . . . . . . . . . . . . . . . . 1,386
1,000 Interstate 8.00%, 12/1/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,011
1,290 Jefferson County Single Family Mortgage Revenue, Series A 8.88%, 10/1/13 . . . . . . . . . . . . . 1,393
1,500 Mesa County 0.00%, 12/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551
980 Mountain Village Metropolitan District, San Miguel County 8.10%, 12/1/11 . . . . . . . . . . . . . 1,035
165 Telluride Multi-Family Housing Revenue, Shandoka Apartments 7.25%, 6/1/08 . . . . . . . . . . . . . 172
500 Telluride Housing Authority Shandoka Apartments Project 7.50%, 6/1/12 . . . . . . . . . . . . . . . 506
1,500 Telluride Housing Authority Shandoka Apartments Project, Series 93 7.50%, 6/1/23 . . . . . . . . . 1,506
-------
34,716
-------
Delaware (0.1%):
275 Delaware Housing Finance Authority Single Family Mortgage Revenue, Series 89-A 7.60%, 12/1/19,
Callable 12/1/99 @ 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286
-------
Florida (3.1%):
1,250 Brevard County Housing Authority Single Family Mortgage Revenue 6.13%, 9/1/09 . . . . . . . . . . . 1,253
90 Duval County Single Family Mortgage Revenue, Series 90-C 7.30%, 9/15/15 . . . . . . . . . . . . . . 94
615 Florida State Housing Finance Agency Home Ownership Revenue, Series G-2 7.50%, 9/1/14 . . . . . . . 653
1,000 Leon County Housing Finance Authority 7.30%, 1/1/28 . . . . . . . . . . . . . . . . . . . . . . . . 1,069
940 Manatee County 8.38%, 5/1/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,028
1,000 Pinellas County Housing Authority 6.35%, 2/1/17 . . . . . . . . . . . . . . . . . . . . . . . . . . 1,010
1,205 Pinellas County Housing Authority 6.25%, 8/1/12 . . . . . . . . . . . . . . . . . . . . . . . . . . 1,217
-------
6,324
-------
Georgia (1.3%):
2,500 Cobb County 9.00%, 10/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,637
-------
Idaho (0.0%):
65 Idaho 6.35%, 7/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
-------
Illinois (5.4%):
5,890 Addison Alton, Granite County, 0.00% 7/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,135
1,750 Aurora Kane County 7.95%, 10/1/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,914
355 Aurora Kane County 8.05%, 9/1/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390
5,250 Bolingbrook Mortgage Revenue, Series 1 0.00%, 1/1/11 . . . . . . . . . . . . . . . . . . . . . . . 1,785
1,100 Danville Single Family Mortgage Revenue 7.30%, 11/1/10 . . . . . . . . . . . . . . . . . . . . . . 1,150
3,530 Freeport 0.00%, 8/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,041
</TABLE>
Continued
38
B-220
<PAGE> 428
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C>
MUNICIPAL BONDS, CONTINUED
Illinois, continued:
$ 245 Illinois Housing Development Authority, Series 91-A 7.35%, 8/1/10 . . . . . . . . . . . . . . . $259
95 Illinois Housing Development Authority Residential Mortgage Revenue, Series
83-B 0.00%, 2/1/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4,685 Moline Single Family Mortgage Revenue, 92 Sub-Series 1 0.00%, 9/1/08 . . . . . . . . . . . . . 1,640
700 Quincy Single Family Mortgage Revenue, Series 94-A 6.88%, 3/1/10, Callable 3/1/04 @ 102 . . . . 718
130 Rock Island Residential Mortgage Revenue 7.70%, 9/1/08 . . . . . . . . . . . . . . . . . . . . 138
-------
11,183
-------
Indiana (1.5%):
375 Anderson Multi-Family Housing Revenue, Parker Housing Corp., Series B 9.00%, 6/1/07 . . . . . . 365
1,585 Indiana State Housing Finance Authority, 7.95%, 7/1/10 . . . . . . . . . . . . . . . . . . . . 1,702
1,000 Indianapolis Multi-Family Revenue, Sunrise Apartments Project, Series 93-A 6.80%, 6/1/19 . . . 989
-------
3,056
-------
Iowa (2.0%):
650 Davenport 7.90%, 3/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 727
100 Des Moines Hospital Facilities Revenue 4.50%*, 8/1/15 . . . . . . . . . . . . . . . . . . . . . 100
2,535 Iowa Finance Authority Single Family Mortgage Revenue 6.40%, 7/1/19 . . . . . . . . . . . . . . 2,526
785 Iowa Finance Authority Single Family Mortgage Revenue 7.90%, 11/1/22 . . . . . . . . . . . . . 830
-------
4,183
-------
Kansas (4.5%):
955 Ford City Single Family Mortgage Revenue 7.90%, 8/1/10 . . . . . . . . . . . . . . . . . . . . 1,008
2,250 Johnson City 7.10%, 5/1/12, Callable 5/1/04 @ 103 . . . . . . . . . . . . . . . . . . . . . . . 2,377
815 Labette County Single Family Mortgage Revenue, Series A 8.40%, 12/1/11 . . . . . . . . . . . . 872
2,400 Reno and Labette Counties Capital Accumulation, 0.00%, 12/1/15 Series A . . . . . . . . . . . . 690
760 Reno County Single Family Refunding Revenue 8.70%, 9/1/11 . . . . . . . . . . . . . . . . . . . 818
470 Sedgwick Shawnee County 7.80%, 11/1/24, Callable 11/1/04 @ 105 . . . . . . . . . . . . . . . . 512
465 Sedgwick Shawnee County 7.80%, 5/1/14, Callable 11/1/04 @ 103 . . . . . . . . . . . . . . . . . 504
970 Sedgwick Single Family Mortgage Revenue 8.20%, 5/1/14 . . . . . . . . . . . . . . . . . . . . . 1,057
460 Sedgwick Shawnee County Single Family Mortgage Revenue 8.05%, 5/1/14 . . . . . . . . . . . . . 513
885 Wichita Single Family Mortgage Revenue 7.10%, 9/1/09 . . . . . . . . . . . . . . . . . . . . . 910
-------
9,261
-------
Louisiana (3.3%):
1,690 Bossier Public Trust Finance Authority Single Family Mortgage Revenue, Series
93 8.50%, 11/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,804
900 Calcasieu Parish Public Transportation Authority, Series B 0.00%, 5/1/13 . . . . . . . . . . . 254
895 Iberia Single Family Mortgage Revenue, Series 1993 7.38%, 1/1/11 . . . . . . . . . . . . . . . 952
122 Lafayette Public Facilities Authority Single Family Mortgage Revenue, Series 1992 7.50%,
10/1/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
960 Lousiana Housing Finance Authority Single Family Mortgage Revenue, Series 85-A
9.38%, 2/1/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 990
1,180 Louisiana Housing Authority7.00% through 3/1/95, 7.10% through 9/1/04 . . . . . . . . . . . . . 1,199
167 Louisiana Public Facilities Authority Single Family Mortgage Revenue, Series C 8.45%,
12/1/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
365 Shreveport Housing Authority Multi-Family Housing Revenue, U.S. Goodman--Section 8 6.13%,
8/1/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350
635 Shreveport Housing Authority Multi-Family Housing Revenue, U.S. Goodman--Section 8 6.13%,
8/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604
364 St. Mary Public Finance Authority Single Family Mortgage Revenue, Series A 7.63%, 3/25/12 . . . 388
-------
6,848
-------
Maine (0.2%):
300 Maine Housing Authority Single Family Mortgage Revenue 6.90%, 11/15/01 . . . . . . . . . . . . 320
-------
Massachusetts (0.8%):
985 Massachussetts Housing Finance Agency, Series 21 7.13%, 6/1/25 . . . . . . . . . . . . . . . . 1,017
250 Massachusetts State Housing Finance Agency Multi-Family Housing Revenue, Series 88-B 8.10%, 260
8/1/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
455 Massachussetts 7.00%, 12/1/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466
-------
1,743
-------
</TABLE>
Continued
39
B-221
<PAGE> 429
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C>
MUNICIPAL BONDS, CONTINUED
Michigan (1.0%):
$ 645 Michigan Housing Development Authority 7.65%, 12/1/12 . . . . . . . . . . . . . . . . . . . . . . . $ 667
1,395 Michigan State Housing Development Authority Single Family Mortgage Revenue, Series 90-A 7.50%,
6/1/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,449
-------
2,116
-------
Minnesota (1.1%):
1,000 Coon Rapids Multi-Family Housing Revenue, Epiphany Pines Project 7.20%, 9/1/16 . . . . . . . . . . 974
850 Minnesota Housing Finance Agency Single Family Mortgage Revenue, Series 94-D 4.55%, 7/1/25, . . . . 771
560 Minnesota State Housing Finance Authority 7.10%, 2/1/21 . . . . . . . . . . . . . . . . . . . . . . 569
-------
2,314
-------
Mississippi (2.1%):
1,000 Mississippi, Series 93-C 6.05%, 9/1/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 991
2,000 Mississippi Home Corp., Series 94-B 7.90%, 3/1/25, Callable 3/1/05 @ 106 . . . . . . . . . . . . . 2,197
1,100 Mississippi Home Corp., Series 94-F 7.10%, 12/1/10 . . . . . . . . . . . . . . . . . . . . . . . . 1,172
-------
4,360
-------
Missouri (1.6%):
670 Grandview Multi-Family Housing Revenue 9.25%, 5/15/08 . . . . . . . . . . . . . . . . . . . . . . . 692
2,295 Jackson County 10.00%, 3/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,295
205 Missouri State Housing Development Single Family Mortgage Revenue, Series 91-A 6.80%, 8/1/15 . . . 213
-------
3,200
-------
Montana (1.4%):
1,576 Greenwood Plaza Housing, Inc. Montana Project Financial Housing Authority, Section - B 10.43%,
1/1/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,702
135 Montana State Housing Authority Board Single Family Mortgage Program, Series 91A-1 7.00%,
10/1/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
1,000 Montana State Housing Authority Board Single Family Mortgage Program, Series 92AR 6.40%,
12/1/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
-------
2,842
-------
Nebraska (0.7%):
6,700 Nebraska State Investment Finance Authority Single Family Mortgage Revenue 0.00%, 12/15/13 . . . . 1,072
275 Nebraska 6.35%, 3/15/06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
-------
1,352
-------
Nevada (0.8%):
905 Nevada Housing Development Authority 7.90%, 10/1/21, Callable 4/1/02 @ 100 . . . . . . . . . . . . 943
435 Nevada Housing Development Authority Single Family Mortgage Revenue, Series B-1 6.20%, 10/1/15 . . 427
250 West Wendover Recreation District 6.50%, 12/1/09 . . . . . . . . . . . . . . . . . . . . . . . . . 242
-------
1,612
-------
New Hampshire (0.1%):
300 New Hampshire State Housing Finance Authority Single Family Residential, Series A 6.85%, 1/1/25 . . 308
-------
New Jersey (1.2%):
935 New Jersey State Housing and Mortgage Finance Agency Series C 7.38%, 10/1/17 . . . . . . . . . . . 973
710 New Jersey State Housing 8.38%, 4/1/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 757
705 New Jersey State Higher Education Authority 7.00%, 7/1/05, Callable 7/1/01 @ 102, 7/1/03 @ 100 . . 739
-------
2,469
-------
New Mexico (3.0%):
715 Bernalillo County La Resolana Apartments, Sub A-2 7.00%, 11/1/08 . . . . . . . . . . . . . . . . . 700
1,295 Bernalillo County Multi-Family Mortgage Revenue, La Resolana Apartments, Series A-1 7.50%,
11/1/08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,269
525 Hobbs Single Family Mortgage Revenue 8.75%, 7/1/11 . . . . . . . . . . . . . . . . . . . . . . . . 567
190 Las Cruces Housing Development Corp. Multi-Family Housing Revenue, Series B 9.00%, 10/1/03 . . . . 191
1,140 Las Cruces Housing Development Corp. Multi-Family Housing Revenue, Series A 6.40%, 10/1/19 . . . . 1,099
360 New Mexico Mortgage Finance Authority Federal National Mortgage Association, Series 93-C 5.35%,
1/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335
220 New Mexico Mortgage Finance Authority Single Family Mortgage Revenue, Series 82-A 12.00%,
7/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
470 New Mexico Mortgage Finance Authority Single Family Mortgage Revenue, Series A-2 6.85%, 7/1/12 . . 484
</TABLE>
Continued
40
B-222
<PAGE> 430
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C>
MUNICIPAL BONDS, CONTINUED
New Mexico, continued:
$ 350 New Mexico Mortgage Finance Authority Single Family Mortgage Revenue, Series A 7.80%, 3/1/21 . . . $ 355
45 New Mexico Mortgage Finance Authority Single Family Mortgage Revenue, Series A-2 7.80%, 9/1/21 . . 46
1,000 New Mexico 6.45%, 7/1/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 986
-------
6,255
-------
New York (5.0%):
1,820 Clay County 6.20%, 9/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,816
1,100 New York City, GO 4.55%*, 9/1/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,100
1,400 New York State, Series 91-UU 7.75%, 10/1/23, . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,496
500 New York Energy, Series 1985-A 4.55%*, 7/1/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
5,400 New York City Municipal Water Financial Authority Water and Sewer System Revenue, Series A
4.50%*, 6/15/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400
-------
10,312
-------
North Dakota (1.2%):
760 North Dakota Housing Finance Authority 8.38%, 7/1/19 . . . . . . . . . . . . . . . . . . . . . . . 784
1,595 North Dakota State 8.38%, 7/1/21, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,649
-------
2,433
-------
Ohio (2.4%):
1,200 Ohio Housing Finance Agency Single Family Mortgage Revenue 7.65%, 3/1/29, . . . . . . . . . . . . . 1,276
2,230 Ohio Housing Finance Agency Single Family Mortgage Revenue, Series 84-A 0.00%, 8/1/15 . . . . . . . 220
290 Ohio Housing Finance Agency Single Family Mortgage Revenue, Series A 7.15%, 3/1/01 . . . . . . . . 301
1,125 Ohio Housing Finance Authority Single Family Mortgage Revenue, Series 91-D 7.05%, 9/1/16 . . . . . 1,152
985 Ohio Housing Finance Authority Single Family Mortgage Revenue 7.00%, 9/1/11 . . . . . . . . . . . . 1,015
1,000 West Clermont Local Schools 7.13%, 12/1/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,056
-------
5,020
-------
Oklahoma (0.3%):
610 Oklahoma City Finance Authority Suboro Timberwoods Apartments 9.00%, 6/1/09 . . . . . . . . . . . . 619
-------
Pennsylvania (3.9%):
4,275 Cambia 5.65%, 12/1/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,275
2,805 Pittsburgh Urban Redevelopment Authority Mortgage Revenue, Series A 8.35%, 10/1/14 . . . . . . . . 2,910
815 Pittsburgh Urban Redevelopment Authority Single Family Mortgage Revenue, Series 88-C 6.13%,
12/1/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 787
-------
7,972
-------
Rhode Island (1.7%):
2,425 Rhode Island Housing and Mortgage Finance 8.25%, 10/1/22, . . . . . . . . . . . . . . . . . . . . . 2,562
835 Rhode Island 6.80%, 10/1/23, Callable 10/1/01 @ 102, 10/1/03 @ 100 . . . . . . . . . . . . . . . . 843
-------
3,405
-------
South Carolina (1.0%):
2,000 South Carolina Housing Finance Authority 7.00%, 7/11/11, Amortized to 7/1/02 @ 100 . . . . . . . . 2,045
-------
South Dakota (0.9%):
400 South Dakota Housing Development Authority Single Family Mortgage Revenue 6.80%, 5/1/12, 410
Callable 5/1/03 @ 105 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
440 South Dakota Housing Development Authority 7.05%, 5/1/11 . . . . . . . . . . . . . . . . . . . . . 454
1,000 South Dakota Student Loan 7.63%, 8/1/06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,061
-------
1,925
-------
Tennessee (1.9%):
1,305 Memphis Health, Educational and Housing Facilities Board Multi-Family Mortgage Revenue,
Edgewater Terrace 7.38%, 1/20/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,365
1,150 Tennessee Housing Development Agency 7.70%, 7/1/16 . . . . . . . . . . . . . . . . . . . . . . . . 1,188
1,370 Tennessee Housing Development Agency Single Family Mortgage Revenue, Series 91-V 7.65%, 7/1/22,
Callable 7/1/01 @ 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,428
-------
3,981
-------
Texas (10.3%):
215 Baytown Single Family Mortgage Revenue, Series 92 8.50%, 9/1/11 . . . . . . . . . . . . . . . . . . 235
1,610 Beaumont Housing Finance Corp. Single Family Mortgage Revenue 9.20%, 3/1/12 . . . . . . . . . . . . 1,785
</TABLE>
Continued
45
B-223
<PAGE> 431
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C>
MUNICIPAL BONDS, CONTINUED
Texas continued:
$ 1,765 Bexar County Housing Finance Corp. Residential Revenue 0.00%, 3/1/15 . . . . . . . . . . . . . $ 488
2,500 Central Texas 0.00%, 9/1/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666
1,260 El Paso Housing Finance Corp. Single Family Mortgage Revenue 7.75%, 9/1/19 . . . . . . . . . . 1,320
810 El Paso Housing Finance Corp. Single Family Mortgage Revenue, Series A 8.75%, 10/1/11 . . . . . 876
1,260 Fort Worth Housing Finance Corp. 8.50%, 10/1/11 . . . . . . . . . . . . . . . . . . . . . . . . 1,377
1,000 Laredo Housing Finance Corp. 6.20%, 10/1/19 . . . . . . . . . . . . . . . . . . . . . . . . . . 1,001
800 Red River, PCR Southwestern Public Service 6.63%, 3/1/09 . . . . . . . . . . . . . . . . . . . 803
495 San Antonio Housing Finance Corp. Park Ridge Apartments 9.55%, 12/1/02 . . . . . . . . . . . . 523
970 San Antonio Housing Finance Corp. Britt Oak Ltd. Project, Series 94 9.75%, 1/1/10 . . . . . . . 978
285 San Antonio, Series 94-A 7.88%, 4/1/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288
345 San Antonio, Series 94-B 9.00%, 4/1/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351
1,555 Southeast Texas 0.00%, 11/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451
17,635 Texas Housing Finance Corp., 0.00%, 3/1/15 Series 94-A . . . . . . . . . . . . . . . . . . . . 4,563
1,950 Travis City, Series 94-A 6.25%, 10/1/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,952
255 Travis County Housing Finance Corp. Residential Mortgage Revenue, Series A 7.00%, 12/1/11 . . . 268
600 Texas Higher Education, Series 91-D 6.88%, 4/1/02 . . . . . . . . . . . . . . . . . . . . . . . 634
1,485 Victoria Housing Finance Corp. Single Family Mortgage Revenue, Series A 8.50%, 1/1/11 . . . . . 1,591
1,000 Winter Garden 6.20%, 10/1/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,014
-------
21,164
-------
Utah (0.3%):
130 Utah State Housing Finance Agency Single Family Mortgage Revenue 8.50%, 7/1/04 . . . . . . . . 135
80 Utah State Housing Finance Agency Single Family Mortgage Revenue, Issue D-2 7.00%, 1/1/16 . . . 82
345 Utah State Housing Finance Agency Single Family Mortgage Revenue, Series A-1 6.00%, 7/1/12 . . 356
120 Utah State Housing Finance Agency Single Family Mortgage Revenue, Series C-2 8.00%, 7/1/21 . . 126
-------
699
-------
Vermont (0.1%):
195 Vermont Housing Finance Agency Single Family Mortgage Revenue 6.88%, 5/1/25 . . . . . . . . . . 195
-------
Virginia (0.4%):
780 Virginia Beach Development Authority Multi-Family Housing Revenue, Wesleyan Courts Apartments
Poject 8.75%, 1/15/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 758
-------
Washington (3.6%):
500 Pierce County Housing Authority Multi-Family Housing Revenue, Chateau Ranier Project 6.50%,
9/1/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463
403 Skagit County Housing Authority Low Income Housing Assistance Revenue, Sea Mar Project 7.00%,
6/20/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416
6,760 Washington State Public Power, Series 91-A 6.00%, 7/1/12 . . . . . . . . . . . . . . . . . . . 6,557
-------
7,436
-------
West Virginia (1.0%):
2,000 Pleasant County 6.15%, 5/1/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,992
-------
</TABLE>
Continued
42
B-224
<PAGE> 432
THE ONE GROUP FAMILY OF MUTUAL FUNDS
Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C>
MUNICIPAL BONDS, CONTINUED:
Wisconsin (0.3%):
$ 500 Wisconsin Housing and Economic Development Authority Home Ownership Revenue, Series A 7.00%,
9/1/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $525
--------
Wyoming (0.4%):
250 Wyoming Community Development Authority Single Family Mortgage Revenue, Series E 7.75%, 6/1/09 . . . 261
290 Wyoming Community Development Authority Single Family Mortgage Revenue, Series A 7.88%, 6/1/18 . . . 302
315 Wyoming Community Development Authority Single Family Mortgage Revenue, Series A 6.88%, 6/1/14 . . . 325
--------
888
--------
Total Municipal Bonds 202,865
--------
INVESTMENT COMPANIES (0.0%):
0 Provident Tax-Free Money Market Fund (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
--------
Total Investment Companies 0
--------
Total (Cost--$203,754)(b) $202,865
========
</TABLE>
- ---------
Percentages indicated are based on net assets of $205,704.
(a) Amount is less than one thousand.
(b) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $25. Cost for federal income tax purposes differs from value
by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . $ 1,746
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . (2,660)
-------
Net unrealized depreciation . . . . . . . . . . . . . . . . . . $ (914)
=======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity arrangements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect on June 30, 1995.
GO--General Obligation
PCR--Pollution Control Revenue
MBIA--Municipal Bond Insurance Association
See notes to financial statements.
43
B-225
<PAGE> 433
THE ONE GROUP FAMILY OF MUTUAL FUNDS
KENTUCKY MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C>
MUNICIPAL BONDS (97.1%):
Kentucky (91.9%):
$ 510 Clinton County, Kentucky, School District Finance 6.10%, 6/1/12 . . . . . . . . . . . . . . . . . $ 512
585 Eastern Kentucky University, Revenues 5.38%, 5/1/04 . . . . . . . . . . . . . . . . . . . . . . . 587
500 Eastern Kentucky University, Revenues 6.20%, 5/1/04 . . . . . . . . . . . . . . . . . . . . . . . 537
500 Fayette County, Kentucky, School District Finance 6.00%, 5/1/03 . . . . . . . . . . . . . . . . . 518
560 Hardin County, Kentucky, Hospital Revenue 4.50%, 10/1/02 . . . . . . . . . . . . . . . . . . . . 542
295 Hardin County, Kentucky, Hospital Revenue 4.50%, 10/1/02 . . . . . . . . . . . . . . . . . . . . 285
510 Hardin County, Kentucky, Hospital Revenue 4.75%, 10/1/04 . . . . . . . . . . . . . . . . . . . . 492
250 Hardin County, Kentucky, Hospital Revenue 4.75%, 10/1/04 . . . . . . . . . . . . . . . . . . . . 241
445 Hardin County, Kentucky, Hospital Revenue 5.00%, 10/1/06 . . . . . . . . . . . . . . . . . . . . 429
725 Jefferson County, Kentucky, Capital Projects 6.10%, 8/15/07 . . . . . . . . . . . . . . . . . . . 741
400 Jefferson County, Kentucky, Health Facility Revenue 6.00%, 5/1/01 . . . . . . . . . . . . . . . . 425
500 Jefferson County, Kentucky, Health Facility Revenue 6.38%, 5/1/08 . . . . . . . . . . . . . . . . 525
500 Jefferson County, Kentucky, Hospital Revenue 6.20%, 10/1/04 . . . . . . . . . . . . . . . . . . . 528
635 Jefferson County, Kentucky, School District Financial 4.70%, 1/1/01 . . . . . . . . . . . . . . . 623
500 Kenton County, Kentucky, Airport Board Revenue 6.10%, 3/1/04 . . . . . . . . . . . . . . . . . . 522
400 Kenton County, Kentucky, Airport Board Revenue 6.20%, 3/1/05 . . . . . . . . . . . . . . . . . . 418
500 Kenton County, Kentucky, Airport Board Revenue 5.75%, 3/1/08 . . . . . . . . . . . . . . . . . . 500
500 Kenton County, Kentucky, Airport Board Revenue 5.75%, 7/1/99 . . . . . . . . . . . . . . . . . . 497
750 Kenton County, Kentucky, School District Financial 4.50%, 7/1/07 . . . . . . . . . . . . . . . . 738
325 Kenton County, Kentucky, School District Financial 5.25%, 7/1/99 . . . . . . . . . . . . . . . . 312
500 Kentucky Higher Education Student Loan 6.50%, 6/1/02 . . . . . . . . . . . . . . . . . . . . . . 521
500 Kentucky Higher Education Student Loan 4.70%, 6/1/00 . . . . . . . . . . . . . . . . . . . . . . 493
400 Kentucky, Housing Corp., Housing Revenue 5.85%, 7/1/00 . . . . . . . . . . . . . . . . . . . . . 407
275 Kentucky, Housing Corp., Housing Revenue 6.20%, 7/1/03 . . . . . . . . . . . . . . . . . . . . . 285
500 Kentucky, Housing Corp., Housing Revenue 5.10%, 1/1/02 . . . . . . . . . . . . . . . . . . . . . 505
500 Kentucky, Housing Corp., Housing Revenue 5.60%, 1/1/07 . . . . . . . . . . . . . . . . . . . . . 508
500 Kentucky, Housing Corp., Housing Revenue 5.50%, 1/1/06 . . . . . . . . . . . . . . . . . . . . . 508
1,450 Kentucky, Housing Corp., Housing Revenue 5.05%, 7/1/06 . . . . . . . . . . . . . . . . . . . . . 1,428
500 Kentucky, Infrastructure Authority 6.50%, 6/1/05 . . . . . . . . . . . . . . . . . . . . . . . . 535
250 Kentucky, Infrastructure Authority 6.10%, 6/1/02 . . . . . . . . . . . . . . . . . . . . . . . . 265
390 Kentucky, Infrastructure Authority 5.60%, 6/1/13 . . . . . . . . . . . . . . . . . . . . . . . . 368
200 Kentucky, Infrastructure Authority 4.50%, 2/1/01 . . . . . . . . . . . . . . . . . . . . . . . . 193
205 Kentucky, Infrastructure Authority 4.60%, 2/1/02 . . . . . . . . . . . . . . . . . . . . . . . . 196
1,000 Kentucky State Properties & Building Commission 5.10%, 9/1/00 . . . . . . . . . . . . . . . . . . 1,010
750 Kentucky State, Turnpike Authority, Economic Development 5.70%, 1/1/03 . . . . . . . . . . . . . 778
750 Kentucky State, Turnpike Authority, Economic Development 5.50%, 7/1/08 . . . . . . . . . . . . . 745
500 Kentucky State, Turnpike Authority, Recovery 6.63%, 7/1/08 . . . . . . . . . . . . . . . . . . . 561
250 Kentucky State, Turnpike Authority, Toll Road 5.80%, 7/1/99 . . . . . . . . . . . . . . . . . . . 259
500 Kentucky State, University Revenue 6.25%, 5/1/02 . . . . . . . . . . . . . . . . . . . . . . . . 537
1,000 Kentucky State Turnpike 5.63%, 7/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 989
500 Kentucky State Turnpike 5.75%, 7/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498
500 Lexington, Fayette Urban County, Government 6.35%, 7/1/07 . . . . . . . . . . . . . . . . . . . . 533
200 Louisville & Jefferson County, Kentucky 4.80%, 5/15/98 . . . . . . . . . . . . . . . . . . . . . 201
500 Louisville & Jefferson County, Kentucky 5.00%, 5/15/06 . . . . . . . . . . . . . . . . . . . . . 486
200 Louisville, Kentucky, Public Properties Corp. 6.40%, 12/01/07 . . . . . . . . . . . . . . . . . . 210
310 Louisville, Kentucky, Water Revenue 6.38%, 11/1/97 . . . . . . . . . . . . . . . . . . . . . . . 323
500 Louisville, Kentucky, Water Works Board, Water 5.40%, 11/15/04 . . . . . . . . . . . . . . . . . 507
500 Louisville, Kentucky, Water Works Board, Water 5.63%, 11/15/07 . . . . . . . . . . . . . . . . . 503
1,040 Louisville, Kentucky, Water Works Board, Water 5.75%, 11/15/09 . . . . . . . . . . . . . . . . . 1,039
200 Morehead State University, Kentucky University Revenue 6.30%, 11/1/08 . . . . . . . . . . . . . . 209
500 Muhlenberg County, Kentucky, School District 5.85%, 8/1/10 . . . . . . . . . . . . . . . . . . . 494
250 Murray State University, Kentucky University Revenues 5.60%, 5/1/07 . . . . . . . . . . . . . . . 248
530 Northern Kentucky University, Revenue 6.10%, 5/1/06 . . . . . . . . . . . . . . . . . . . . . . . 562
</TABLE>
Continued
44
B-226
<PAGE> 434
THE ONE GROUP FAMILY OF MUTUAL FUNDS
KENTUCKY MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C>
$ 500 Northern Kentucky University, Revenue 4.70%, 5/1/05 . . . . . . . . . . . . . . . . . . . . . . . $ 464
600 Perry County, Kentucky, School District Financial 6.25%, 7/1/09 . . . . . . . . . . . . . . . . . 620
250 Richmond, Kentucky, Water, Gas & Sewer Revenue 6.50%, 6/1/99 . . . . . . . . . . . . . . . . . . 267
100 Shelby County, Kentucky, School District Financial 6.25%, 9/1/03 . . . . . . . . . . . . . . . . 108
500 Shelby County, Kentucky, School District Financial 6.50%, 9/1/05 . . . . . . . . . . . . . . . . 542
500 University of Kentucky, University Revenues 5.75%, 5/1/97 . . . . . . . . . . . . . . . . . . . . 510
500 University of Kentucky, University Revenues 6.25%, 5/1/07 . . . . . . . . . . . . . . . . . . . . 527
500 University of Kentucky, University Revenues 4.15%, 5/1/04 . . . . . . . . . . . . . . . . . . . . 449
500 University of Louisville, Kentucky Revenues 5.40%, 5/1/07 . . . . . . . . . . . . . . . . . . . . 488
500 University of Louisville, Kentucky Revenues 5.40%, 5/1/08 . . . . . . . . . . . . . . . . . . . . 485
500 University of Louisville, Kentucky Revenues 5.40%, 5/1/09 . . . . . . . . . . . . . . . . . . . . 483
310 Western Kentucky University, Revenue 5.85%, 5/1/96 . . . . . . . . . . . . . . . . . . . . . . . 314
985 Western Kentucky University, Revenue 5.00%, 5/1/09 . . . . . . . . . . . . . . . . . . . . . . . 910
950 Winchester Kentucky, Utilities Revenue 5.30%, 7/1/09 . . . . . . . . . . . . . . . . . . . . . . 903
2,000 Kentucky, St. Elizabeth Medical 6.00%, 11/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . 2,015
2,000 Kentucky State, Property & Building Commission 6.00%, 2/1/10 . . . . . . . . . . . . . . . . . . 2,120
-------
38,081
-------
Tennessee (5.2%):
1,000 McCracken City Hospital 6.20%, 11/1/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,065
1,000 McCracken City Hospital 6.40%, 11/1/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,069
-------
2,134
-------
Total Municipal Bonds 40,215
-------
INVESTMENT COMPANIES (1.8%):
SHARES
- ------
739 The One Group Municipal Money Market Fund, Class A . . . . . . . . . . . . . . . . . . . . . . . 739
-------
Total Investment Companies 739
-------
Total (Cost--$41,155)(a) $40,954
=======
</TABLE>
________________
Percentages indicated are based on net assets of $41,417.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . $ 238
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . (439)
-----
Net unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . $(201)
=====
</TABLE>
See notes to financial statements.
45
B-227
<PAGE> 435
THE ONE GROUP FAMILY OF MUTUAL FUNDS
OHIO MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<S> <C>
MUNICIPAL BONDS (93.6%):
Massachusetts (1.1%):
$ 1,000 Massachusetts, GO, 6.75%, 8/1/09, Callable 8/1/01 @ 102 . . . . . . . . . . . . . . . . . . . . $ 1,071
--------
Missouri (1.1%):
1,000 Missouri State Health and Educational Facilities Authority, GO, 6.40%, 6/1/10 . . . . . . . . . 1,072
--------
Ohio (90.3%):
2,000 Bexley, Ohio, City School District, 6.50%, 12/1/16 . . . . . . . . . . . . . . . . . . . . . . 2,220
1,000 Butler County, Middletown Regional Hospital, 6.75%, 11/15/10 . . . . . . . . . . . . . . . . . 1,070
1,000 Cincinnati, University of Cincinnati, Series I1, 7.10%, 6/1/10 . . . . . . . . . . . . . . . . 1,109
1,000 Cincinnati, University of Cincinnati, Series R2, 6.25%, 6/1/09 . . . . . . . . . . . . . . . . 1,038
2,775 Clermont City, Waterworks, 6.63%, 12/1/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,108
1,000 Cleveland Waterworks Revenue, 5.50%, 1/1/13 . . . . . . . . . . . . . . . . . . . . . . . . . . 968
985 Cleveland Airport, 6.00%, 1/1/14, Callable 1/1/04 @ 102 . . . . . . . . . . . . . . . . . . . 992
1,850 Cleveland Waterworks Revenue, 6.25%, 1/1/06 AMBAC . . . . . . . . . . . . . . . . . . . . . . . 1,963
1,000 Cleveland, Ohio, 7/15/89, 6.88%, 7/1/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,103
2,800 Cleveland Waterworks Revenue, Series F-92B, 6.50%, 1/1/11 . . . . . . . . . . . . . . . . . . . 2,937
2,500 Cleveland Public Power System, 6.40%, 11/15/06, Callable 11/15/04 @ 102 . . . . . . . . . . . . 2,684
1,000 Cleveland, Ohio, 6.38%, 7/1/12, Callable 7/1/02 @ 102 . . . . . . . . . . . . . . . . . . . . . 1,031
3,600 Columbus, Ohio Water System, 6.38%, 11/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . 3,740
1,285 Columbus, Ohio Waterworks, 6.00%, 5/1/11 Callable 5/1/03 @ 102 . . . . . . . . . . . . . . . . 1,306
2,250 Columbus, Ohio Waterworks, GO, 6.00%, 5/1/12 . . . . . . . . . . . . . . . . . . . . . . . . . 2,287
1,225 Columbus, Ohio, Municipal Airport, 6.20%, 4/15/04 . . . . . . . . . . . . . . . . . . . . . . . 1,292
1,000 Columbus, Ohio Sewer Improvement Bonds, GO, 6.75%, 9/15/06 . . . . . . . . . . . . . . . . . . 1,144
1,500 Cuyahoga County, Ohio, Public Improvements, 6.70%, 10/1/99 . . . . . . . . . . . . . . . . . . 1,648
1,000 Delaware County, Ohio, GO, 5.60%, 12/1/10, Callable 12/1/05 @ 101 . . . . . . . . . . . . . . . 973
1,000 Delaware County, Ohio, Library District, 7.25%, 11/1/10 . . . . . . . . . . . . . . . . . . . . 1,148
1,000 Fairfield County, Ohio, Lancaster-Fairfield Community Hospital, 7.10%, 6/15/21 . . . . . . . . 1,139
1,000 Franklin County, Ohio, Hospital Revenue, Children's Hospital Project, Series A,
6.60%, 11/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,044
1,000 Franklin County, Ohio, Hospital Revenue, Riverside Hospital, Series B, 7.60%, 5/15/20 . . . . . 1,145
1,000 Franklin County, Ohio, Hospital Revenue, Children's Hospital Project, Series A,
6.50%, 5/1/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,066
1,000 Greene County Water Systems, 6.85%, 12/1/11, Callable 12/1/01 @ 102 . . . . . . . . . . . . . . 1,069
1,265 Hamilton County Hospital, 6.63%, 1/1/06, Callable 1/1/01 @ 100 . . . . . . . . . . . . . . . . 1,338
1,500 Hamilton County Hospital, 6.25%, 1/1/12, Callable 1/1/03 @ 102 . . . . . . . . . . . . . . . . 1,483
1,500 Hamilton County, Ohio, Building Improvements & Refunding Museum Center, 6.50%, 12/1/09 . . . . 1,573
1,000 Hamilton County, Ohio, Sewer System Improvement, Series A, 6.30%, 12/1/01 . . . . . . . . . . . 1,084
1,500 Hamilton County, Ohio, Electric System Revenue, 6.13%, 12/15/08, Callable 10/15/02 @ 102 . . . 1,560
1,000 Hamilton County, Ohio Water System Revenue, 6.40%, 10/15/07 . . . . . . . . . . . . . . . . . . 1,065
1,000 Kent State University, Ohio, 6.45%, 5/1/12 . . . . . . . . . . . . . . . . . . . . . . . . . . 1,045
2,000 Lakewood, Ohio, Sanitation Sewer System, 6.40%, 12/1/11 . . . . . . . . . . . . . . . . . . . . 2,093
2,000 Montgomery County, Ohio, Sisters of Charity, 6.50%, 5/15/08 . . . . . . . . . . . . . . . . . . 2,095
1,000 North Royalton, Ohio, 7.50%, 12/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,097
1,000 Northeast Ohio, Regional Sewer District, 6.50%, 11/15/08 . . . . . . . . . . . . . . . . . . . 1,052
1,250 Ohio Housing Agency, 6.20%, 9/1/14, Callable 3/1/05 @ 102 . . . . . . . . . . . . . . . . . . . 1,258
1,000 Ohio State Water Development Pollution Control, 5.50%, 12/1/09, Callable 6/1/05 @ 101 . . . . . 975
1,000 Ohio State Liquor Profits, 6.85%, 9/1/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,095
1,165 Ohio State Building Authority, 6.50%, 9/1/09, Callable 9/1/04 @ 102 . . . . . . . . . . . . . . 1,242
1,000 Ohio State Building Authority, 6.50%, 10/1/01 . . . . . . . . . . . . . . . . . . . . . . . . . 1,081
2,000 Ohio State Building Authority, Adult Correctional Building, Series A, 6.13%, 10/1/09 . . . . . 2,060
1,000 Ohio State Building Authority, Local Jails, Series A, 7.35%, 4/1/09 . . . . . . . . . . . . . . 1,131
2,000 Ohio State Building Authority, State Facilities, Series A, 6.38%, 6/1/07 . . . . . . . . . . . 2,102
</TABLE>
Continued
46
B-228
<PAGE> 436
THE ONE GROUP FAMILY OF MUTUAL FUNDS
OHIO MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<S> <C>
MUNICIPAL BONDS, CONTINUED:
$ 1,000 Ottawa County, Ohio, 7.00%, 9/1/11, Callable 9/1/01 @ 102 . . . . . . . . . . . . . . . . . . . $ 1,080
1,000 Pickerington, Ohio, Local School Districts, 7.00%, 12/1/13 . . . . . . . . . . . . . . . . . . 1,129
2,220 Rocky River, Ohio, 6.90%, 12/1/11, Callable 12/1/00 @ 102 . . . . . . . . . . . . . . . . . . . 2,375
1,000 Saint Mary's, Ohio, Electric System Mortgage, 7.15%, 12/1/10 . . . . . . . . . . . . . . . . . 1,094
1,000 Sandusky County, Ohio, City School District, 7.30%, 12/1/10 . . . . . . . . . . . . . . . . . . 1,076
1,000 Shaker Heights, Ohio, 7.10%, 12/15/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,149
1,000 Springfield, Ohio, 6.88%, 9/1/06, Callable 9/1/01 @ 102 . . . . . . . . . . . . . . . . . . . . 1,089
1,750 Toledo, Ohio, GO, 6.10%, 12/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,778
1,000 Toledo, Ohio, Sewer System, 7.38%, 11/15/10 . . . . . . . . . . . . . . . . . . . . . . . . . . 1,086
1,000 Tuscarawas Valley, Ohio, 6.60%, 12/1/15, Callable 12/1/05 @ 102 . . . . . . . . . . . . . . . . 1,052
1,000 University of Cincinnati, 7.00%, 6/1/11, Callable 6/1/01 @ 102 . . . . . . . . . . . . . . . . 1,080
1,000 University of Cincinnati, 6.75%, 12/1/09, Callable 12/1/01 @ 102 . . . . . . . . . . . . . . . 1,079
1,000 Westerville, Ohio, Minerva Park and Blendon Joint Township, 6.80%, 9/15/06 . . . . . . . . . . 1,094
2,750 Westerville, Ohio, Minerva Park and Blendon Joint Township, 7.00%, 9/15/12 . . . . . . . . . . 2,991
1,000 Worthington, Ohio, City School District, 7.45%, 12/1/12 . . . . . . . . . . . . . . . . . . . . 1,132
-------
85,937
-------
Washington (1.1%):
1,000 Washington State, Non-Callable, 6.25%, 2/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . 1,045
-------
Total Municipal Bonds 89,125
-------
INVESTMENT COMPANIES (5.5%):
SHARES
- ------
325 Fidelity Tax-Free Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325
4,931 The One Group Ohio Municipal Money Market Fund, Class A . . . . . . . . . . . . . . . . . . . . 4,931
-------
Total Investment Companies 5,256
-------
Total (Cost--$90,584)(a) $94,381
=======
</TABLE>
_________
Percentages indicated are based on net assets of $95,208.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,952
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . (155)
------
Net unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . $3,797
======
</TABLE>
AMBAC--American Municipal Bond Assurance Corp.
GO--General Obligation
See notes to financial statements.
47
B-229
<PAGE> 437
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands except per share amounts)
LIMITED
GOVERNMENT VOLATILITY INTERMEDIATE GOVERNMENT INCOME
ARM BOND BOND BOND BOND
FUND FUND FUND FUND FUND
---------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value . . . . . . . . . . . . . . . . . . . . . . . $54,500 $409,960 $187,862 $371,122 $447,471
Repurchase agreements . . . . . . . . . . . . . . . . . . . . . . . 1,061 15,252 6,785 16,852 35,061
------- -------- -------- -------- --------
55,561 425,212 194,647 387,974 482,532
Interest receivable . . . . . . . . . . . . . . . . . . . . . . . . 308 5,461 2,422 3,676 6,987
Receivable from brokers for investments sold . . . . . . . . . . . 88 12,506
Receivable for capital shares issued . . . . . . . . . . . . . . . 63 1,469 432 1,484 1,471
Receivable from advisor . . . . . . . . . . . . . . . . . . . . . . 24 111 59 6 99
Net variation margin on open futures contracts . . . . . . . . . . 37
Deferred organization costs . . . . . . . . . . . . . . . . . . . . 13 3 1 9
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . 23 2 1 35 181
------- -------- -------- -------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,117 432,258 197,562 393,184 503,776
------- -------- -------- -------- --------
LIABILITIES:
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . 177 1,318 714 1,191 1,536
Payable to brokers for investments purchased . . . . . . . . . . . 3,346 16,748
Payable for capital shares redeemed . . . . . . . . . . . . . . . . 23 364 72 898 2,224
Cash overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . 29 741 165 425 19
Accrued expenses and other payables:
Investment advisory fees . . . . . . . . . . . . . . . . . . 26 209 95 143 239
Administration fees . . . . . . . . . . . . . . . . . . . . . 8 58 27 53 67
12b-1 fees (Class A) . . . . . . . . . . . . . . . . . . . . 1 3 1 2 1
12b-1 fees (Class B) . . . . . . . . . . . . . . . . . . . . 0 2 0 2 1
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 49 65 1 134
------- -------- -------- -------- --------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . 276 6,090 1,139 2,715 20,969
------- -------- -------- -------- --------
NET ASSETS:
Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,089 427,533 199,171 396,664 511,098
Undistributed (distribution in excess of) net investment income . . (236) (122) 116 (302) 357
Accumulated undistributed net realized losses from investment
transactions . . . . . . . . . . . . . . . . . . . . . . . . . . (3,358) (7,604) (5,812) (13,541) (53,133)
Net unrealized appreciation (depreciation) from investments . . . . (654) 6,361 2,948 7,648 24,485
------- -------- -------- -------- --------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $55,841 $426,168 $196,423 $390,469 $482,807
======= ======== ======== ======== ========
Net assets
Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . $51,050 $410,746 $191,216 $379,826 $474,124
Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,631 12,516 4,941 8,130 6,796
Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 2,906 266 2,513 1,887
------- -------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $55,841 $426,168 $196,423 $390,469 $482,807
======= ======== ======== ======== ========
Outstanding units of beneficial interest (shares)
Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . 5,188 38,999 19,095 38,720 49,683
Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . 471 1,189 492 828 713
Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 274 27 256 196
------- -------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . 5,675 40,462 19,614 39,804 50,592
======= ======== ======== ======== ========
Net asset value
Fiduciary--offering and redemption price per share . . . . . $ 9.84 $ 10.53 $ 10.01 $ 9.81 $ 9.54
======= ======== ======== ======== ========
Class A--redemption price per share . . . . . . . . . . . . . $ 9.83 $ 10.52 $ 10.04 $ 9.81 $ 9.54
======= ======== ======== ======== ========
Class B--offering price per share (a) . . . . . . . . . . . . $ 9.84 $ 10.60 $ 10.01 $ 9.81 $ 9.62
======= ======== ======== ======== ========
Maximum Sales Charge (Class A) . . . . . . . . . . . . . . . . . . 4.50% 4.50% 4.50% 4.50% 4.50%
Maximum Offering Price (100%/(100%--Maximum Sales Charge) of
net asset value adjusted to nearest cent) per share (Class A) . . $ 10.29 $ 11.02 $ 10.51 $ 10.27 $ 9.99
======= ======== ======== ======== ========
Investments, at Cost . . . . . . . . . . . . . . . . . . . . . . . $56,256 $418,851 $191,699 $380,326 $458,047
======= ======== ======== ======== ========
</TABLE>
__________
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
48
B-230
<PAGE> 438
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands
except per share amounts)
INTERMEDIATE KENTUCKY OHIO
TAX-FREE TAX-FREE MUNICIPAL MUNICIPAL
BOND BOND BOND BOND
FUND FUND FUND FUND
------------ -------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value . . . . . . . . . . . . . . . . . . . . . $207,008 $202,865 $40,954 $94,381
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 2
Interest and dividends receivable . . . . . . . . . . . . . . . 3,782 3,366 630 1,145
Receivable from brokers for investments sold . . . . . . . . . 8,912
Receivable for capital shares issued . . . . . . . . . . . . . 1,023 617 16 160
Receivable from advisor . . . . . . . . . . . . . . . . . . . . 63 31 12 25
Deferred organization costs . . . . . . . . . . . . . . . . . . 1 9 6
Prepaid expenses and other assets . . . . . . . . . . . . . . . 1 92 29
-------- -------- ------- -------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 220,992 206,980 41,614 95,746
-------- -------- ------- -------
LIABILITIES:
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . 806 858 134 336
Payable to brokers for investments purchased . . . . . . . . . 2,073
Payable for capital shares redeemed . . . . . . . . . . . . . . 7 90 51
Cash overdraft . . . . . . . . . . . . . . . . . . . . . . . . 217 87
Accrued expenses and other payables:
Investment advisory fees . . . . . . . . . . . . . . . . 107 75 20 46
Administration fees . . . . . . . . . . . . . . . . . . . 30 28 6 13
12b-1 fees (Class A) . . . . . . . . . . . . . . . . . . 1 2 2 2
12b-1 fees (Class B) . . . . . . . . . . . . . . . . . . 1 6 2
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 8 35 1
-------- -------- ------- -------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . 3,033 1,276 197 538
-------- -------- ------- -------
NET ASSETS:
Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,408 212,148 43,397 95,116
Undistributed net investment income . . . . . . . . . . . . . . 11 19 8
Accumulated undistributed net realized losses
from investment transactions . . . . . . . . . . . . . . . . (534) (5,574) (1,779) (3,713)
Net unrealized appreciation (depreciation) from investments . . 3,074 (889) (201) 3,797
-------- -------- ------- -------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $217,959 $205,704 $41,417 $95,208
======== ======== ======= =======
Net assets
Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . $211,229 $185,916 $32,520 $79,993
Class A . . . . . . . . . . . . . . . . . . . . . . . . . 5,614 11,462 8,818 12,006
Class B . . . . . . . . . . . . . . . . . . . . . . . . . 1,116 8,326 79 3,209
-------- -------- ------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . $217,959 $205,704 $41,417 $95,208
======== ======== ======= =======
Outstanding units of beneficial interest (shares)
Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . 19,861 19,189 3,277 7,512
Class A . . . . . . . . . . . . . . . . . . . . . . . . . 528 1,179 888 1,124
Class B . . . . . . . . . . . . . . . . . . . . . . . . . 105 859 8 298
======== ======== ======= =======
Total . . . . . . . . . . . . . . . . . . . . . . . 20,494 21,227 4,173 8,934
======== ======== ======= =======
Net asset value
Fiduciary--offering and redemption price per share . . . $ 10.64 $ 9.69 $ 9.92 $ 10.65
======== ======== ======= =======
Class A--redemption price per share . . . . . . . . . . . $ 10.63 $ 9.72 $ 9.93 $ 10.68
======== ======== ======= =======
Class B--offering price per share (a) . . . . . . . . . . $ 10.65 $ 9.69 $ 9.87 $ 10.75
======== ======== ======= =======
Maximum Sales Charge (Class A) . . . . . . . . . . . . . . . . 4.50% 4.50% 4.50% 4.50%
Maximum Offering Price (100%/(100%--Maximum Sales Charge)
of net asset value adjusted to nearest cent)
per share (Class A) . . . . . . . . . . . . . . . . . . . . . $ 11.13 $ 10.18 $ 10.40 $ 11.18
======== ======== ======= =======
Investments, at Cost . . . . . . . . . . . . . . . . . . . . . $203,934 $203,754 $41,155 $90,584
======== ======== ======= =======
</TABLE>
_____________
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
49
B-231
<PAGE> 439
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands)
GOVERNMENT LIMITED VOLATILITY INTERMEDIATE GOVERNMENT INCOME
ARM BOND BOND BOND BOND
FUND FUND FUND FUND FUND
--------- ------------------ ------------ ---------- ------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income . . . . . . . . . . . . . . . . . . . $5,104 $26,927 $10,292 $21,138 $37,375
------ ------- ------- ------- -------
TOTAL INCOME . . . . . . . . . . . . . . . . . . . . 5,104 26,927 10,292 21,138 37,375
------ ------- ------- ------- -------
EXPENSES:
Investment advisory fees . . . . . . . . . . . . . . 486 2,548 837 1,291 2,979
Administration fees . . . . . . . . . . . . . . . . . 149 716 235 483 837
12b-1 fees (Class A) . . . . . . . . . . . . . . . . 42 47 7 14 18
12b-1 fees (Class B) . . . . . . . . . . . . . . . . 1 24 13 12
12b-1 fees (Service) . . . . . . . . . . . . . . . . 1 2
Custodian and accounting fees . . . . . . . . . . . . 25 77 66 65 96
Legal and audit fees . . . . . . . . . . . . . . . . 27 54 52 42 70
Organization costs . . . . . . . . . . . . . . . . . 3 14 1 3
Trustees' fees and expenses . . . . . . . . . . . . . 3 8 7 6 10
Transfer agent fees . . . . . . . . . . . . . . . . . 40 93 49 71 97
Registration and filing fees . . . . . . . . . . . . 24 44 79 84 59
Printing costs . . . . . . . . . . . . . . . . . . . 17 31 32 36 55
Other . . . . . . . . . . . . . . . . . . . . . . . . 118 36 17 22 60
------ ------- ------- ------- -------
Total expenses before waivers/reimbursements . . . . 935 3,693 1,382 2,130 4,295
Less waivers/reimbursements . . . . . . . . . . . . . (369) (1,415) (599) (59) (1,331)
------ ------- ------- ------- -------
NET EXPENSES . . . . . . . . . . . . . . . . . . . . 566 2,278 783 2,071 2,964
------ ------- ------- ------- -------
Net Investment Income . . . . . . . . . . . . . . . . 4,538 24,649 9,509 19,067 34,411
------ ------- ------- ------- -------
REALIZED/UNREALIZED GAINS FROM INVESTMENTS:
Net realized losses from investment
transactions . . . . . . . . . . . . . . . . . . . (2,023) (7,605) (4,330) (7,094) (53,134)
Net change in unrealized appreciation from
investments . . . . . . . . . . . . . . . . . . . . 1,410 14,800 7,307 16,133 68,445
------ ------- ------- ------- -------
Net realized/unrealized gains (losses) from
investments . . . . . . . . . . . . . . . . . . . . (613) 7,195 2,977 9,039 15,311
------ ------- ------- ------- -------
Change in net assets resulting from operations . . . $3,925 $31,844 $12,486 $28,106 $49,722
====== ======= ======= ======= =======
</TABLE>
See notes to financial statements.
50
B-232
<PAGE> 440
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERMEDIATE TAX-FREE OHIO MUNCIPAL
TAX-FREE BOND BOND KENTUCKY MUNCIPAL BOND
FUND FUND BOND FUND FUND
------------- --------- ---------------------- -------------
YEAR YEAR PERIOD PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JANUARY 19, JUNE 30,
1995 1995 1995(a) 1995(b) 1995
------------- --------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income . . . . . . . . . . . . . . . . . . . . $11,299 $11,882 $1,007 $ 2,876 $ 5,920
Dividend income . . . . . . . . . . . . . . . . . . . . 89 91 13
------- ------- ------ ------- -------
TOTAL INCOME . . . . . . . . . . . . . . . . . . . . . 11,388 11,973 1,020 2,876 5,920
------- ------- ------ ------- -------
EXPENSES:
Investment advisory fees . . . . . . . . . . . . . . . 1,198 819 112 272 602
Administration fees . . . . . . . . . . . . . . . . . . 337 307 32 78 171
12b-1 fees (Class A) . . . . . . . . . . . . . . . . . 18 36 14 45
12b-1 fees (Class B) . . . . . . . . . . . . . . . . . 8 67 26
Custodian and accounting fees . . . . . . . . . . . . . 53 52 7 85 21
Legal and audit fees . . . . . . . . . . . . . . . . . 33 25 13 31 18
Organization costs . . . . . . . . . . . . . . . . . . 5 3 5
Trustees' fees and expenses . . . . . . . . . . . . . . 6 5 1 4 4
Transfer agent fees . . . . . . . . . . . . . . . . . . 54 51 6 40 48
Registration and filing fees . . . . . . . . . . . . . 36 55 5 40 23
Printing costs . . . . . . . . . . . . . . . . . . . . 23 25 1 8 21
Other . . . . . . . . . . . . . . . . . . . . . . . . . 12 5 8 9 8
------- ------- ------ ------- -------
Total expenses before waivers/reimbursements . . . . . 1,783 1,450 199 567 992
Less waivers/reimbursements . . . . . . . . . . . . . . (705) (342) (65) (9) (354)
------- ------- ------ ------- -------
NET EXPENSES . . . . . . . . . . . . . . . . . . . . . 1,078 1,108 134 558 638
------- ------- ------ ------- -------
Net Investment Income . . . . . . . . . . . . . . . . . 10,310 10,865 886 2,318 5,282
------- ------- ------ ------- -------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment
transactions . . . . . . . . . . . . . . . . . . . . 1,387 (3,212) (447) (1,331) (3,290)
Net change in unrealized appreciation (depreciation)
from investments . . . . . . . . . . . . . . . . . . 1,623 3,441 2,403 (4,798) 3,601
------- ------- ------ ------- -------
Net realized/unrealized gains (losses) from
investments . . . . . . . . . . . . . . . . . . . . . 3,010 229 1,956 (6,129) 311
------- ------- ------ ------- -------
Change in net assets resulting from operations . . . . $13,320 $11,094 $2,842 $(3,811) $ 5,593
======= ======= ====== ======= =======
</TABLE>
__________
(a) For the period from January 20, 1995 (date merged) to June 30, 1995.
(b) For the period from February 1, 1994 to January 19, 1995. Audited by other
auditors.
See notes to financial statements.
51
B-233
<PAGE> 441
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
GOVERNMENT LIMITED INTERMEDIATE
ARM FUND VOLATILITY FUND BOND FUND
---------------------- ---------------------- -------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994 1995 1994
-------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income . . . . . . . . . . . . $ 4,538 $ 7,719 $ 24,649 $ 22,966 $ 9,509 $ 4,128
Net realized gains (losses) from
investment transactions . . . . . . . . . . (2,023) (1,333) (7,605) 1,112 (4,330) 114
Net change in unrealized appreciation
(depreciation) from investments . . . . . . . 1,410 (2,124) 14,800 (21,743) 7,307 (5,861)
--------- --------- --------- --------- -------- --------
Change in net assets resulting from operations . . 3,925 4,262 31,844 2,335 12,486 (1,619)
--------- --------- --------- --------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income . . . . . . . . . (3,574) (7,330) (23,512) (22,114) (9,373) (4,074)
In excess of net investment income . . . . . (222) (370) (107) (258)
From net realized gains from investment
transactions . . . . . . . . . . . . . . . (3,186) (110)
In excess of net realized gains from
investment transactions . . . . . . . . . . (48)
(515)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income . . . . . . . . . (554) (430) (732) (866) (136)
In excess of net investment income . . . . . (12) (37) (16) (21)
From net realized gains from investment
transactions . . . . . . . . . . . . . . . (61)
In excess of net realized gains from
investment transactions . . . . . . . . . . (3) (65)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income . . . . . . . . . (5) (121) (17) (1)
In excess of net investment income . . . . . (1)
From net realized gains from investment
transactions . . . . . . . . . . . . . . . . (3)
DISTRIBUTIONS TO SERVICE SHAREHOLDERS:
From net investment income . . . . . . . . . (3)
--------- --------- --------- --------- -------- --------
Change in net assets from shareholder
distributions . . . . . . . . . . . . . . . . . . (4,367) (8,218) (24,491) (26,592) (9,510) (4,699)
--------- --------- --------- --------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued . . . . . . . . . 35,084 277,604 157,468 231,080 126,318 91,042
Proceeds from shares issued in connection
with acquisition . . . . . . . . . . . . . 39,916
Dividends reinvested . . . . . . . . . . . . 1,806 4,985 8,292 12,026 2,748 3,185
Cost of shares redeemed . . . . . . . . . . . (139,268) (277,491) (211,545) (167,788) (74,018) (33,678)
--------- --------- --------- --------- -------- --------
Change in net assets from share transactions . . . (102,378) 5,098 (45,785) 75,318 94,964 60,549
--------- --------- --------- --------- -------- --------
Change in net assets . . . . . . . . . . . . . . . (102,820) 1,142 (38,432) 51,061 97,940 54,231
NET ASSETS:
Beginning of period . . . . . . . . . . . . . 158,661 157,519 464,600 413,539 98,483 44,252
--------- --------- --------- --------- -------- --------
End of period . . . . . . . . . . . . . . . . $ 55,841 $ 158,661 $ 426,168 $ 464,600 $196,423 $ 98,483
========= ========= ========= ========= ======== ========
SHARE TRANSACTIONS:
Issued . . . . . . . . . . . . . . . . . . . 3,568 27,779 15,271 22,219 12,678 8,975
Issued in connection with acquisition . . . . 4,204
Reinvested . . . . . . . . . . . . . . . . . 183 500 803 1,126 282 311
Redeemed . . . . . . . . . . . . . . . . . . (14,185) (27,871) (20,592) (16,425) (7,677) (3,370)
========= ========= ========= ========= ======== ========
Change in shares . . . . . . . . . . . . . . . . . (10,434) 408 (4,518) 6,920 9,487 5,916
========= ========= ========= ========= ======== ========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of period . . . . . . . . . . . . . . . . $ (236) $ (407) $ (122) $ (280) $ 116 $ 117
========= ========= ========= ========= ======== ========
</TABLE>
See notes to financial statements.
52
B-234
<PAGE> 442
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
GOVERNMENT INCOME INTERMEDIATE TAX-
BOND FUND BOND FUND FREE BOND FUND
---------------------- ----------------------- ------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994 1995 1994
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income . . . . . . . . . . . . $ 19,067 $ 7,246 $ 34,411 $ 29,584 $ 10,310 $ 8,948
Net realized gains (losses) from investment
transactions . . . . . . . . . . . . . . . . (7,094) (5,368) (53,134) 21,041 1,387 (921)
Net change in unrealized appreciation
(depreciation) from investments . . . . . . 16,133 (8,621) 68,445 (65,174) 1,623 (8,701)
--------- -------- --------- --------- -------- --------
Change in net assets resulting from operations . . 28,106 (6,743) 49,722 (14,549) 13,320 (674)
--------- -------- --------- --------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income . . . . . . . . . (18,433) (7,169) (33,925) (29,231) (9,992) (8,904)
In excess of net investment income . . . . . (300) (305) (61) (12)
From net realized gains from investment
transactions . . . . . . . . . . . . . . . (25,188) (117)
In excess of net realized gains from
investment transactions . . . . . . . . . . (219) (2,306) (1,862)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income . . . . . . . . . (247) (70) (338) (339) (237) (276)
In excess of net investment income . . . . . (4) (3) (11) (11) (12)
From net realized gains from investment
transactions . . . . . . . . . . . . . . . (293)
In excess of net realized gains from
investment transactions . . . . . . . . . . (2) (24) (71)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income . . . . . . . . . (76) (8) (73) (4) (35) (6)
In excess of net realized gains from
investment transactions . . . . . . . . . . (5) (3) (5)
DISTRIBUTIONS TO SERVICE SHAREHOLDERS:
From net investment income . . . . . . . . . (11) (1)
In excess of net realized gains from
investment transactions . . . . . . . . . . (1)
--------- -------- --------- --------- -------- --------
Change in net assets from shareholder
distributions . . . . . . . . . . . . . . . . . . (19,060) (7,776) (36,755) (55,059) (10,275) (11,265)
--------- -------- --------- --------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued . . . . . . . . . 175,681 215,599 147,583 282,007 76,973 82,075
Proceeds from shares issued in connection
with acquisition . . . . . . . . . . . . . 96,760
Dividends reinvested . . . . . . . . . . . . 7,435 3,267 17,360 29,656 1,337 2,283
Cost of shares redeemed . . . . . . . . . . . (110,491) (45,301) (261,301) (166,212) (52,112) (55,672)
--------- -------- --------- --------- -------- --------
Change in net assets from share transactions . . . 169,385 173,565 (96,358) 145,451 26,198 28,686
--------- -------- --------- --------- -------- --------
Change in net assets . . . . . . . . . . . . . . . 178,431 159,046 (83,391) 75,843 29,243 16,747
NET ASSETS:
Beginning of period . . . . . . . . . . . . . 212,038 52,992 566,198 490,355 188,716 171,969
--------- -------- --------- --------- -------- --------
End of period . . . . . . . . . . . . . . . . $ 390,469 $212,038 $ 482,807 $ 566,198 $217,959 $188,716
========= ======== ========= ========= ======== ========
SHARE TRANSACTIONS:
Issued . . . . . . . . . . . . . . . . . . . 17,640 21,771 16,030 27,809 7,387 7,387
Issued in connection with acquisition . . . . 10,564
Reinvested . . . . . . . . . . . . . . . . . 789 334 1,893 3,250 128 207
Redeemed . . . . . . . . . . . . . . . . . . (11,871) (4,642) (28,705) (16,706) (5,012) (5,033)
========= ======== ========= ========= ======== ========
Change in shares . . . . . . . . . . . . . . . . . 17,122 17,463 (10,782) 14,353 2,503 2,561
========= ======== ========= ========= ======== ========
Undistributed (distributions in excess of)
net investment income included in net assets:
End of period . . . . . . . . . . . . . . . . $ (302) $ (309) $ (71) $ (63) $ 11 $ (24)
========= ======== ========= ========= ======== ========
</TABLE>
See notes to financial statements.
53
B-235
<PAGE> 443
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
TAX-FREE
BOND FUND KENTUCKY MUNICIPAL BOND FUND
------------------- --------------------------------------
YEAR YEAR PERIOD PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JANUARY 19, JANUARY 31,
1995 1994 1995 (a) 1995 (b)(d) 1994 (c)(d)
-------- ------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . $ 10,865 $ 6,633 $ 886 $ 2,318 $ 1,806
Net realized gains (losses) from investment
transactions . . . . . . . . . . . . . . . . . . . . (3,212) (2,122) (447) (1,331) (1)
Net change in unrealized appreciation
(depreciation) from investments . . . . . . . . . . 3,441 (4,463) 2,403 (4,798) 2,194
-------- -------- -------- -------- --------
Change in net assets resulting from operations . . . . . . 11,094 48 2,842 (3,811) 3,999
-------- -------- -------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income . . . . . . . . . . . . . (9,899) (6,155) (704) (2,409) (1,715)
In excess of net investment income . . . . . . . . . (11)
In excess of net realized gains from investment
transactions . . . . . . . . . . . . . . . . . . . . (344)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income . . . . . . . . . . . . . (593) (441) (182)
In excess of net investment income . . . . . . . . .
In excess of net realized gains from investment
transactions . . . . . . . . . . . . . . . . . . . . (25)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income . . . . . . . . . . . . . (343) (42)
In excess of net investment income . . . . . . . . .
In excess of net realized gains from investment
transactions . . . . . . . . . . . . . . . . . . . . (2)
-------- -------- -------- -------- --------
Change in net assets from shareholder distributions . . . . (10,835) (7,020) (886) (2,409) (1,715)
-------- -------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued . . . . . . . . . . . . . 92,292 158,490 13,688 12,790 71,308
Dividends reinvested . . . . . . . . . . . . . . . . 1,490 1,301 117 340 152
Cost of shares redeemed . . . . . . . . . . . . . . . (56,680) (29,359) (16,297) (29,620) (9,081)
-------- -------- -------- -------- --------
Change in net assets from share transactions . . . . . . . 37,102 130,432 (2,492) (16,490) 62,379
-------- -------- -------- -------- --------
Change in net assets . . . . . . . . . . . . . . . . . . . 37,361 123,460 (536) (22,710) 64,663
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . 168,343 44,883 41,953 64,663
-------- -------- -------- -------- --------
End of period . . . . . . . . . . . . . . . . . . . . $205,704 $168,343 $ 41,417 $ 41,953 $ 64,663
======== ======== ======== ======== ========
SHARE TRANSACTIONS:
Issued . . . . . . . . . . . . . . . . . . . . . . . 9,619 15,823 1,341 1,300 7,061
Reinvested . . . . . . . . . . . . . . . . . . . . . 155 131 12 35 15
Redeemed . . . . . . . . . . . . . . . . . . . . . . (5,967) (2,973) (1,602) (3,103) (886)
======== ======== ======== ======== ========
Change in shares . . . . . . . . . . . . . . . . . . . . . 3,807 12,981 (249) (1,768) 6,190
======== ======== ======== ======== ========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of period . . . . . . . . . . . . . . . . . . . . $ 19 $ (11) $ $ $ 91
======== ======== ======== ======== ========
<CAPTION>
(Amounts in Thousands)
OHIO MUNICIPAL
BOND FUND
---------------------
YEAR YEAR
ENDED ENDED
JUNE 30, JUNE 30,
1995 1994
-------- --------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . $ 5,282 $ 5,084
Net realized gains (losses) from investment
transactions . . . . . . . . . . . . . . . . . . . (3,290) (337)
Net change in unrealized appreciation
(depreciation from investments . . . . . . . . . . . 3,601 (5,278)
-------- --------
Change in net assets resulting from operations . . . . . . 5,593 (531)
-------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income . . . . . . . . . . . . . (4,520) (4,378)
In excess of net investment income . . . . . . . . .
In excess of net realized gains from investment
transactions . . . . . . . . . . . . . . . . . . . (170)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income . . . . . . . . . . . . . (627) (722)
In excess of net investment income . . . . . . . . . (22) (22)
In excess of net realized gains from investment
transactions . . . . . . . . . . . . . . . . . . . (28)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income . . . . . . . . . . . . . (112) (17)
In excess of net investment income . . . . . . . . . (1) (1)
In excess of net realized gains from investment
transactions . . . . . . . . . . . . . . . . . . . (1)
-------- --------
Change in net assets from shareholder distributions . . . . (5,282) (5,339)
-------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued . . . . . . . . . . . . . 12,266 45,878
Dividends reinvested . . . . . . . . . . . . . . . . 870 942
Cost of shares redeemed . . . . . . . . . . . . . . . (28,426) (18,647)
-------- --------
Change in net assets from share transactions . . . . . . . (15,290) 28,173
-------- --------
Change in net assets . . . . . . . . . . . . . . . . . . . (14,979) 22,303
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . 110,187 87,884
-------- --------
End of period . . . . . . . . . . . . . . . . . . . . $ 95,208 $110,187
======== ========
SHARE TRANSACTIONS:
Issued . . . . . . . . . . . . . . . . . . . . . . . 1,160 4,108
Reinvested . . . . . . . . . . . . . . . . . . . . . 82 86
Redeemed . . . . . . . . . . . . . . . . . . . . . . (2,717) (1,691)
======== ========
Change in shares . . . . . . . . . . . . . . . . . . . . . (1,475) 2,503
======== ========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of period . . . . . . . . . . . . . . . . . . . . $ 8 $ 8
======== ========
</TABLE>
_______________
(a) For the period from January 20, 1995 (date merged) to June 30, 1995.
(b) For the period from February 1, 1994 to January 19, 1995.
(c) For the period from March 12, 1993 (date of initial public investment) to
January 31, 1994.
(d) Audited by other auditors. Prior to January 20, 1995, the Kentucky Municipal
Bond Fund Shares were unclassified.
See notes to financial statements.
54
B-236
<PAGE> 444
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1995
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as a diversified, open-end
investment company established as a Massachusetts business trust. The
Trust is registered to offer five classes of shares: Fiduciary, Class A,
Class B, Institutional, and Service. The Trust currently offers
twenty-four funds. The accompanying financial statements and financial
highlights are those of the Government ARM Fund, the Limited Volatility
Bond Fund, the Intermediate Bond Fund, the Government Bond Fund, the
Income Bond Fund, the Intermediate Tax-Free Bond Fund, the Tax-Free Bond
Fund, the Kentucky Municipal Bond Fund, and the Ohio Municipal Bond Fund
(individually, a "Fund"; collectively, the "Funds") only. During the
year ended June 30, 1995, The One Group Short-Term Global Bond Fund
ceased operations.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies in
conformity with generally accepted accounting principles consistently
followed by the Trust in the preparation of its financial statements.
SECURITY VALUATION
Corporate debt securities and debt securities of U.S. issuers (other
than short-term investments maturing in 60 days or less), including
municipal securities, are valued on the basis of valuations provided
by dealers or by an independent pricing service approved by the
Board of Trustees. Short-term investments maturing in 60 days or
less are valued at amortized cost, which approximates market value.
Investments for which there are no such quotations or valuations are
valued at fair value as determined in good faith by the investment
advisor under the direction of the Board of Trustees. Futures
contracts are valued at the settlement price established each day by
the board of trade or an exchange on which they are traded. Options
traded on an exchange are valued using the last sale price or, in
the absence of a sale, the last offering price. Options traded
over-the-counter are valued using dealer-supplied valuations.
REPURCHASE AGREEMENTS
Each Fund may invest in repurchase agreements with institutions that
the Fund's investment advisor has determined are creditworthy. Each
repurchase agreement is recorded at cost. The Fund requires that the
securities purchased in a repurchase transaction be transferred to
the custodian in a manner sufficient to enable the Fund to obtain
those securities in the event of a counterparty default. The seller,
under the repurchase agreement, is required to maintain the value of
the securities held at not less than the repurchase price, including
accrued interest.
WRITTEN OPTIONS
The Funds may write covered call or put options for which premiums
received are recorded as liabilities and are subsequently adjusted
to the current value of the options written. Premiums received from
writing options which expire are treated as realized gains. Premiums
received from writing options which are exercised or are closed are
offset against the proceeds received or amount paid on the
transaction to determine realized gain or loss.
FUTURES CONTRACTS
The Funds may enter into futures contracts for the delayed delivery
of securities at a fixed price at some future date or the change in
the value of a specified financial index over a predetermined time
period. Cash or
Continued
55
B-237
<PAGE> 445
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
securities are deposited with brokers in order to maintain a
position. Subsequent payments made or received by the fund based on
the daily change in the market value of the position are recorded as
unrealized gain or loss until the contract is closed out, at which
time the gain or loss is realized.
INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked
either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices or other reference instruments.
Indexed securities may be more volatile than the referenced
instrument itself, but any loss is limited to the amount of the
original investment.
MORTGAGE ROLLS
The Funds may enter into mortgage "dollar rolls" in which the Fund
sells mortgage-backed securities for delivery in the current month
and simultaneously contracts to repurchase substantially similar
securities on a specified future date. During the roll period, the
Fund forgoes principal and interest paid on the mortgage-backed
securities. The Fund is compensated by fee income, for the
difference between the current sales price and the lower forward
price for the future purchase.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net
realized gains or losses on sales of securities are determined on
the specific identification cost method. Interest income and
expenses are recognized on the accrual basis. Interest income,
including any discount or premium, is accrued as earned using the
effective interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to
that Fund, while the expenses which are attributable to more than
one fund of the Trust are allocated among the respective Funds. Each
class of shares bears its pro-rata portion of expenses attributable
to its series, except that each class separately bears expenses
related specifically to that class such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid
monthly for each Fund. Net realized capital gains, if any, are
distributed at least annually. Dividends are declared separately for
each class. No class has preferential dividend rights; differences
in per share dividend rates are generally due to differences in
separate class expenses.
Net investment income and net capital gain distributions are
determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These
differences are due primarily to differing treatments for
mortgage-backed securities, expiring capital loss carryforwards, and
deferrals of certain losses.
ORGANIZATION COSTS
Costs incurred by the Trust in connection with its organization,
including the fees and expenses of registering and qualifying its
shares for distribution have been deferred and are being amortized
using the straight-line method over a period of five years beginning
with the commencement of each Fund's operations. All such costs have
been allocated among the funds of the Trust pro-rata, based on the
relative net assets of each fund. In the event that any of the
initial shares are redeemed during such period by any holder
thereof, the related
Continued
56
B-238
<PAGE> 446
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
fund will be reimbursed by such holder for any unamortized
organization costs in the proportion as the number of initial shares
being redeemed bears to the number of initial shares outstanding at
the time of redemption.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income
tax purposes. Each Fund intends to qualify or to continue to qualify
as a regulated investment company by complying with the provisions
available to certain investment companies as defined in applicable
sections of the Internal Revenue Code, and to make distributions of
net investment income and net realized capital gains sufficient to
relieve it from all, or substantially all, federal income taxes.
RECLASSIFICATIONS:
Certain reclassifications have been made to the 1994 financial
statements and financial highlights in order to conform to the 1995
presentation.
3. SHARES OF BENEFICIAL INTEREST:
The Trust is authorized to issue an unlimited number of shares of
beneficial interest, with no par value which may, without shareholder
approval, be divided into an unlimited number of series of such shares
and any series may be classified or reclassified into one or more
classes. Currently, shares of the Trust are registered to be offered
through thirty series and five classes: Fiduciary, Class A, Class B,
Institutional and Service. The Service Shares commenced offering on
January 17, 1994 when they were designated as "Retirement" Shares. On
April 4, 1995, the name of the Retirement Shares was changed to
"Service" Shares. During the year ended June 30, 1995, Service Shares
transferred to Class A Shares, and as of June 30, 1995, there were no
shareholders in the Service Class. Shareholders are entitled to one vote
for each full share held and will vote in the aggregate and not by class
or series, except as otherwise expressly required by law or when the
Board of Trustees has determined that the matter to be voted on affects
only the interest of shareholders of a particular class or series. The
following is a summary of transactions in Fund shares for the fiscal
years ending June 30, 1995 and 1994:
Continued
57
B-239
<PAGE> 447
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands)
GOVERNMENT ARM LIMITED VOLATILITY BOND INTERMEDIATE BOND
FUND FUND FUND
---------------------- ---------------------- ---------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994 1995 1994
--------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued . . . . . . . . . $ 34,868 $ 259,931 $ 152,849 $ 220,728 $ 125,119 $ 91,042
Proceeds from shares issued in
connection with acquisition . . . . . . . . 35,113
Dividends reinvested . . . . . . . . . . . . 1,732 4,833 7,661 11,169 2,663 3,185
Shares redeemed . . . . . . . . . . . . . . . (124,793) (275,937) (204,209) (158,990) (73,001) (33,678)
--------- --------- --------- --------- --------- --------
Change in net assets from Fiduciary
share transactions . . . . . . . . . . . . . $ (88,193) $ (11,173) $ (43,699) $ 72,907 $ 89,894 $ 60,549
========= ========= ========= ========= ========= ========
CLASS A SHARES:
Proceeds from shares issued . . . . . . . . $ 70 $ 17,658 $ 3,343 $ 8,316 $ 934
Proceeds from shares issued in
connection with acquisition . . . . . . . 4,803
Dividends reinvested . . . . . . . . . . . 70 152 518 836 84
Shares redeemed . . . . . . . . . . . . . . (14,471) (1,554) (6,811) (8,761) (1,016)
--------- --------- --------- --------- --------- --------
Change in net assets from
Class A share transactions . . . . . . . . $(14,331) $ 16,256 $ (2,950) $ 391 $ 4,805
======== ========= ========= ========= ========= ========
CLASS B SHARES:
Proceeds from shares issued . . . . . . . . $ 146 $ 15 $ 1,164 $ 2,020 $ 265
Dividends reinvested . . . . . . . . . . . 4 110 21 1
Shares redeemed . . . . . . . . . . . . . . (4) (391) (37) (1)
--------- --------- --------- --------- --------- --------
Change in net assets from
Class B share transactions . . . . . . . . $ 146 15 $ 883 $ 2,004 $ 265
========= ========= ========= ========= ========= ========
SERVICE SHARES:
Proceeds from shares issued . . . . . . . . $ 112 $ 16
Dividends reinvested . . . . . . . . . . . 3
Shares redeemed . . . . . . . . . . . . . . (134)
--------- --------- --------- --------- --------- --------
Change in net assets from
Service share transactions . . . . . . . . $ (19) $ 16
========= ========= ========= ========= ========= ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued . . . . . . . . . . . . . . . . . . 3,545 26,011 14,826 21,244 12,567 8,975
Issued in connection with acquisition . . . 3,700
Reinvested . . . . . . . . . . . . . . . . 176 485 742 1,046 274 311
Redeemed . . . . . . . . . . . . . . . . . (12,706) (27,715) (19,884) (15,589) (7,573) (3,370)
--------- --------- --------- --------- --------- --------
Change in Fiduciary Shares . . . . . . . . (8,985) (1,219) (4,316) 6,701 8,968 5,916
========= ========= ========= ========= ========= ========
CLASS A SHARES:
Issued . . . . . . . . . . . . . . . . . . 8 1,767 323 783 84
Issued in connection with acquisition . . . 504
Reinvested . . . . . . . . . . . . . . . . 7 15 50 78 8
Redeemed . . . . . . . . . . . . . . . . . (1,479) (156) (658) (834) (104)
--------- --------- --------- --------- --------- --------
Change in Class A Shares . . . . . . . . . (1,464) 1,626 (285) 27 492
========= ========= ========= ========= ========= ========
CLASS B SHARES:
Issued . . . . . . . . . . . . . . . . . . 15 1 111 191 27
Reinvested . . . . . . . . . . . . . . . . 11 2
Redeemed . . . . . . . . . . . . . . . . . (38) (2)
--------- --------- --------- --------- --------- --------
Change in Class B Shares . . . . . . . . . 15 1 84 191 27
========= ========= ========= ========= ========= ========
SERVICE SHARES:
Issued . . . . . . . . . . . . . . . . . . 11 1
Reinvested . . . . . . . . . . . . . . . .
Redeemed . . . . . . . . . . . . . . . . . (12)
--------- --------- --------- --------- --------- --------
Change in Service Shares . . . . . . . . . (1) 1
========= ========= ========= ========= ========= ========
</TABLE>
Continued
58
B-240
<PAGE> 448
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERMEDIATE TAX-
GOVERNMENT BOND FUND INCOME BOND FUND FREE BOND FUND
---------------------- ---------------------- --------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994 1995 1994
--------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued . . . . . . . . $ 170,196 $ 213,545 $ 142,061 $ 279,907 $ 74,654 $ 78,806
Proceeds from shares issued in
connection with acquisition . . . . . . . 92,808
Dividends reinvested . . . . . . . . . . . 7,203 3,207 17,045 29,164 1,137 2,020
Shares redeemed . . . . . . . . . . . . . . (108,841) (44,860) (257,754) (163,478) (50,142) (53,168)
--------- --------- --------- --------- -------- --------
Change in net assets from
Fiduciary share transactions . . . . . . . $ 161,366 $ 171,892 $ (98,648) $ 145,593 $ 25,649 $ 27,658
========= ========= ========= ========= ======== ========
CLASS A SHARES:
Proceeds from shares issued . . . . . . . . $ 3,603 $ 1,320 $ 3,989 $ 1,263 $ 1,577 $ 2,657
Proceeds from shares issued in
connection with acquisition . . . . . . . 3,952
Dividends reinvested . . . . . . . . . . . 178 54 260 484 176 258
Shares redeemed . . . . . . . . . . . . . . (1,509) (389) (2,993) (2,695) (1,755) (2,457)
--------- --------- --------- --------- -------- --------
Change in net assets from
Class A share transactions . . . . . . . . $ 6,224 $ 985 $ 1,256 $ (948) $ (2) $ 458
========= ========= ========= ========= ======== ========
CLASS B SHARES:
Proceeds from shares issued . . . . . . . . $ 1,870 $734 $ 1,213 $ 778 $ 742 $ 612
Dividends reinvested . . . . . . . . . . . 54 6 43 7 24 5
Shares redeemed . . . . . . . . . . . . . . (129) (52) (151) (39) (215) (47)
--------- --------- --------- --------- -------- --------
Change in net assets from
Class B share transactions . . . . . . . . $ 1,795 $688 $ 1,105 $ 746 $ 551 $ 570
========= ========= ========= ========= ======== ========
SERVICE SHARES:
Proceeds from shares issued . . . . . . . . $ 12 $ 320 $ 59
Dividends reinvested . . . . . . . . . . . 12 1
Shares redeemed . . . . . . . . . . . . . . (12) (403)
--------- --------- --------- --------- -------- --------
Change in net assets from
Service share transactions . . . . . . . . $ 0 $ (71) $ 60
========= ========= ========= ========= ======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued . . . . . . . . . . . . . . . . . . 17,086 21,565 15,438 27,595 7,168 7,094
Issued in connection with acquisition . . . 10,133
Reinvested . . . . . . . . . . . . . . . . 764 328 1,859 3,200 109 183
Redeemed . . . . . . . . . . . . . . . . . (11,695) (4,598) (28,323) (16,429) (4,824) (4,806)
--------- --------- --------- --------- -------- -------
Change in Fiduciary Shares . . . . . . . . 16,288 17,295 (11,026) 14,366 2,453 2,471
========= ========= ========= ========= ======== ========
CLASS A SHARES:
Issued . . . . . . . . . . . . . . . . . . 359 131 427 127 148 238
Issued in connection with acquisition . . . 431
Reinvested . . . . . . . . . . . . . . . . 19 5 28 49 17 23
Redeemed . . . . . . . . . . . . . . . . . (161) (38) (323) (273) (167) (223)
--------- --------- --------- --------- ------- --------
Change in Class A Shares . . . . . . . . . 648 98 132 (97) (2) 38
========= ========= ========= ========= ======== ========
CLASS B SHARES:
Issued . . . . . . . . . . . . . . . . . . 194 75 130 81 71 55
Reinvested . . . . . . . . . . . . . . . . 6 1 5 1 2 1
Redeemed . . . . . . . . . . . . . . . . . (14) (6) (17) (4) (21) (4)
--------- --------- --------- --------- -------- --------
Change in Class B Shares . . . . . . . . . 186 70 118 78 52 52
========= ========= ========= ========= ======== ========
SERVICE SHARES:
Issued . . . . . . . . . . . . . . . . . . 1 35 6
Reinvested . . . . . . . . . . . . . . . . 1
Redeemed . . . . . . . . . . . . . . . . . (1) (42)
-------- --------- --------- --------- -------- --------
Change in Service Shares . . . . . . . . . 0 (6) 6
========= ========= ========= ========= ======== ========
</TABLE>
Continued
59
B-241
<PAGE> 449
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands)
OHIO MUNICIPAL
TAX-FREE BOND FUND KENTUCKY MUNICIPAL BOND FUND BOND FUND
--------------------- ----------------------------------- --------------------
YEAR YEAR PERIOD PERIOD PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JANUARY 19, JANUARY 31, JUNE 30, JUNE 30,
1995 1994 1995(a) 1995(b)(d) 1994(c)(d) 1995 1994
-------- --------- -------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued . . . . $ 84,681 $ 145,401 $ 2,966 $ 12,790 $ 71,308 $ 9,413 $ 35,922
Dividends reinvested . . . . . . . 805 890 6 340 152 298 314
Shares redeemed . . . . . . . . . . (52,518) (27,883) (14,827) (29,620) (9,081) (23,281) (12,702)
-------- --------- -------- -------- -------- -------- --------
Change in net assets from
Fiduciary share transactions . . . $ 32,968 $ 118,408 $(11,855) $(16,490) $ 62,379 $(13,570) $ 23,534
======== ========= ======== ======== ======== ======== ========
CLASS A SHARES:
Proceeds from shares issued . . . . $ 2,951 $ 8,112 $ 10,642 $ 1,338 $ 7,830
Dividends reinvested . . . . . . . 470 384 111 486 612
Shares redeemed . . . . . . . . . . (2,721) (1,396) (1,470) (4,694) (5,885)
-------- --------- -------- -------- -------- -------- --------
Change in net assets from
Class A share transactions . . . . $ 700 $ 7,100 $ 9,283 $ (2,870) $ 2,557
======== ========= ======== ======== ======== ======== ========
CLASS B SHARES:
Proceeds from shares issued . . . . $ 4,660 $ 4,977 $ 80 $ 1,515 $ 2,126
Dividends reinvested . . . . . . . 215 27 86 16
Shares redeemed . . . . . . . . . . (1,441) (80) (451) (60)
-------- --------- -------- -------- -------- -------- --------
Change in net assets from
Class B share transactions . . . . $ 3,434 $ 4,924 $ 80 $ 1,150 $ 2,082
======== ========= ======== ======== ======== ======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued . . . . . . . . . . . . . . 8,830 14,505 307 1,300 7,061 892 3,213
Reinvested . . . . . . . . . . . . 84 89 1 35 15 28 28
Redeemed . . . . . . . . . . . . . (5,532) (2,821) (1,453) (3,103) (886) (2,223) (1,155)
-------- --------- -------- -------- -------- -------- --------
Change in Fiduciary Shares . . . . 3,382 11,773 (1,145) (1,768) 6,190 (1,303) 2,086
======== ========= ======== ======== ======== ======== ========
CLASS A SHARES:
Issued . . . . . . . . . . . . . . 304 809 1,026 126 700
Reinvested . . . . . . . . . . . . 49 39 11 46 56
Redeemed . . . . . . . . . . . . . (283) (144) (149) (451) (530)
-------- --------- -------- -------- -------- -------- --------
Change in Class A Shares . . . . . 70 704 888 (279) 226
======== ========= ======== ======== ======== ======== ========
CLASS B SHARES:
Issued . . . . . . . . . . . . . . 485 509 8 142 195
Reinvested . . . . . . . . . . . . 22 3 8 2
Redeemed . . . . . . . . . . . . . (152) (8) (43) (6)
-------- --------- -------- -------- -------- -------- --------
Change in Class B Shares . . . . . 355 504 8 107 191
======== ========= ======== ======== ======== ======== ========
</TABLE>
- -------
(a) For the period from January 20, 1995 (date merged) to June 30, 1995.
(b) For the period from February 1, 1994 to January 19, 1995
(c) For the period from March 12, 1993 (date of initial public investment) to
January 31, 1994.
(d) Audited by other auditors. Prior to January 20, 1995, the Kentucky
Municipal Bond Fund shares were unclassified.
Continued
60
B-242
<PAGE> 450
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and Banc One Investment Advisors Corporation (the "Advisor")
are parties to an investment advisory agreement under which the Advisor
is entitled to receive an annual fee, computed daily and paid monthly,
equal to the following percentages of the Funds' average daily net
assets: 0.60% of the Income Bond, the Intermediate Bond, Limited
Volatility Bond, Ohio Municipal Bond, Kentucky Municipal Bond, and
Intermediate Tax-Free Bond Funds; 0.55% of the Government ARM Fund, and
0.45% of the Government Bond and Tax-Free Bond Funds.
The Trust and 440 Financial Group of Worcester ("440 Financial") are
parties to an administrative agreement under which 440 Financial (the
"Administrator") provides services for a fee that is computed daily and
payable monthly, at an annual rate of 0.20% on the first $1.5 billion of
the combined average net assets of the Funds and other funds offered by
the Trust; 0.18% on the next $0.5 billion of the combined average net
assets, and 0.16% on the combined average net assets over $2 billion.
Effective April 1, 1995, The Shareholder Services Group, Inc, d/b/a 440
Financial became the Administrator to the Trust. Also effective April
1, 1995, the Advisor became the Sub-Administrator pursuant to an
agreement between the Administrator and the Advisor. The Advisor
assumed many of the administrative duties, for which it receives a fee
paid by the Administrator.
The Trust has adopted a distribution and shareholder services plan (the
"Plan") on behalf of the Class A, Class B and Service Class shares
pursuant to Rule 12b-1 under the 1940 Act. 440 Financial Distributors,
Inc. (the Distributor) acts as the distributor of the Trust's shares.
The Distributor receives an annual fee for its services of 0.35%, 1.00%,
and 0.75% of the average daily net assets of the Class A, Class B, and
Service Class shares, respectively. These fees are used by the
Distributor to pay banks, including affiliates of the Advisor, other
institutions and broker/dealers, or to reimburse the Distributor for
expenses incurred for providing distribution or shareholder assistance.
The Distributor has voluntarily agreed to limit its fees for the Class A
Shares to an annual rate of 0.25% of the average daily net assets of the
Class A Shares of each Fund.
Certain officers of the Trust are also officers of the Administrator
and/or Distributor. Such officers receive no compensation from the
Funds for serving in their respective roles.
The Advisor, Administrator, and Distributor voluntarily agreed to waive
a portion of their fees and to reimburse the Funds for certain expenses
so that total expenses of each Fund would not exceed certain annual
expense limitations. For the year ended June 30, 1995, fees in the
following amounts were waived or reimbursed to the Funds:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
LIMITED
VOLATILITY
GOVERNMENT FUND INTERMEDIATE
ARM FUND BOND BOND FUND
---------- ---------- ------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Waivers/reimbursements . . . . . . . . . . $285 $1,393 $597
ADMINISTRATION FEES:
Waivers/reimbursements . . . . . . . . . . 72 2
12B-1 FEES (CLASS A):
Waivers/reimbursements . . . . . . . . . . 12 14 2
12B-1 FEES (CLASS B):
Waivers/reimbursements . . . . . . . . . . 6
</TABLE>
Continued
61
B-243
<PAGE> 451
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED June 30, 1995
<TABLE>
<CAPTION>
INTERMEDIATE
GOVERNMENT INCOME BOND TAX-FREE BOND
BOND FUND FUND FUND
---------- ----------- -------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Waivers/reimbursements . . . . . . . . . . $39 $1,317 $699
ADMINISTRATION FEES:
Waivers/reimbursements . . . . . . . . . . 15 7
12B-1 FEES (CLASS A):
Waivers/reimbursements . . . . . . . . . . 4 5 5
12B-1 FEES (CLASS B):
Waivers/reimbursements . . . . . . . . . . 1 2 1
</TABLE>
<TABLE>
<CAPTION>
KENTUCKY KENTUCKY OHIO
TAX-FREE MUNICIPAL MUNICIPAL MUNICIPAL
BOND FUND BOND FUND (a) BOND FUND (b) BOND FUND
--------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Investment Advisory Fees:
Waivers/reimbursements . . . . . . . . . . $246 $59 $ 9 $307
Administration Fees:
Waivers/reimbursements . . . . . . . . . . 79 2 32
12b-1 Fees (Class A):
Waivers/reimbursements . . . . . . . . . . 10 4 13
12b-1 Fees (Class B):
Waivers/reimbursements . . . . . . . . . . 7 2
</TABLE>
- -------
(a) For the period January 20, 1995 (date merged) through June 30, 1995.
(b) For the period February 1, 1994 through January 19, 1995.
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of
securities (excluding short-term securities and purchased options)
during the year ended June 30, 1995 were as follows: (amounts in
thousands)
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES OTHER SECURITIES
--------------------- ---------------------
PURCHASES SALES PURCHASES SALES
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Government ARM Fund . . . . . . . . . . . . . . $ 2,483 $ 86,025 $ 0 $ 11,314
Limited Volatility Bond Fund . . . . . . . . . 220,678 262,031 87,639 78,969
Intermediate Bond Fund . . . . . . . . . . . . 150,552 89,390 74,061 43,297
Government Bond Fund . . . . . . . . . . . . . 425,725 277,655 31,748 18,117
Income Bond Fund . . . . . . . . . . . . . . . 575,280 647,586 657,119 686,737
Intermediate Tax-Free Bond Fund . . . . . . . . . . . . . . . . . . . . . . 405,664 388,097
Tax-Free Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,088 119,675
Kentucky Municipal Bond Fund (January 20, 1995 through June 30, 1995) . . . 8,203 10,888
Kentucky Municipal Bond Fund (February 1, 1994 through January 19, 1995) . 5,221 15,894
Ohio Municipal Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . 75,774 91,286
</TABLE>
Continued
62
B-244
<PAGE> 452
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as written options, futures,
structured notes and indexed securities involves risk in excess of the
amounts reflected in the Statements of Assets and Liabilities. The face
or contract amounts reflect the extent of the involvement the funds have
in the particular class of instrument. Risks associated with these
instruments include an imperfect correlation between the movements in
the price of the instruments and the price of the underlying securities
and interest rates, an illiquid secondary market for the instruments or
inability of counterparties to perform under the terms of the contract.
The Funds enter into these contracts primarily as a means to hedge
against adverse fluctuations in securities.
7. FEDERAL TAX INFORMATION:
At June 30, 1995 the following Funds have capital loss carryforwards
which are available to offset future gains, if any:
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYFORWARD (000) EXPIRES
------------------ -------
<S> <C> <C>
Government ARM Fund . . . . . . . . . . . . . . . . . . . . . . $ 2,283 2003
Limited Volatility Bond Fund . . . . . . . . . . . . . . . . . 2,420 2003
Intermediate Bond Fund . . . . . . . . . . . . . . . . . . . . 1,321 2003
845 2002
222 2001
Government Bond Fund . . . . . . . . . . . . . . . . . . . . . 10,380 2003
733 2002
307 2001
Income Bond Fund . . . . . . . . . . . . . . . . . . . . . . . 52,042 2003
Intermediate Tax-Free Bond Fund . . . . . . . . . . . . . . . . 534 2003
Tax-Free Bond Fund . . . . . . . . . . . . . . . . . . . . . . 3,799 2003
Kentucky Municipal Bond Fund . . . . . . . . . . . . . . . . . 1,331 2002
1 2001
Ohio Municipal Bond Fund . . . . . . . . . . . . . . . . . . . 2,319 2003
</TABLE>
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following
fiscal year. The following deferred losses will be treated as arising
on the first day of the fiscal year ended June 30, 1996.
<TABLE>
<CAPTION>
POST-OCTOBER
CAPITAL LOSSES (000)
--------------------
<S> <C>
Government ARM Fund . . . . . . . . . . . . . . . . . . . . . . . . . . $1,064
Limited Volatility Fund . . . . . . . . . . . . . . . . . . . . . . . . 5,185
Intermediate Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . 3,424
Government Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . 2,121
Income Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,093
Intermediate Tax-Free Bond Fund . . . . . . . . . . . . . . . . . . . . none
Tax-Free Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 1,750
Kentucky Municipal Bond Fund . . . . . . . . . . . . . . . . . . . . . 447
Ohio Municipal Bond Fund . . . . . . . . . . . . . . . . . . . . . . . 1,394
</TABLE>
Continued
63
B-245
<PAGE> 453
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
The Income Bond Fund distributed approximately $4,206,000 as a long-term
capital gain dividend for the purposes of the dividends-paid deduction
for the fiscal year ended June 30, 1995. Of the dividends paid from net
investment income by the Intermediate Tax-Free Bond Fund, the Tax-Free
Bond Fund, the Kentucky Municipal Bond Fund, and the Ohio Municipal Bond
Fund for the fiscal year ended June 30, 1995, 100% constituted exempt
interest dividends for regular federal income tax purposes.
8. CONCENTRATION OF CREDIT RISK:
The Ohio and Kentucky Municipal Bond Funds invest primarily in debt
obligations issued by the respective States and their political
subdivisions, agencies and public authorities to obtain funds for
various public purposes. The Funds are more susceptible to economic and
political factors adversely affecting issuers of the States' specific
municipal securities than are municipal bond funds that are not
concentrated in these issuers to the same extent.
9. REORGANIZATION:
On October 7, 1994, the Board of Trustees approved an agreement and plan
of reorganization for the acquisition of the Trademark Funds by the
Trust. Under the agreement and plan of reorganization, all assets and
liabilities of the Trademark Government Income Fund, the Trademark
Short-Intermediate Government Fund and the Trademark Kentucky Municipal
Bond Fund (the "Acquired Funds") were acquired by the Government Bond
Fund, the Intermediate Bond Fund, and the Kentucky Municipal Bond Fund,
respectively (the "Acquiring Funds"), in exchange for shares of the each
Acquiring Fund. The reorganization, which qualified as a tax-free
exchange for federal income tax purposes, was completed following
approval by the shareholders of the Acquired Funds. The following is a
summary of Shares Outstanding, Net Assets, Unrealized Depreciation and
Net Asset Value per share immediately before and after the
reorganization (amounts in thousands except net asset value):
Continued
64
B-246
<PAGE> 454
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1995
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
--------------------------------------------- --------------
TRADEMARK SHORT-INTERMEDIATE INTERMEDIATE INTERMEDIATE
GOVERNMENT FUND BOND FUND BOND FUND
---------------------------- ------------ --------------
<S> <C> <C> <C>
Shares: *4,378 14,387 18,592
Net Assets: *$39,916 $136,529 $176,445
Net Asset Value:
Fiduciary . . . . . . . . . . . . . . . . . *$ 9.12 $ 9.49 $ 9.49
Class A . . . . . . . . . . . . . . . . . . $ 9.52 $ 9.52
Unrealized Depreciation: . . . . . . . . . . . $(3,636) $ (5,186) $ (8,822)
</TABLE>
<TABLE>
<CAPTION>
TRADEMARK GOVERNMENT GOVERNMENT GOVERNMENT
INCOME FUND BOND FUND BOND FUND
-------------------- --------- ----------
<S> <C> <C> <C>
Shares: *10,770 25,385 35,949
Net Assets: *$ 96,760 $232,446 $329,206
Net Asset Value:
Fiduciary . . . . . . . . . . . . . . . . . *$ 8.98 $ 9.16 $ 9.16
Class A . . . . . . . . . . . . . . . . . . $ 9.16 $ 9.16
Unrealized Depreciation: . . . . . . . . . . . $(10,216) $ (7,028) $(17,244)
</TABLE>
<TABLE>
<CAPTION>
TRADEMARK KENTUCKY KENTUCKY
KENTUCKY MUNICIPAL MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND
------------------ --------- ---------
<S> <C> <C> <C>
Shares: *4,422 4,422
Net Assets:
Fiduciary . . . . . . . . . . . . . . . . . *$41,953 $41,953
Net Asset Value:
Fiduciary . . . . . . . . . . . . . . . . . *$ 9.49 $ 9.49
Unrealized Depreciation . . . . . . . . . . . . $(2,604) $(2,604)
</TABLE>
- -------------------------
* Before the reorganization, the Acquired Funds offered only one class of
shares.
Additionally, the Government Bond Fund and the Intermediate Bond Fund had
capital loss carryforwards from the Acquired Funds of approximately $1,040,000
and $971,000, respectively.
Continued
65
B-247
<PAGE> 455
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT ARM FUND
---------------------------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------------------------
1995 1994
---------------------------- ---------------------------------
FIDUCIARY CLASS A CLASS B FIDUCIARY CLASS A CLASS B (a)
--------- ------- ------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . $ 9.85 $ 9.84 $ 9.86 $ 10.03 $ 10.03 $ 9.98
------- ------- ------ -------- ------- --------
Investment Activities
Net investment income . . . . . . . . . . . . . . . . . . . . 0.55 0.52 0.47 0.36 0.36 0.12
Net realized and unrealized gains (losses) from
investments . . . . . . . . . . . . . . . . . . . . . . . . (0.05) (0.06) (0.04) (0.15) (0.17) (0.11)
------- ------- ------ -------- ------- --------
Total from Investment Activities . . . . . . . . . . . . . . . 0.50 0.46 0.43 0.21 0.19 0.01
------- ------- ------ -------- ------- --------
Distributions
Net investment income . . . . . . . . . . . . . . . . . . . . (0.48) (0.46) (0.45) (0.37) (0.34) (0.12)
In excess of net investment income . . . . . . . . . . . . . (0.03) (0.01) (0.02) (0.04) (0.01)
------- ------- ------ -------- ------- --------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . (0.51) (0.47) (0.45) (0.39) (0.38) (0.13)
------- ------- ------ -------- ------- --------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . $ 9.84 $ 9.83 $ 9.84 $ 9.85 $ 9.84 $ 9.86
======= ======= ====== ======== ======= ========
Total Return (Excludes Sales Charge). . . . . . . . . . . . . . 5.14% 4.84% 4.77% 2.16% 1.95% (0.09)%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . . . . . . . . . . $51,050 $ 4,631 $ 160 $139,593 $19,053 $ 15
Ratio of expenses to average net assets . . . . . . . . . . 0.61% 0.86% 1.31% 0.65% 0.89% 1.41%(d)
Ratio of net investment income to average net assets . . . . 5.18% 4.88% 4.91% 3.70% 3.54% 3.49%(d)
Ratio of expenses to average net assets * . . . . . . . . . 1.01% 1.36% 1.96% 0.81% 1.14% 1.83%(d)
Ratio of net investment income to average net assets * . . . 4.78% 4.38% 4.26% 3.54% 3.29% 3.07%(d)
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . 2.91% 2.91% 2.91% 242.20% 242.20% 242.20%
<CAPTION>
GOVERNMENT ARM FUND
----------------------------
YEAR ENDED JUNE 30,
1993
----------------------------
FIDUCIARY (b) CLASS A (c)
------------- -----------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . $ 10.00 $ 10.00
--------- --------
Investment Activities
Net investment income . . . . . . . . . . . . . . . . . . . . 0.17 0.14
Net realized and unrealized gains (losses) from investments 0.03 0.03
--------- --------
Total from Investment Activities. . . . . . . . . . . . . . . . 0.20 0.17
--------- --------
Distributions
Net investment income . . . . . . . . . . . . . . . . . . . . (0.17) (0.14)
In excess of net investment income . . . . . . . . . . . . .
--------- --------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . (0.17) (0.14)
--------- --------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.03 $ 10.03
========= ========
Total Return (Excludes Sales Charge). . . . . . . . . . . . . . 4.93%(d) 4.78%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . . . . . . . . . . $ 154,413 $ 3,106
Ratio of expenses to average net assets . . . . . . . . . . 0.58%(d) 0.81%(d)
Ratio of net investment income to average net assets . . . . 4.71%(d) 4.47%(d)
Ratio of expenses to average net assets * . . . . . . . . . 1.03%(d) 1.34%(d)
Ratio of net investment income to average net assets * . . . 4.26%(d) 3.95%(d)
Portfolio Turnover. . . . . . . . . . . . . . . . . . . . . . 109.96% 109.96%
</TABLE>
- -------------------------
* During the period the investment advisory, 12b-1, and administration fees
were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) The Fund commenced operations on February 2, 1993.
(c) Class A Shares commenced offering on March 10, 1993.
(d) Annualized.
(e) Not Annualized.
See notes to financial statements.
66
B-248
<PAGE> 456
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED VOLATILITY BOND FUND
----------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------
1995
----------------------------------------------
FIDUCIARY CLASS A CLASS B SERVICE (b)
--------- ------- ------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.33 $ 10.32 $10.40 $10.38
-------- ------- ------ ------
Investment Activities
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.60 0.56 0.53 0.51
Net realized and unrealized gains (losses) from investments . . . . . . . . 0.19 0.21 0.19 0.19
-------- ------- ------ ------
Total from Investment Activities . . . . . . . . . . . . . . . . . . . . . . . 0.79 0.77 0.72 0.70
-------- ------- ------ ------
Distributions
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.59) (0.56) (0.52) (0.49)
In excess of net investment income . . . . . . . . . . . . . . . . . . . . . (0.01)
Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In excess of net realized gains . . . . . . . . . . . . . . . . . . . . . .
-------- ------- ------ ------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.59) (0.57) (0.52) (0.49)
-------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.53 $ 10.52 $10.60 $10.59
======== ======= ====== ======
Total Return (Excludes Sales Charge) . . . . . . . . . . . . . . . . . . . . . 7.96% 7.67% 7.18% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . . . . . . . . . . . . . . . . . $410,746 $12,516 $2,906
Ratio of expenses to average net assets . . . . . . . . . . . . . . . . . . 0.52% 0.77% 1.28% 1.32%(e)
Ratio of net investment income to average net assets . . . . . . . . . . . . 5.82% 5.57% 5.10% 5.55%(e)
Ratio of expenses to average net assets * . . . . . . . . . . . . . . . . . 0.85% 1.20% 1.86% 1.68%(e)
Ratio of net investment income to average net assets * . . . . . . . . . . . 5.49% 5.14% 4.52% 5.20%(c)
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76.43% 76.43% 76.43% 76.43%
<CAPTION>
LIMITED VOLATILITY BOND FUND
-----------------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------------
1994
-----------------------------------------------
FIDUCIARY CLASS A CLASS B (a) RETIREMENT
--------- ------- ----------- ----------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.87 $ 10.87 $10.78 $10.78
-------- ------- ------ ------
Investment Activities
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.54 0.52 0.17 0.10
Net realized and unrealized gains (losses) from investments . . . . . . . . (0.45) (0.46) (0.37) (0.38)
-------- ------- ------ ------
Total from Investment Activities . . . . . . . . . . . . . . . . . . . . . . . 0.09 0.06 (0.20) (0.28)
-------- ------- ------ ------
Distributions
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.55) (0.51) (0.15) (0.08)
In excess of net investment income . . . . . . . . . . . . . . . . . . . . . (0.02) (0.04) (0.04)
Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.06) (0.06)
In excess of net realized gains . . . . . . . . . . . . . . . . . . . . . . (0.03)
-------- ------- ------ ------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.63) (0.61) (0.18) (0.12)
-------- ------- ------ ------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.33 $ 10.32 $10.40 $10.38
======== ======= ====== ======
Total Return (Excludes Sales Charge) . . . . . . . . . . . . . . . . . . . . . 0.79% 0.49% (1.81)%(f) (2.59)%(f)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . . . . . . . . . . . . . . . . . $447,394 $15,216 $1,974 $ 16
Ratio of expenses to average net assets . . . . . . . . . . . . . . . . . . 0.50% 0.75% 1.26%(e) 1.26%(e)
Ratio of net investment income to average net assets . . . . . . . . . . . . 5.10% 4.92% 4.39%(e) 4.37%(c)
Ratio of expenses to average net assets * . . . . . . . . . . . . . . . . . 0.85% 1.20% 1.86%(e) 1.60%(e)
Ratio of net investment income to average net assets * . . . . . . . . . . . 4.75% 4.47% 3.79%(e) 4.03%(e)
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.61% 30.61% 30.61% 30.61%
</TABLE>
<TABLE>
<CAPTION>
LIMITED VOLATILITY BOND FUND
------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------
1993 1992 1991
------------------ ----------------------- -------------
FIDUCIARY CLASS A FIDUCIARY CLASS A (c) FIDUCIARY (d)
--------- ------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . $ 10.72 $ 10.72 $ 10.26 $ 10.61 $ 10.00
-------- ------- -------- -------- --------
Investment Activities
Net investment income . . . . . . . . . . . . . . . . . . . . . . 0.61 0.59 0.70 0.24 0.58
Net realized and unrealized gains (losses) from investments . . . . 0.25 0.24 0.47 0.13 0.25
-------- ------- -------- -------- --------
Total from Investment Activities . . . . . . . . . . . . . . . . . . 0.86 0.83 1.17 0.37 0.83
-------- ------- -------- -------- --------
Distributions
Net investment income . . . . . . . . . . . . . . . . . . . . . . (0.62) (0.59) (0.70) (0.26) (0.57)
In excess of net investment income . . . . . . . . . . . . . . . .
Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . (0.09) (0.09) (0.01)
In excess of net realized gains . . . . . . . . . . . . . . . . .
-------- ------- -------- -------- --------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . . . (0.71) (0.68) (0.71) (0.26) (0.57)
-------- ------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.87 $ 10.87 $ 10.72 $ 10.72 $ 10.26
======== ======= ======== ======== ========
Total Return (Excludes Sales Charge) . . . . . . . . . . . . . . . . 8.27% 8.04% 11.75% 9.84%(e) 9.76%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . . . . . . . . . . . . $397,820 $15,719 $301,907 $ 161 $154,991
Ratio of expenses to average net assets . . . . . . . . . . . . . 0.56% 0.76% 0.52% 0.99%(e) 0.32%(e)
Ratio of net investment income to average net assets . . . . . . . 5.70% 5.35% 6.63% 5.95%(c) 7.49%(e)
Ratio of expenses to average net assets * . . . . . . . . . . . . 0.90% 1.27% 1.04% 1.29%(e) 0.92%(e)
Ratio of net investment income to average net assets * . . . . . . 5.36% 4.84% 6.11% 5.65%(e) 6.89%(e)
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . 40.28% 40.28% 43.87% 43.87% 24.69%
</TABLE>
- -------------------------
* During the period the investment advisory, 12b-1, and administration fees
were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) The Service Class Shares commenced offering on January 17, 1994 when they
were designated as"Retirement" Shares. On April 4, 1995, the name of the
Retirement Shares was changed to "Service" Shares. As of June 1, 1995,
Service Shares transferred to Class A Shares; and as of June 30, 1995, there
were no shareholders in the Service Class. The return for the period from
July 1, 1994 to June 1, 1995 for the Service Shares was 6.90%.
(c) Class A Shares commenced offering on February 18, 1992.
(d) The Fund commenced operations on September 4, 1990.
(e) Annualized.
(f) Not Annualized.
See notes to financial statements.
67
B-249
<PAGE> 457
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------------------------------------
1995 1994 1993 1992
--------------------------------------------- --------- ------------- ----------------
FIDUCIARY CLASS A (e) CLASS B (e) FIDUCIARY FIDUCIARY (d) FIDUCIARY (a)(d)
--------- ----------- ----------- --------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . $ 9.72 $ 9.45 $ 9.45 $ 10.51 $ 10.09 $ 10.00
-------- -------- ------- ------- ------- -------
Investment Activities
Net investment income . . . . . . . 0.66 0.37 0.23 0.60 0.63 0.22
Net realized and unrealized gains
(losses) from investments . . . . . 0.29 0.59 0.56 (0.67) 0.42 0.08
-------- -------- ------- ------- ------- -------
Total from Investment Activities . . . 0.95 0.96 0.79 (0.07) 1.05 0.30
-------- -------- ------- ------- ------- -------
Distributions
Net investment income . . . . . . . (0.66) (0.37) (0.23) (0.60) (0.63) (0.21)
Net realized gains . . . . . . . . . (0.02)
In excess of net realized gains . . (0.10)
-------- -------- ------- ------- ------- -------
Total Distributions . . . . . . . . . . (0.66) (0.37) (0.23) (0.72) (0.63) (0.21)
-------- -------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD . . . . $ 10.01 $ 10.04 $ 10.01 $9.72 $ 10.51 $ 10.09
======== ======== ======= ======= ======= =======
Total Return (Excludes Sales Charge) . 10.15% 10.29%(b) 8.22%(b) (0.74)% 10.67% 3.00%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . $191,216 $ 4,941 $ 266 $98,483 $44,252 $23,457
Ratio of expenses to average net
assets . . . . . . . . . . . . . . 0.56% 0.83%(b) 1.51%(b) 0.32% 0.39% 0.36%(b)
Ratio of net investment income to
average net assets . . . . . . . . 6.88% 6.64%(b) 6.15%(b) 6.04% 6.14% 6.99%(b)
Ratio of expenses to average net
assets * . . . . . . . . . . . . . 0.99% 1.66%(b) 2.34%(b) 0.87% 1.17% 1.33%(b)
Ratio of net investment income to
average net assets * . . . . . . . 6.45% 5.81%(b) 5.31%(b) 5.49% 5.36% 6.02%(b)
Portfolio Turnover . . . . . . . . . 99.71% 99.71% 99.71% 85.62% 21.51% 11.74%
</TABLE>
- ------------
* During the period the investment advisory, 12b-1, and administration fees
were voluntarily reduced. If such voluntary fee reductions had not
occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on February 28, 1992.
(b) Annualized.
(c) Not Annualized.
(d) Audited by other auditors.
(e) Class A and Class B Shares commenced operations November 30, 1994.
See notes to financial statements.
68
B-250
<PAGE> 458
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
-----------------------------------------------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------------
1995 1994
--------------------------------------------------- ----------------------
FIDUCIARY CLASS A CLASS B SERVICE(f) FIDUCIARY CLASS A
--------- ------- ------- ----------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . $ 9.35 $ 9.35 $ 9.35 $ 9.32 $ 10.15 $ 10.17
-------- ------- ------- ------ --------- -------
Investment Activities
Net investment income . . . . . . . . . . 0.62 0.61 0.55 0.44 0.51 0.48
Net realized and unrealized gains (losses)
from investments . . . . . . . . . . . 0.46 0.45 0.46 0.46 (0.77) (0.79)
-------- ------- ------- ------ --------- -------
Total from Investment Activities . . . . . . 1.08 1.06 1.01 0.90 (0.26) (0.31)
-------- ------- ------- ------ --------- -------
Distributions
Net investment income . . . . . . . . . . (0.61) (0.59) (0.55) (0.44) (0.50) (0.47)
In excess of net investment income . . . . (0.01) (0.01) (0.02) (0.02)
In excess of net realized gains . . . . . (0.02) (0.02)
-------- ------- ------- ------ --------- -------
Total Distributions . . . . . . . . . . . . . (0.62) (0.60) (0.55) (0.44) (0.54) (0.51)
-------- ------- ------- ------ --------- -------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . $ 9.81 $ 9.81 9.81 9.78 $ 9.35 $ 9.35
======== ======= ======= ====== ========= =======
Total Return (Excludes Sales Charge) . . . . 12.04% 11.84% 11.20% (f) (2.73)% (3.16)%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . $379,826 $ 8,130 $ 2,513 $ 209,692 $ 1,690
Ratio of expenses to average net
assets . . . . . . . . . . . . . . . . . 0.71% 0.97% 1.62% 1.64%(d) 0.68% 0.92%
Ratio of net investment income to
average net assets . . . . . . . . . . . 6.65% 6.46% 5.76% 6.65%(d) 5.13% 4.84%
Ratio of expenses to average net
assets * . . . . . . . . . . . . . . . . 0.73% 1.09% 1.74% 1.66%(d) 0.71% 1.05%
Ratio of net investment income to
average net assets * . . . . . . . . . . 6.63% 6.34% 5.64% 6.62%(d) 5.10% 4.71%
Portfolio Turnover . . . . . . . . . . . . 106.14% 106.14% 106.14% 106.14% 377.78% 377.78%
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
-----------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------
1994 1993
----------- ---------------------------
CLASS B(a) FIDUCIARY(b) CLASS A(c)
----------- ------------- -----------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . $ 10.04 $ 10.00 $ 10.22
------- ------- -------
Investment Activities
Net investment income . . . . . . . . . . 0.18 0.20 0.17
Net realized and unrealized gains (losses)
from investments . . . . . . . . . . . (0.69) 0.15 (0.05)
------- ------- -------
Total from Investment Activities . . . . . . (0.51) 0.35 0.12
------- ------- -------
Distributions
Net investment income . . . . . . . . . . (0.16) (0.20) (0.17)
In excess of net investment income . . . . (0.02)
In excess of net realized gains . . . . .
------- ------- -------
Total Distributions . . . . . . . . . . . . . (0.18) (0.20) (0.17)
------- ------- -------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . $ 9.35 $ 10.15 $ 10.17
======= ======= =======
Total Return (Excludes Sales Charge) . . . . (4.99)%(e) 9.03%(d) 5.35%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . $ 656 $52,152 $ 840
Ratio of expenses to average net
assets . . . . . . . . . . . . . . . . . 1.52%(d) 0.69%(d) 0.95%(d)
Ratio of net investment income to
average net assets . . . . . . . . . . . 4.60%(d) 5.43%(d) 5.56%(d)
Ratio of expenses to average net
assets * . . . . . . . . . . . . . . . . 1.63%(d) 1.05%(d) 1.44%(d)
Ratio of net investment income to
average net assets * . . . . . . . . . . 4.49%(d) 5.07%(d) 5.07%(d)
Portfolio Turnover . . . . . . . . . . . . 377.78% 139.24% 139.24%
</TABLE>
- -------------
* During the period the investment advisory, 12b-1, and administration fees
were voluntarily reduced. If such voluntary fee reductions had not
occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) The Fund commenced operations on February 8, 1993.
(c) Class A Shares commenced offering on March 5, 1993.
(d) Annualized.
(e) Not Annualized.
(f) The Service Class Shares commenced offering on July 15, 1994 when they were
designated as "Retirement" shares. On April 4, 1995, the name of the
Retirement shares was changed to "Service" shares. As of June 1, 1995,
Service Shares transferred to Class A shares, and as of June 30, 1995,
there were no shareholders in the Service Class. The return for the period
from July 15, 1994 to June 1, 1995 for the Service Shares was 9.59%.
See notes to financial statements.
69
B-251
<PAGE> 459
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME BOND FUND
--------------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------------
1995 1994
-------------------------------------------------- ---------
FIDUCIARY CLASS A CLASS B SERVICE (b) FIDUCIARY
--------- ------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . $ 9.23 $ 9.22 $ 9.29 9.05 $ 10.43
--------- ------- ------- -------- --------
Investment Activities
Net investment income . . . . . . . . . . 0.64 0.61 0.56 0.49 0.54
Net realized and unrealized gains
(losses) from investments . . . . . . . . 0.35 0.36 0.38 0.40 (0.74)
--------- ------- ------- -------- --------
Total from Investment Activities . . . . . . 0.99 0.97 0.94 0.89 (0.20)
--------- ------- ------- -------- --------
Distributions
Net investment income . . . . . . . . . . (0.64) (0.60) (0.57) (0.51) (0.57)
In excess of net investment income . . . . (0.01)
In excess of net realized gains . . . . . (0.04) (0.04) (0.04) (0.04) (0.43)
--------- ------- ------- -------- --------
Total Distributions . . . . . . . . . . . . . (0.68) (0.65) (0.61) (0.55) (1.00)
--------- ------- ------- -------- --------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . $ 9.54 $ 9.54 $ 9.62 $ 9.39 $ 9.23
========= ======= ======= ======== ========
Total Return (Excludes Sales Charge) . . . . 11.29% 10.90% 10.63% (b) (2.54)%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . $474,124 $ 6,796 $ 1,887 $560,071
Ratio of expenses to average net assets . 0.59% 1.01% 1.49% 1.24%(d) 0.53%
Ratio of net investment income to
average net assets . . . . . . . . . . . 6.94% 6.57% 6.16% 5.85%(d) 5.35%
Ratio of expenses to average net assets * 0.86% 1.38% 1.86% 1.53%(d) 0.85%
Ratio of net investment income to
average net assets * . . . . . . . . . . 6.67% 6.20% 5.80% 5.57%(d) 5.03%
Portfolio Turnover . . . . . . . . . . . . 262.25% 262.25% 262.25% 262.25% 131.04%
</TABLE>
<TABLE>
<CAPTION>
INCOME BOND FUND
-----------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------
1994
-----------------------------------------
CLASS A CLASS B (a) RETIREMENT
------- ----------- ----------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . $ 10.43 $ 9.97 $ 9.97
-------- --------- --------
Investment Activities
Net investment income . . . . . . . . . . 0.52 0.17 0.12
Net realized and unrealized gains
(losses) from investments . . . . . . . . (0.75) (0.70) (0.94)
-------- --------- --------
Total from Investment Activities . . . . . . (0.23) (0.53) (0.82)
-------- --------- --------
Distributions
Net investment income . . . . . . . . . . (0.55) (0.15) (0.10)
In excess of net investment income . . . .
In excess of net realized gains . . . . . (0.43)
-------- --------- --------
Total Distributions . . . . . . . . . . . . . (0.98) (0.15) (0.10)
-------- --------- --------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . $ 9.22 $ 9.29 $ 9.05
======== ========= ========
Total Return (Excludes Sales Charge) . . . . (2.33)% (5.29)%(e) (8.24)%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . $ 5,347 $ 723 $ 57
Ratio of expenses to average net assets . 0.78% 1.45%(d) 1.30%(d)
Ratio of net investment income to
average net assets . . . . . . . . . . . 5.25% 5.20%(d) 5.28%(d)
Ratio of expenses to average net assets * 1.20% 1.84%(d) 1.59%(d)
Ratio of net investment income to
average net assets * . . . . . . . . . . 4.83% 4.81%(d) 4.99%(d)
Portfolio Turnover . . . . . . . . . . . . 131.04% 131.04% 131.04%
</TABLE>
<TABLE>
<CAPTION>
INCOME BOND FUND
--------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------------
1993 1992 1991
------------------------ ----------------------------- ---------
FIDUCIARY CLASS A FIDUCIARY CLASS A (c) FIDUCIARY
--------- ------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . $ 10.18 $ 10.16 $ 9.59 $ 10.06 $ 9.49
-------- ------- -------- --------- --------
Investment Activities
Net investment income . . . . . . . . . . . 0.66 0.63 0.71 0.26 0.79
Net realized and unrealized gains (losses)
from investments . . . . . . . . . . . . . 0.38 0.41 0.59 0.11 0.06
-------- ------- -------- --------- --------
Total from Investment Activities . . . . . . . 1.04 1.04 1.30 0.37 0.85
-------- ------- -------- --------- --------
Distributions
Net investment income . . . . . . . . . . . (0.66) (0.64) (0.71) (0.27) (0.75)
Net realized gains . . . . . . . . . . . . . (0.13) (0.13)
-------- ------- -------- --------- --------
Total Distributions . . . . . . . . . . . . . . (0.79) (0.77) (0.71) (0.27) (0.75)
-------- ------- -------- --------- --------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . $ 10.43 $ 10.43 $ 10.18 $ 10.16 $ 9.59
======== ======= ======== ========= ========
Total Return (Excludes Sales Charge) . . . . . 10.62% 10.58% 13.85% 10.16%(d) 9.20%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . $483,291 $ 7,064 $376,898 $ 188 $269,856
Ratio of expenses to average net assets . . 0.56% 0.77% 0.49% 0.97%(d) 0.29%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . 6.44% 6.12% 7.18% 6.58%(d) 7.88%
Ratio of expenses to average net assets * . 0.90% 1.26% 1.04% 1.27%(d) 0.89%
Ratio of net investment income to average
net assets * . . . . . . . . . . . . . . . 6.10% 5.63% 6.63% 6.28%(d) 7.28%
Portfolio Turnover . . . . . . . . . . . . . 143.52% 143.52% 32.50% 32.50% 39.63%
</TABLE>
____________
* During the period the investment advisory, 12b-1, and administration fees
were voluntarily reduced. If such voluntary fee reductions had not
occurred, the ratios would have been as indicated.
(a) Class B shares commenced offering on January 14, 1994.
(b) The Service Class shares commenced offering on January 17, 1994 when they
were designated as "Retirement" shares. On April 4, 1995, the name of the
Retirement shares was changed to "Service" shares. As of June 1, 1995,
Service shares transferred to Class A shares, and as of June 30, 1995,
there were no shareholders in the Service Class. The return for the period
from July 1, 1994 to June 1, 1995 for the Service Shares was 9.93%.
(c) Class A commenced offering on February 18, 1992.
(d) Annualized.
(e) Not Annualized.
See notes to financial statements.
70
B-252
<PAGE> 460
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
--------------------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------------------
1995 1994
----------------------------- -----------------------------------
FIDUCIARY CLASS A CLASS B FIDUCIARY CLASS A CLASS B (a)
--------- ------- ------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . $ 10.49 $ 10.48 $ 10.50 $ 11.15 $ 11.14 $ 11.18
-------- ------- ------- -------- ------- -------
Investment Activities
Net investment income . . . . . . 0.54 0.51 0.46 0.52 0.50 0.17
Net realized and unrealized gains
(losses) from investments . . . 0.15 0.15 0.14 (0.52) (0.52) (0.67)
-------- ------- ------- -------- ------- -------
Total from Investment Activities . . 0.69 0.66 0.60 0.00 (0.02) (0.50)
-------- ------- ------- -------- ------- -------
Distributions
Net investment income . . . . . . (0.54) (0.49) (0.45) (0.53) (0.52) (0.17)
In excess of net investment
income . . . . . . . . . . . . (0.02) (0.01) (0.01)
Net realized gains . . . . . . . . (0.01)
In excess of net realized gains . . (0.11) (0.11) (0.01)
-------- ------- ------- -------- ------- -------
Total Distributions . . . . . . . . . (0.54) (0.51) (0.45) (0.66) (0.64) (0.18)
-------- ------- ------- -------- ------- -------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . $ 10.64 $ 10.63 $ 10.65 $ 10.49 $ 10.48 $ 10.50
======== ======= ======= ======== ======= =======
Total Return (Excludes Sales Charge). 6.75% 6.49% 5.89% (0.11)% (0.33)% (4.48%)(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . $211,229 $ 5,614 $ 1,116 $182,611 $ 5,556 $ 549
Ratio of expenses to average net
assets . . . . . . . . . . . . 0.53% 0.78% 1.43% 0.48% 0.73% 1.40%(d)
Ratio of net investment income to
average net assets . . . . . . 5.17% 4.91% 4.29% 4.78% 4.57% 4.08%(d)
Ratio of expenses to average net
assets * . . . . . . . . . . . 0.88% 1.23% 1.88% 0.84% 1.19% 1.85%(d)
Ratio of net investment income to
average net assets * . . . . . . 4.82% 4.46% 3.84% 4.42% 4.11% 3.63%(d)
Portfolio Turnover . . . . . . . . 199.76% 199.76% 199.76% 105.98% 105.98% 105.98%
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
----------------------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------------------
1993 1992 1991
-------------------- --------- ----------- -------------
FIDUCIARY CLASS A FIDUCIARY CLASS A (b) FIDUCIARY (c)
--------- ------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . $10.69 $10.69 $ 10.28 $10.57 $10.00
------ ------ -------- ------ ------
Investment Activities
Net investment income . . . . . . 0.53 0.55 0.55 0.15 0.49
Net realized and unrealized gains
(losses) from investments . . . 0.49 0.44 0.42 0.18 0.27
------ ------ -------- ------ ------
Total from Investment Activities . . 1.02 0.99 0.97 0.33 0.76
------ ------ -------- ------ ------
Distributions
Net investment income . . . . . . (0.52) (0.50) (0.55) (0.21) (0.48)
In excess of net investment
income . . . . . . . . . . . .
Net realized gains . . . . . . . . (0.04) (0.04) (0.01)
In excess of net realized gains . .
------ ------ -------- ------ ------
Total Distributions . . . . . . . . . (0.56) (0.54) (0.56) (0.21) (0.48)
------ ------ -------- ------ ------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . $11.15 $11.14 $ 10.69 $10.69 $ 10.28
====== ====== ======== ====== =======
Total Return (Excludes Sales Charge). 9.79% 9.47% 9.54% 8.68%(d) 9.49%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . $166,489 $5,480 $142,672 $ 5 $82,192
Ratio of expenses to average net
assets . . . . . . . . . . . . 0.54% 0.71% .55% 1.02%(d) .30%(d)
Ratio of net investment income to
average net assets . . . . . . 4.93% 4.77% 5.28% 4.91%(d) 6.04%(d)
Ratio of expenses to average net
assets * . . . . . . . . . . . 0.94% 1.27% 1.07% 1.32%(d) 0.90%(d)
Ratio of net investment income to
average net assets * . . . . . . 4.53% 4.21% 4.77% 4.61%(d) 5.44%(d)
Portfolio Turnover . . . . . . . . 31.99% 31.99% 11.50% 11.50% 35.15%
</TABLE>
- --------
* During the period the investment advisory, 12b-1, and administration fees
were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Class A Shares commenced offering on February 18, 1992.
(c) The Fund commenced operations on September 4, 1990.
(d) Annualized.
(e) Not Annualized.
See notes to financial statements.
71
B-253
<PAGE> 461
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TAX-FREE BOND FUND
--------------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------------
1995 1994
---------------------------- --------------------------------
FIDUCIARY CLASS A CLASS B FIDUCIARY CLASS A CLASS B (a)
--------- ------- ------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . $ 9.66 $ 9.67 $9.62 $10.11 $ 10.12 $ 10.10
-------- ------- ----- ------ ------- -------
Investment Activities
Net investment income . . . . . . . . . . . . . . . . . 0.57 0.55 0.49 0.56 0.55 0.24
Net realized and unrealized gains (losses) from
investments . . . . . . . . . . . . . . . . . . . . . 0.03 0.05 0.07 (0.42) (0.43) (0.48)
-------- ------- ----- ------ ------- -------
Total from Investment Activities . . . . . . . . . . . . . 0.60 0.60 0.56 0.14 0.12 (0.24)
-------- ------- ----- ------ ------- -------
Distributions
Net investment income . . . . . . . . . . . . . . . . . (0.57) (0.55) (0.49) (0.56) (0.54) (0.24)
In excess of net realized gains . . . . . . . . . . . . . (0.03) (0.03)
-------- ------- ----- ------ ------- -------
Total Distributions . . . . . . . . . . . . . . . . . . . . (0.57) (0.55) (0.49) (0.59) (0.57) (0.24)
-------- ------- ----- ------ ------- -------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . $ 9.69 $ 9.72 $9.69 $9.66 $9.67 $ 9.62
======== ======= ===== ===== ===== =======
Total Return (Excludes Sales Charge). . . . . . . . . . . . 6.46% 6.21% 5.58% 1.36% 1.34% (1.98)%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . . . . . . . . $185,916 $11,462 $8,326 $152,763 $10,725 $ 4,855
Ratio of expenses to average net assets . . . . . . . . 0.56% 0.81% 1.46% 0.54% 0.79% 1.41%(d)
Ratio of net investment income to average net assets . . 6.02% 5.76% 5.14% 5.61% 5.44% 4.95%(d)
Ratio of expenses to average net assets * . . . . . . . 0.74% 1.09% 1.74% 0.71% 1.06% 1.62%(d)
Ratio of net investment income to average net assets * . 5.84% 5.48% 4.86% 5.44% 5.17% 4.74%(d)
Portfolio Turnover . . . . . . . . . . . . . . . . . . . 66.02% 66.02% 66.02% 101.48% 101.48% 101.48%
<CAPTION>
TAX-FREE BOND FUND
--------------------------
YEAR ENDED JUNE 30,
--------------------------
1993
--------------------------
FIDUCIARY (b) CLASS A (c)
------------- -----------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . $ 10.00 $10.06
------- ------
Investment Activities
Net investment income . . . . . . . . . . . . . . . . . 0.19 0.19
Net realized and unrealized gains (losses) from
investments . . . . . . . . . . . . . . . . . . . . . 0.11 0.05
------- ------
Total from Investment Activities . . . . . . . . . . . . . 0.30 0.24
------- ------
Distributions
Net investment income . . . . . . . . . . . . . . . . . (0.19) (0.18)
In excess of net realized gains . . . . . . . . . . . . .
------- ------
Total Distributions . . . . . . . . . . . . . . . . . . . . (0.19) (0.18)
------- ------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . $ 10.11 $10.12
======= ======
Total Return (Excludes Sales Charge). . . . . . . . . . . . 5.18%(d) 6.86%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . . . . . . . . $40,777 $4,106
Ratio of expenses to average net assets . . . . . . . . 0.54%(d) 0.80%(d)
Ratio of net investment income to average net assets . . 5.66%(d) 5.71%(d)
Ratio of expenses to average net assets * . . . . . . . 1.01%(d) 1.36%(d)
Ratio of net investment income to average net assets * . 5.19%(d) 5.15%(d)
Portfolio Turnover . . . . . . . . . . . . . . . . . . . 66.12% 66.12%
</TABLE>
- -------------
* During the period the investment advisory, 12b-1, and administration fees
were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) The Fund commenced operations on February 9, 1993.
(c) Class A Shares commenced offering on February 23, 1993.
(d) Annualized.
(e) Not Annualized.
See notes to financial statements.
72
B-254
<PAGE> 462
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KENTUCKY MUNICIPAL BOND FUND
--------------------------------------------------------------------
MARCH 16,
JANUARY 20, 1995 TO 1995 TO FEBRUARY 1, MARCH 12,
JUNE 30, 1995(a) JUNE 30, 1995 1994, TO 1993, TO
-------------------- ------------- JANUARY 19, JANUARY 31,
FIDUCIARY CLASS A CLASS B(f) 1995(d) 1994(d)(e)
--------- ------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . $ 9.49 $ 9.49 $ 9.75 $ 10.45 $ 10.00
------- ------ ------ ------- -------
Investment Activities
Net investment income . . . . . . . . . . . . . . . . . 0.20 0.19 0.14 0.41 0.36
Net realized and unrealized gains (losses) from
investments . . . . . . . . . . . . . . . . . . . . . 0.43 0.44 0.12 (0.95) 0.43
------- ------ ------ ------- -------
Total from Investment Activities . . . . . . . . . . . . . 0.63 0.63 0.26 (0.54) 0.79
------- ------ ------ ------- -------
Distributions
Net investment income . . . . . . . . . . . . . . . . . (0.20) (0.19) (0.14) (0.42) (0.34)
------- ------ ------ ------- -------
Total Distributions . . . . . . . . . . . . . . . . . . . . (0.20) (0.19) (0.14) (0.42) (0.34)
------- ------ ------ ------- -------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . $ 9.92 $ 9.93 $ 9.87 $ 9.49 $ 10.45
======= ====== ====== ======= =======
Total Return (Excludes Sales Charge) . . . . . . . . . . . 6.56%(b) 5.66%(b) 2.63%(b) -5.17%(b) 8.05%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . . . . . . . $32,520 $8,818 $ 79 $41,953 $64,663
Ratio of expenses to average net assets . . . . . . . . 0.65%(c) 0.90%(c) 1.58%(c) 1.03%(c) 0.70%(c)
Ratio of net investment income to average net assets . . 4.70%(c) 4.44%(c) 3.89%(c) 4.27%(c) 4.19%(c)
Ratio of expenses to average net assets * . . . . . . . 0.97%(c) 1.33%(c) 2.21%(c) 1.05%(c) 0.91%(c)
Ratio of net investment income to average net assets * . 4.38%(c) 4.01%(c) 3.25%(c) 4.25%(c) 3.98%(c)
Portfolio Turnover . . . . . . . . . . . . . . . . . . . 19.75% 19.75% 19.75% 10.00% 5.00%
</TABLE>
- -------------
* During the period the investment advisory, 12b-1, and administration fees
were voluntarily reduced. If such voluntary fee reductions had not
occurred, the ratios would have been as indicated.
(a) Period from date merged.
(b) Not Annualized.
(c) Annualized.
(d) Audited by other auditors.
(e) Period from initial public investment.
(f) Class B Shares commenced offering on March 16, 1995.
See notes to financial statements.
73
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<PAGE> 463
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
--------------------------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------
1995 1994
------------------------------- ------------------------------------
FIDUCIARY CLASS A CLASS B FIDUCIARY CLASS A CLASS B (a)
--------- ------- ------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . $ 10.58 $ 10.61 $10.68 $ 11.11 $ 11.13 $11.31
------- ------- ------ ------- ------- ------
Investment Activities
Net investment income . . . . . . . . . . . 0.55 0.53 0.43 0.51 0.50 0.17
Net realized and unrealized gains
(losses) from investments . . . . . . . . 0.07 0.07 0.07 (0.50) (0.48) (0.62)
------- ------- ------ ------- ------- ------
Total from Investment Activities . . . . . . . 0.62 0.60 0.50 0.01 0.02 (0.45)
------- ------- ------ ------- ------- ------
Distributions
Net investment income . . . . . . . . . . . (0.55) (0.51) (0.43) (0.52) (0.50) (0.17)
In excess of net investment income . . . . . (0.02) (0.02) (0.01)
In excess of net realized gains . . . . . . (0.02) (0.02)
------- ------- ------ ------- ------- ------
Total Distributions . . . . . . . . . . . . . . (0.55) (0.53) (0.43) (0.54) (0.54) (0.18)
------- ------- ------ ------- ------- ------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . $ 10.65 $ 10.68 $10.75 $ 10.58 $ 10.61 $10.68
======= ======= ====== ======= ======= ======
Total Return (Excludes Sales Charge) . . . . . 6.07% 5.79% 5.17% 0.07% (0.05)% (4.02)%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . $79,993 $12,006 $3,209 $93,261 $14,883 $2,043
Ratio of expenses to average net assets . . . 0.58% 0.82% 1.48% 0.53% 0.78% 1.28%(d)
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . 5.29% 5.01% 4.40% 4.76% 4.63% 4.23%(d)
Ratio of expenses to average net assets * . . 0.91% 1.25% 1.91% 0.86% 1.21% 1.68%(d)
Ratio of net investment income to average
net assets * . . . . . . . . . . . . . . 4.96% 4.58% 3.97% 4.43% 4.20% 3.83%(d)
Portfolio Turnover . . . . . . . . . . . . . 77.69% 77.69% 77.69% 16.77% 16.77% 16.77%
<CAPTION>
OHIO MUNICIPAL BOND FUND
-------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------
1993 1992
-------------------- --------------------------
FIDUCIARY CLASS A FIDUCIARY (b) CLASS A (c)
--------- ------- ------------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . . $ 10.48 $ 10.48 $ 10.00 $10.29
------- ------- ------- ------
Investment Activities
Net investment income . . . . . . . . . . . 0.54 0.52 0.56 0.20
Net realized and unrealized gains
(losses) from investments . . . . . . . . 0.62 0.64 0.47 0.21
------- ------- ------- ------
Total from Investment Activities . . . . . . . 1.16 1.16 1.03 0.41
------- ------- ------- ------
Distributions
Net investment income . . . . . . . . . . . (0.53) (0.51) (0.55) (0.22)
In excess of net investment income . . . . .
In excess of net realized gains . . . . . . ------- ------- ------- ------
Total Distributions . . . . . . . . . . . . . . (0.53) (0.51) (0.55) (0.22)
------- ------- ------- ------
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . . . . . $ 11.11 $ 11.13 $ 10.48 $10.48
======= ======= ======= ======
Total Return (Excludes Sales Charge) . . . . . 11.43% 11.40% 10.64%(d) 10.85%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) . . . . . $74,792 $13,092 $45,199 $ 41
Ratio of expenses to average net assets . . . 0.55% 0.77% 0.63%(d) 1.01%(d)
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . 5.14% 4.85% 5.61%(d) 5.16%(d)
Ratio of expenses to average net assets * . . 0.94% 1.25% 1.21%(d) 1.40%(d)
Ratio of net investment income to average
net assets * . . . . . . . . . . . . . . 4.75% 4.37% 5.03%(d) 4.77%(d)
Portfolio Turnover . . . . . . . . . . . . . 26.67% 26.67% 9.78% 9.78%
</TABLE>
- -----------------------
* During the period the investment advisory, 12b-1, and administration fees
were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) The Fund commenced operations on July 2, 1991.
(c) Class A Shares commenced offering on February 18, 1992.
(d) Annualized.
(e) Not Annualized.
See notes to financial statements.
74
B-256
<PAGE> 464
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1995
To the Shareholders and Board of
Trustees of The One Group:
We have audited the accompanying statements of assets and liabilities of the
Government ARM Fund, the Limited Volatility Bond Fund, the Intermediate Bond
Fund, the Government Bond Fund, the Income Bond Fund, the Intermediate Tax-Free
Bond Fund, the Tax-Free Bond Fund, the Kentucky Municipal Bond Fund, and the
Ohio Municipal Bond Fund (nine series of The One Group), including the schedule
of portfolio investments, as of June 30, 1995, and the related statements of
operations, the statements of changes in net assets and financial highlights for
each of the periods indicated herein. These financial statements and financial
highlights are the responsibility of The One Group's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the year
ended June 30, 1993 and for the period from February 28, 1992 (commencement of
operations) to June 30, 1992 for the Intermediate Bond Fund were audited by
other auditors whose report dated August 25, 1993 expressed an unqualified
opinion on the financial highlights. The statement of operations for the period
from February 1, 1994 to January 19, 1995 and the statement of changes in net
assets and the financial highlights for the period from February 1, 1994 to
January 19, 1995 and the period from March 12, 1993 (commencement of operations)
to January 31, 1994 for the Kentucky Municipal Bond Fund were audited by other
auditors whose report dated April 6, 1995 expressed an unqualified opinion on
these statements and the financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Government ARM Fund, the Limited Volatility Bond Fund, the Intermediate Bond
Fund, the Government Bond Fund, the Income Bond Fund, the Intermediate Tax-Free
Bond Fund, the Tax-Free Bond Fund, the Kentucky Municipal Bond Fund, and the
Ohio Municipal Bond Fund of The One Group as of June 30, 1995, the results of
their operations, the changes in their net assets, and the financial highlights
for each of the periods indicated herein, in conformity with generally accepted
accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
August 18, 1995
75
B-257
<PAGE> 465
APPENDIX
The nationally recognized statistical rating organizations (individually, an
"NRSRO") that may be utilized by the Advisers or the Sub-Advisers with regard
to portfolio investments for the Funds include Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Corporation ("S&P"), Duff & Phelps, Inc.
("Duff"), Fitch Investors Service, Inc. ("Fitch"), IBCA Limited and its
affiliate, IBCA Inc. (collectively, "IBCA"), and Thomson BankWatch, Inc.
("Thomson"). Set forth below is a description of the relevant ratings of each
such NRSRO. The NRSROs that may be utilized by the Advisers or the
Sub-Advisers and the description of each NRSRO's ratings is as of the date of
this Statement of Additional Information, and may subsequently change.
Long-Term Debt Ratings (may be assigned, for example, to corporate and
municipal bonds)
Description of the four highest long-term debt ratings by Moody's (Moody's
applies numerical modifiers (1, 2, and 3) in each rating category to indicate
the security's ranking within the category):
Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the fundamentally
strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what
are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be
as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat
larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the
future.
Baa Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of
B-258
<PAGE> 466
time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
Description of the four highest long-term debt ratings by S&P (S&P may apply a
plus (+) or minus (-) to a particular rating classification to show relative
standing within that classification):
AAA Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely
strong.
AA Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only
in small degree.
A Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
Description of the three highest long-term debt ratings by Duff:
AAA Highest credit quality. The risk factors are negligible being
only slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality Protection factors are strong.
AA Risk is modest but may vary slightly from time to time because
of economic conditions.
A+ Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic
stress.
Description of the three highest long-term debt ratings by Fitch (plus or minus
signs are used with a rating symbol to indicate the relative position of the
credit within the rating category):
AAA Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong
ability to pay interest and repay principal, which is unlikely
to be affected by reasonably foreseeable events.
B-259
<PAGE> 467
AA Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and
repay principal is very strong, although not quite as strong
as bonds rated "AAA." Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these
issues is generally rated "[-]+."
A Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
IBCA's description of its three highest long-term debt ratings:
AAA Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal
and interest is substantial such that adverse changes in
business, economic or financial conditions are unlikely to
increase investment risk significantly.
AA Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal
and interest is substantial. Adverse changes in business,
economic, or financial conditions may increase investment risk
albeit not very significantly.
A Obligations for which there is a low expectation of investment
risk. Capacity for timely repayment of principal and interest
is strong, although adverse changes in business, economic or
financial conditions may lead to increased investment risk.
Short-Term Debt Ratings (may be assigned, for example, to commercial paper,
master demand notes, bank instruments, and letters of credit)
Moody's description of its three highest short-term debt ratings:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a
superior capacity for repayment of senior short-term
promissory obligations. Prime-1 repayment capacity will
normally be evidenced by many of the following
characteristics:
-Leading market positions in well-established
industries.
-High rates of return on funds employed.
B-260
<PAGE> 468
-Conservative capitalization structures with
moderate reliance on debt and ample asset
protection.
-Broad margins in earnings coverage of fixed
financial charges and high internal cash generation.
-Well-established access to a range of financial
markets and assured sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a
strong capacity for repayment of senior short-term debt
obligations. This will normally be evidenced by many of
the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be
more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have
an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and
market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the
level of debt protection measurements and may require
relatively high financial leverage. Adequate alternate
liquidity is maintained.
S&P's description of its three highest short-term debt ratings:
A-1 This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to have
extremely strong safety characteristics are denoted with a
plus sign (+).
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not
as high as for issues designated "A-1."
A-3 Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the
adverse effects of changes in circumstances than obligations
carrying the higher designations.
B-261
<PAGE> 469
Duff's description of its three highest short-term debt ratings (Duff
incorporates gradations of "1+" (one plus) and "1-" (one minus) to assist
investors in recognizing quality differences within the highest rating
category):
Duff 1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is
just below risk-free U.S. Treasury short-term obligations.
Duff 1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection
factors. Risk factors are minor.
Duff 1- High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors.
Risk factors are very small.
Duff 2 Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to
capital markets is good. Risk factors are small.
Duff 3 Satisfactory liquidity and other protection factors qualify
issue as to investment grade. Risk factors are larger and
subject to more variation. Nevertheless, timely payment is
expected.
Fitch's description of its three highest short-term debt ratings:
F-1+ Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of
assurance for timely payment.
F-1 Very Strong Credit Quality. Issues assigned this rating
reflect an assurance of timely payment only slightly less in
degree than issues rated F-1+.
F-2 Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as for issues assigned F-1+
or F-1 ratings.
F-3 Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for
timely payment is adequate, however, near-term adverse changes
could cause these securities to be rated below investment
grade.
B-262
<PAGE> 470
IBCA's description of its three highest short-term debt ratings:
A+ Obligations supported by the highest capacity for timely
repayment.
A1 Obligations supported by a very strong capacity for timely
repayment.
A2 Obligations supported by a strong capacity for timely
repayment, although such capacity may be susceptible to
adverse changes in business, economic or financial conditions.
Short-Term Loan/Municipal Note Ratings
Moody's description of its two highest short-term loan/municipal note ratings:
MIG-1/VMIG-1 This designation denotes best quality. There is present
strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to
the market for refinancing.
MIG-2/VMIG-2 This designation denotes high quality. Margins of
protection are ample although not so large as in the
preceding group.
S&P's description of its two highest municipal note ratings:
SP-1 Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming
safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
Short-Term Debt Ratings
Thomson BankWatch, Inc. ("TBW") ratings are based upon a qualitative and
quantitative analysis of all segments of the organization including, where
applicable, holding company and operating subsidiaries.
BankWatch(TM) Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper, other senior short-term
obligations and deposit obligations of the entities to which the rating has
been assigned.
B-263
<PAGE> 471
The TBW Short-Term Ratings apply only to unsecured instruments that have a
maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an untimely
payment of principal or interest.
TBW-1 The highest category; indicates a very high degree of
likelihood that principal and interest will be paid on a
timely basis.
TBW-2 The second highest category; while the degree of safety
regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for
issues rated "TBW-1."
TBW-3 The lowest investment grade category; indicates that while
more susceptible to adverse developments (both internal and
external) than obligations with higher ratings, capacity to
service principal and interest in a timely fashion is
considered adequate.
TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
*As of June 30, 1995, the Fund had not commenced operations.
B-264
