<PAGE>
PARAGON PORTFOLIO
4900 SEARS TOWER
CHICAGO, IL 60606
February 22, 1996
To the Shareholders:
Enclosed you will find several documents furnished to you in connection with
a special meeting of the shareholders of Paragon Treasury Money Market Fund
("Paragon Money Market"), Paragon Short-Term Government Fund ("Paragon
Government"), Paragon Intermediate-Term Bond Fund ("Paragon Bond"), Paragon
Value Equity Income Fund ("Paragon Equity"), Paragon Louisiana Tax-Free Fund
("Paragon Louisiana"), Paragon Value Growth Fund ("Paragon Growth") and Paragon
Gulf South Growth Fund ("Paragon Gulf South") (collectively, the "Paragon
Funds") to be held on Monday, March 25, 1996 at 4900 Sears Tower, Chicago, IL
60606. We hope this material will receive your immediate attention and that, if
you cannot attend the meeting in person, you will vote your proxy promptly.
The Trustees of Paragon Portfolio are recommending that shareholders of the
Paragon Funds approve a reorganization in which Paragon Money Market, Paragon
Government, Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon Growth and
Paragon Gulf South will transfer all of their assets to The One Group-Registered
Trademark- U.S. Treasury Securities Money Market Fund ("One Group Money
Market"), The One Group-Registered Trademark- Limited Volatility Bond Fund ("One
Group Limited Volatility"), The One Group-Registered Trademark- Government Bond
Fund ("One Group Bond"), The One Group-Registered Trademark- Income Equity Fund
("One Group Equity"), The One Group-Registered Trademark- Louisiana Municipal
Bond Fund ("One Group Louisiana"), The One Group-Registered Trademark- Value
Growth Fund ("One Group Growth") and The One Group-Registered Trademark- Gulf
South Growth Fund ("One Group Gulf South") (collectively, the "One Group
Funds"), respectively, in return for Class A, Class B, and Fiduciary Class
shares of the corresponding One Group Funds. At the same time, One Group Money
Market, One Group Limited Volatility, One Group Bond, One Group Equity, One
Group Louisiana, One Group Growth and One Group Gulf South will assume all of
the liabilities of the corresponding Paragon Funds. After the transfer, shares
of the One Group Funds will be distributed to the corresponding Paragon Funds'
shareholders tax-free in liquidation of the Paragon Funds.
As a result of these transactions, your shares of Paragon Money Market,
Paragon Government, Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon
Growth and Paragon Gulf South would, in effect, be exchanged at net asset value
and on a tax-free basis for shares of One Group Money Market, One Group Limited
Volatility, One Group Bond, One Group Equity, One Group Louisiana, One Group
Growth and One Group Gulf South, respectively. If the Paragon Fund shareholder
of record is a financial organization authorized to act in a fiduciary,
advisory, agency, custodial or similar capacity, that shareholder will receive
One Group Fiduciary Class shares. All other Paragon Fund Class A shareholders
will receive One Group Class A shares. Shareholders of record holding Paragon
Fund Class B shares, other than Class B shareholders of Paragon Money Market,
will receive One Group Class B shares. Paragon Money Market Class B shareholders
will receive One Group Money Market Class A shares.
We believe that the proposed transaction offers shareholders of Paragon
Money Market, Paragon Government, Paragon Bond, Paragon Equity, Paragon
Louisiana, Paragon Growth and Paragon Gulf South the opportunity to pursue
similar investment objectives in a more efficient manner and with greater
economies of scale.
THE TRUSTEES BELIEVE THAT THE PROPOSED COMBINATION OF PARAGON MONEY MARKET,
PARAGON GOVERNMENT, PARAGON BOND, PARAGON EQUITY, PARAGON LOUISIANA, PARAGON
GROWTH AND PARAGON GULF SOUTH WITH ONE GROUP MONEY MARKET, ONE GROUP LIMITED
VOLATILITY, ONE GROUP BOND, ONE GROUP EQUITY, ONE GROUP LOUISIANA, ONE GROUP
GROWTH AND ONE GROUP GULF SOUTH IS IN THE BEST INTERESTS OF THE PARAGON FUNDS
AND THEIR SHAREHOLDERS AND RECOMMEND THAT YOU VOTE IN FAVOR OF SUCH PROPOSAL.
<PAGE>
The Notice of Special Meeting of Shareholders, the accompanying Combined
Prospectus/Proxy Statement, Prospectuses for the One Group Money Market, One
Group Limited Volatility, One Group Bond, One Group Equity, One Group Louisiana,
One Group Growth and One Group Gulf South, the Prospectus for Paragon Portfolio,
and the form of proxy are enclosed. Please read them carefully. If you are
unable to attend the meeting in person, we urge you to sign, date, and return
the proxy card so that your shares may be voted in accordance with your
instructions.
Sincerely
Michael J. Richman
Secretary
<PAGE>
PARAGON PORTFOLIO
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Paragon Portfolio
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (Special
Meeting and any adjournment thereof, the "Meeting") of Paragon Treasury Money
Market Fund ("Paragon Money Market"), Paragon Short-Term Government Fund
("Paragon Government"), Paragon Intermediate-Term Bond Fund ("Paragon Bond"),
Paragon Value Equity Income Fund ("Paragon Equity"), Paragon Louisiana Tax-Free
Fund ("Paragon Louisiana"), Paragon Value Growth Fund ("Paragon Growth") and
Paragon Gulf South Growth Fund ("Paragon Gulf South")(collectively, the "Paragon
Funds") will be held on Monday, March 25, 1996 at 9:00 a.m. Central standard
time at, 4900 Sears Tower, Chicago, IL, for the following purpose:
1. To approve an Agreement and Plan of Reorganization pursuant to which all
of the assets and liabilities of Paragon Money Market, Paragon
Government, Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon
Growth and Paragon Gulf South will be transferred to The One
Group-Registered Trademark- U.S. Treasury Securities Money Market Fund
("One Group Money Market"), The One Group-Registered Trademark- Limited
Volatility Bond Fund ("One Group Limited Volatility"), The One
Group-Registered Trademark- Bond Fund ("One Group Bond"), The One
Group-Registered Trademark- Income Equity Fund ("One Group Equity"), The
One Group-Registered Trademark- Louisiana Municipal Bond Fund ("One Group
Louisiana"), The One Group-Registered Trademark- Value Growth Fund ("One
Group Growth") and the One Group-Registered Trademark- Gulf South Growth
Fund ("One Group Gulf South") (collectively, the "One Group Funds"),
respectively, in return for Class A, Class B, and Fiduciary Class shares
of the corresponding One Group Fund. Following the transfer, Paragon
Money Market, Paragon Government, Paragon Bond, Paragon Equity, Paragon
Louisiana, Paragon Growth and Paragon Gulf South will be dissolved and
shares of One Group Money Market, One Group Limited Volatility, One Group
Bond, One Group Equity, One Group Louisiana, One Group Growth and One
Group Gulf South will be distributed to the corresponding Paragon Fund
shareholders in liquidation of Paragon Money Market, Paragon Government,
Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon Growth and
Paragon Gulf South.
2. To transact any other business as properly comes before the Meeting.
The proposed transaction is described in the attached Combined
Prospectus/Proxy Statement. A copy of the Agreement and Plan of Reorganization
is attached as Exhibit A to the Prospectus/Proxy Statement.
Pursuant to instructions of the Board of Trustees of Paragon Portfolio, the
close of business on February 22, 1996, has been designated as the record date
for determination of shareholders entitled to notice of, and to vote at, the
Meeting. Premier Bank will cast votes attributable to any shares for which it
serves as fiduciary in the same proportion as votes cast by other shareholders.
Each shareholder who does not expect to attend in person is requested to
date, execute, sign, and promptly return the enclosed form of proxy.
By Order of the Trustees
Michael J. Richman
Secretary
Chicago, Illinois
February 22, 1996
Your prompt attention to the enclosed form of proxy will help avoid the expense
of additional mailings.
<PAGE>
COMBINED PROSPECTUS/PROXY STATEMENT
February 22, 1996
<TABLE>
<S> <C>
The One Group-Registered Trademark- Paragon Portfolio
3435 Stelzer Road 4900 Sears Tower
Columbus, OH 43219 Chicago, IL 60606
Tel. No. 1-800-480-4111 Tel. No. 1-800-525-7907
</TABLE>
COMBINED PROSPECTUS/PROXY STATEMENT
This Combined Prospectus/Proxy Statement is furnished in connection with the
solicitation of proxies from the owners of shares of the following Funds of
Paragon Portfolio:
Paragon Treasury Money Market Fund ("Paragon Money Market")
Paragon Short-Term Government Fund ("Paragon Government")
Paragon Intermediate-Term Bond Fund ("Paragon Bond")
Paragon Value Equity Income Fund ("Paragon Equity")
Paragon Louisiana Tax-Free Fund ("Paragon Louisiana")
Paragon Value Growth Fund ("Paragon Growth")
Paragon Gulf South Growth Fund ("Paragon Gulf South")
The proxies will be used at a Special Meeting of Shareholders ("Meeting") to
approve an Agreement and Plan of Reorganization between Paragon Portfolio and
The One Group dated as of January 19, 1996, a copy of which is attached as
Exhibit A, and the consummation of the transactions (collectively, the
"Transaction") contemplated in the Agreement and Plan of Reorganization. The
Agreement and Plan of Reorganization contemplates the transfer of all the assets
and liabilities of each Paragon Fund to corresponding One Group Fund in exchange
for shares of the corresponding One Group Fund as follows:
<TABLE>
<CAPTION>
SHAREHOLDERS OF WILL RECEIVE SHARES OF
- -------------------------------- --------------------------------------------------------------------------
<S> <C>
Paragon Money Market The One Group-Registered Trademark- U.S. Treasury Securities Money Market
Fund ("One Group Money Market")
Paragon Government Fund The One Group-Registered Trademark- Limited Volatility Bond Fund ("One
Group Limited Volatility")
Paragon Bond The One Group-Registered Trademark- Government Bond Fund ("One Group
Bond")
Paragon Equity The One Group-Registered Trademark- Income Equity Fund ("One Group
Equity")
Paragon Louisiana The One Group-Registered Trademark- Louisiana Municipal Bond Fund ("One
Group Louisiana")
Paragon Growth The One Group-Registered Trademark- Value Growth Fund ("One Group Growth")
Paragon Gulf South The One Group-Registered Trademark- Gulf South Growth Fund ("One Group
Gulf South")
</TABLE>
Following the transfer of assets, shares of each One Group Fund will be
distributed to shareholders of each corresponding Paragon Fund. The Paragon
Funds will then be dissolved and liquidated. As a result of the transactions,
each shareholder of a Paragon Fund will receive on a tax-free basis, a number of
full and fractional shares of the corresponding One Group Fund equal at the date
of the exchange to the value of the net assets of each Paragon Fund attributable
to the shareholder.
If the Paragon Fund shareholder of record is a financial organization
authorized to act in a fiduciary, advisory, custodial or similar capacity, that
shareholder will receive One Group Fiduciary Class shares. All other Paragon
Fund Class A shareholders will receive One Group Class A shares. Shareholders of
record holding Paragon Fund Class B shares, other than Class B shareholders of
Paragon Money Market, will receive One Group Class B shares. Paragon Money
Market Class B shareholders will receive One Group Money Market Class A shares.
<PAGE>
In this Combined Proxy/Prospectus, One Group Money Market, One Group Limited
Volatility, One Group Bond, One Group Equity, One Group Louisiana, One Group
Growth and One Group Gulf South are each referred to as a "One Group Fund" and
collectively as "One Group Funds". Likewise, Paragon Money Market, Paragon
Government, Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon Growth and
Paragon Gulf South, are each referred to as a "Paragon Fund" and collectively as
"Paragon Funds".
The Paragon Funds are portfolios of Paragon Portfolio, an open-end
management investment company consisting of eleven funds. Likewise, the One
Group Funds are portfolios of The One Group, an open-end management investment
company consisting of thirty-two separate funds.
This Combined Prospectus/Proxy Statement explains concisely what you should
know before investing in One Group Money Market, One Group Limited Volatility,
One Group Bond, One Group Equity, One Group Louisiana, One Group Growth and One
Group Gulf South Funds. Please read it carefully and keep it for future
reference.
This Combined Prospectus/Proxy Statement is accompanied by prospectuses for
the One Group Money Market, One Group Limited Volatility, One Group Bond, and
One Group Equity Funds, which are dated November 1, 1995, and the One Group
Louisiana, One Group Growth and One Group Gulf South Funds, which are dated
February 7, 1996, as well as the current prospectus relating to Paragon Money
Market, Paragon Government, Paragon Bond, Paragon Equity, Paragon Louisiana,
Paragon Growth and Paragon Gulf South, which is dated March 30, 1995. The
prospectuses for the One Group Funds and the Paragon Funds are incorporated into
this Combined Prospectus/Proxy Statement by reference. The current Statement of
Additional Information of The One Group, dated November 1, 1995, as amended
February 7, 1996, has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. The Statement of Additional Information of
The One Group may be obtained, without charge, by writing to The One Group
Services Company, 3435 Stelzer Road, Columbus, OH 43219 or by calling
1-800-480-4111 during business hours. The current Statement of Additional
Information of Paragon Portfolio, dated March 30, 1995, has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. The
Statement of Additional Information of Paragon Portfolio can be obtained without
charge by writing to Goldman Sachs & Co., 4900 Sears Tower, Chicago, IL 60606,
or by calling 1-800-525-7907. In addition, a Statement of Additional Information
dated February 22, 1996 relating to the reorganization of the Paragon Funds
described in this Combined Prospectus/Proxy Statement, has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. Such
Statement of Additional Information may be obtained, without charge, by writing
or calling The One Group Services Company at the address or telephone number
provided above.
SHARES OF THE ONE GROUP OFFERED HEREBY ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR ENDORSED BY BANC ONE CORPORATION OR ITS BANK OR NON-BANK AFFILIATES. THE
SHARES OF THE ONE GROUP OFFERED HEREBY ARE NOT INSURED 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 ONE GROUP FOR INVESTMENT ADVISORY SERVICES.
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 PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS COMBINED PROSPECTUS/PROXY STATEMENT IN
CONNECTION WITH THE OFFER MADE BY THIS COMBINED PROSPECTUS/PROXY STATEMENT AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE ONE GROUP. THIS COMBINED PROSPECTUS/PROXY
STATEMENT DOES NOT CONSTITUTE AN OFFERING BY THE ONE GROUP IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
Proposal (1) Approval of the Agreement and Plan of Reorganization................................... 1
Synopsis............................................................................................ 2
Risk Factors........................................................................................ 37
Management Discussion of Fund Performance........................................................... 44
Information About the Proposed the Transaction...................................................... 60
Federal Income Tax Consequences..................................................................... 62
Voting Information.................................................................................. 65
Interests of Certain Persons in the Transaction..................................................... 74
Financial Statements................................................................................ 74
Information filed with the Securities and Exchange Commission....................................... 75
Plan of Reorganization.............................................................................. Exhibit A
</TABLE>
<PAGE>
PROPOSAL (1): APPROVAL OF THE REORGANIZATION OF THE PARAGON FUNDS
On October 31, 1995, the Board of Trustees ("Trustees") of Paragon Portfolio
approved an Agreement and Plan of Reorganization pursuant to which Paragon Money
Market, Paragon Government, Paragon Bond, Paragon Equity, Paragon Louisiana,
Paragon Growth and Paragon Gulf South would be merged with and into One Group
Money Market, One Group Limited Volatility, One Group Bond, One Group Equity,
One Group Louisiana, One Group Growth and One Group Gulf South, respectively, on
or about March 26, 1996 (the "Exchange Date"). On the Exchange Date, each
Paragon Fund will transfer all of its assets and liabilities to the
corresponding One Group Fund, in exchange for shares of the corresponding One
Group Fund having an aggregate net asset value equal to the aggregate value of
the net assets acquired from the corresponding Paragon Fund. The assets and
liabilities of the Paragon Funds and The One Group Funds will be valued as of
the close of trading on the New York Stock Exchange on the business day next
preceding the Exchange Date. Following the transfer, the Paragon Funds will be
dissolved and shares of the respective One Group Fund received by the
corresponding Paragon Fund will be distributed to Paragon Fund shareholders in
liquidation of the Paragon Funds. As a result of the proposed transaction, a
Paragon Money Market, Paragon Government, Paragon Bond, Paragon Equity, Paragon
Louisiana, Paragon Growth or Paragon Gulf South shareholder will receive, on a
tax-free basis, a number of full and fractional shares equal in value at the
date of the exchange to the value of the net assets of the respective Paragon
Fund transferred to One Group Money Market, One Group Limited Volatility, One
Group Bond, One Group Equity, One Group Louisiana, One Group Growth and One
Group Gulf South respectively, attributable to the shareholder. If the Paragon
Fund shareholder of record is a financial organization authorized to act in a
fiduciary, advisory, agency, custodial or similar capacity, that shareholder
will receive One Group Fiduciary Class shares. All other Paragon Fund Class A
shareholders will receive One Group Class A shares. Shareholders of record
holding Paragon Fund Class B shares, other than Class B shareholders of Paragon
Money Market, will receive One Group Class B shares. Paragon Money Market Class
B shareholders will receive One Group Money Market Class A shares.
The Trustees have concluded that participation in the proposed transaction
is in the best interests of the Paragon Funds, the One Group Funds and their
respective existing shareholders. The Trustees have further concluded that the
economic interests of shareholders of the Paragon Funds and the One Group Funds
will not be diluted as a result of the proposed transaction. In reaching this
conclusion, the Trustees considered, among other things, the similarity of the
investment objectives of Paragon Portfolio and the One Group Funds; the expense
ratios of Paragon Portfolio and the One Group Funds; the performance of Paragon
Portfolio as compared to the One Group Funds; the potential economies of scale
which could be realized as a result of the increase in size of the One Group
Funds; and the fact that the transaction will be free of federal income taxes.
1
<PAGE>
SYNOPSIS
FEE TABLE
Below are fee tables showing the current fees for the Paragon Funds and the
One Group Funds.
SHAREHOLDER AND FUND EXPENSES (NOTE 1)
PARAGON TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
CLASS A CLASS B+
-------- ---------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(as a percentage of offering price)
Maximum Sales Charge Imposed on Purchases (Note
2)............................................... None None
Sales Charge Imposed on Reinvested
Distributions.................................... None None
Maximum Deferred Sales Charge (Note 2)............ None 5.0%
Redemption Fee.................................... None None
Exchange Fee (Note 3)............................. $5 $5
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets after
adjustments)
Management Fees................................... .20% .20%
Administration Fees............................... .15% .15%
12b-1 Fees........................................ None .75%
Other Expenses.................................... .08% .08%
-------- ---------
TOTAL FUND OPERATING EXPENSES....................... .43% 1.18%
-------- ---------
-------- ---------
</TABLE>
PARAGON SHORT-TERM GOVERNMENT FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
-------- ---------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(as a percentage of offering price)
Maximum Sales Charge Imposed on Purchases (Note
2)............................................... 4.5% None
Sales Charge Imposed on Reinvested
Distributions.................................... None None
Maximum Deferred Sales Charge (Note 2)............ None 5.0%
Redemption Fee.................................... None None
Exchange Fee (Note 3)............................. $5 $5
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets after
adjustments)
Management Fees................................... .50% .50%
Administration Fees............................... .15% .15%
12b-1 Fees........................................ None .75%
Other Expenses.................................... .12% .12%
-------- ---------
TOTAL FUND OPERATING EXPENSES....................... .77% 1.52%
-------- ---------
-------- ---------
</TABLE>
2
<PAGE>
PARAGON INTERMEDIATE-TERM BOND FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
-------- ---------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(as a percentage of offering price)
Maximum Sales Charge Imposed on Purchases (Note
2)............................................... 4.5% None
Sales Charge Imposed on Reinvested
Distributions.................................... None None
Maximum Deferred Sales Charge (Note 2)............ None 5.0%
Redemption Fee.................................... None None
Exchange Fee (Note 3)............................. $5 $5
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets after
adjustments)
Management Fees................................... .50% .50%
Administration Fees............................... .15% .15%
12b-1 Fees........................................ None .75%
Other Expenses.................................... .11% .11%
-------- ---------
TOTAL FUND OPERATING EXPENSES....................... .76% 1.51%
-------- ---------
-------- ---------
</TABLE>
PARAGON LOUISIANA TAX-FREE FUND (NOTE 4)
<TABLE>
<CAPTION>
CLASS A CLASS B
-------- ---------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(as a percentage of offering price)
Maximum Sales Charge Imposed on Purchases (Note
2)............................................... 4.5% None
Sales Charge Imposed on Reinvested
Distributions.................................... None None
Maximum Deferred Sales Charge (Note 2)............ None 5.0%
Redemption Fee.................................... None None
Exchange Fee (Note 3)............................. $5 $5
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets after
adjustments)
Management Fees................................... .40% .40%
Administration Fees............................... .10% .10%
12b-1 Fees........................................ None .75%
Other Expenses.................................... .15% .15%
-------- ---------
TOTAL FUND OPERATING EXPENSES....................... .65% 1.40%
-------- ---------
-------- ---------
</TABLE>
3
<PAGE>
PARAGON VALUE GROWTH FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
-------- ---------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(as a percentage of offering price)
Maximum Sales Charge Imposed on Purchases (Note
2)............................................... 4.5% None
Sales Charge Imposed on Reinvested
Distributions.................................... None None
Maximum Deferred Sales Charge (Note 2)............ None 5.0%
Redemption Fee.................................... None None
Exchange Fee (Note 3)............................. $5 $5
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets after
adjustments)
Management Fees................................... .65% .65%
Administration Fees............................... .15% .15%
12b-1 Fees........................................ None .75%
Other Expenses.................................... .16% .16%
-------- ---------
TOTAL FUND OPERATING EXPENSES....................... .96% 1.71%
-------- ---------
-------- ---------
</TABLE>
PARAGON VALUE EQUITY INCOME FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
-------- ---------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(as a percentage of offering price)
Maximum Sales Charge Imposed on Purchases (Note
2)............................................... 4.5% None
Sales Charge Imposed on Reinvested
Distributions.................................... None None
Maximum Deferred Sales Charge (Note 2)............ None 5.0%
Redemption Fee.................................... None None
Exchange Fee (Note 3)............................. $5 $5
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets after
adjustments)
Management Fees................................... .65% .65%
Administration Fees............................... .15% .15%
12b-1 Fees........................................ None .75%
Other Expenses.................................... .13% .13%
-------- ---------
TOTAL FUND OPERATING EXPENSES....................... .93% 1.68%
-------- ---------
-------- ---------
</TABLE>
4
<PAGE>
PARAGON GULF SOUTH GROWTH FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
--------- ---------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(as a percentage of offering price)
Maximum Sales Charge Imposed on Purchases (Note
2)............................................... 4.5% None
Sales Charge Imposed on Reinvested
Distributions.................................... None None
Maximum Deferred Sales Charge (Note 2)............ None 5.0%
Redemption Fee.................................... None None
Exchange Fee (Note 3)............................. $5 $5
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets after
adjustments)
Management Fees................................... .65% .65%
Administration Fees............................... .15% .15%
12b-1 Fees........................................ None .75%
Other Expenses.................................... .20% .20%
--------- ---------
TOTAL FUND OPERATING EXPENSES....................... 1.00% 1.75%
--------- ---------
--------- ---------
</TABLE>
5
<PAGE>
EXAMPLE OF FUND EXPENSES
You would pay the following expenses on a hypothetical $1,000 investment,
assuming a 5% annual return and redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Paragon Treasury Money Market Fund
Class A Shares............................ $ 4 $14 $ 24 $ 54
Class B Shares
-- Assuming complete redemption at end of
period................................... $62 $67 $ 75 $112
-- Assuming no redemption................. $12 $37 $ 65 $112
Paragon Short-Term Government Fund
Class A Shares............................ $53 $68 $ 86 $136
Class B Shares
-- Assuming complete redemption at end of
period................................... $65 $78 $ 93 $151
-- Assuming no redemption................. $15 $48 $ 83 $151
Paragon Intermediate-Term Bond Fund
Class A Shares............................ $52 $68 $ 85 $135
Class B Shares
-- Assuming complete redemption at end of
period $65 $78 $ 92 $150
-- Assuming no redemption................. $15 $48 $ 82 $150
Paragon Louisiana Tax-Free Fund
Class A Shares............................ $51 $65 $ 80 $122
Class B Shares
-- Assuming complete redemption at end of
period................................... $64 $74 $ 87 $138
-- Assuming no redemption................. $14 $44 $ 77 $138
Paragon Value Growth Fund
Class A Shares............................ $54 $74 $ 96 $158
Class B Shares
-- Assuming complete redemption at end of
period................................... $67 $84 $103 $172
-- Assuming no redemption................. $17 $54 $ 93 $172
Paragon Value Equity Income Fund
Class A Shares............................ $54 $73 $ 94 $154
Class B Shares
-- Assuming complete redemption at end of
period................................... $67 $83 $101 $169
-- Assuming no redemption................. $17 $53 $ 91 $169
Paragon Gulf South Growth Fund
Class A Shares............................ $55 $75 $ 98 $162
Class B Shares
-- Assuming complete redemption at end of
period................................... $68 $85 $105 $177
-- Assuming no redemption................. $18 $55 $ 95 $177
</TABLE>
- ------------------------
NOTES:
(1) The purpose of the table provided above is to assist investors in
understanding the various costs and expenses that a shareholder in the Funds
will bear directly or indirectly. Except as described in Note (4), the costs
and expenses included in the table and hypothetical example are based on
actual fees and expenses of the Class A shares for the fiscal year ended
November 30, 1994. The costs and expenses in the table and hypothetical
example for the Class B shares are based on estimated fees and expenses of
the Class B Shares assuming that such Shares were outstanding throughout the
fiscal year ended November 30, 1994. Other expenses and total fund operating
expenses actually incurred by Class B shares during the period from
commencement of operations of the respective Class B shares to November 30,
1994 were as follows: Paragon Government
6
<PAGE>
-- 0.13% and 1.53%, respectively; Paragon Intermediate -- 0.12% and 1.52%,
respectively; Paragon Louisiana -- 0.16% and 1.41%, respectively; Paragon
Growth -- 0.16% and 1.71%, respectively; Paragon Equity -- 0.12%; and 1.67%,
respectively; and Paragon Gulf South -- 0.20% and 1.75%, respectively. The
costs and expenses included in the table and hypothetical example should not
be considered as representative of past or future expenses. Actual expenses
may be greater or less than those indicated. Moreover, while the example
assumes a 5% annual return, the Fund's actual performance will vary and
might result in actual return greater or less than 5%. See "The Adviser,
Administrator and Distributor," "Purchase of Shares" and "Class B
Distribution Plan" in the Paragon Funds Prospectuses accompanying this
Combined Prospectus/Proxy Statement.
(2) Paragon Portfolio's transfer agent may impose a transaction fee of $7.50 for
each wire purchase.
(3) In addition to free reinvestments of dividends and distributions in shares
of the other Funds and free automatic exchanges pursuant to the Automatic
Exchange Program, five free exchanges are permitted in each twelve month
period without the imposition of any transaction fee; a fee of $5 is charged
for each subsequent exchange during such period.
(4) During the fiscal year ended November 30, 1994, Paragon's former adviser,
Premier Investment Adviser, L.L.C., ("Premier") voluntarily reduced its
advisory fee to 0.40% of Paragon Louisiana's average daily net assets and
Goldman Sachs Asset Management voluntary agreed to reduce its administration
fee to 0.10% of Paragon Louisiana's average daily net assets. During such
fiscal year, the Paragon Louisiana Tax-Free Fund's total operating expenses
attributable to the Class A Shares of the Paragon Louisiana Tax-Free Fund
were 0.65% of its average daily net assets. The estimated total operating
expenses attributable to the Class B Shares of Paragon Louisiana were 1.40%
of its average daily net assets, assuming that such Class B Shares were
outstanding throughout the fiscal year ended November 30, 1994. Had the
reduction of fees for the fiscal year ended November 30, 1994 otherwise
payable not been reflected in the above table, the advisory fees would be
0.50%, its administration fees would be 0.15%, and its total operating
expenses attributable to the Class A Shares would be 0.80% of its average
daily net assets. Without such fee reductions, the estimated total operating
expenses attributable to the Class B Shares of Paragon Louisiana would be
1.55% of its average daily net assets, assuming that such Class B Shares
were outstanding throughout the fiscal year ended November 30, 1994.
+ Investors wishing to purchase shares of Paragon Money Market are generally
required to purchase Class A shares. Class B shares of Paragon Money Market
will typically be issued only in exchange for Class B shares of any of the
other Funds.
* Class B shares convert to Class A shares seven years after purchase;
therefore, Class A expenses are used in the hypothetical example after year
seven.
Investors should be aware that, due to distribution fees, a long-term holder
of Class B shares of the Funds may pay over time more than the economic
equivalent of the maximum front-end sales charge permitted under the rules of
the National Association of Securities Dealers, Inc. ("NASD").
7
<PAGE>
THE ONE GROUP-REGISTERED TRADEMARK- U.S. TREASURY SECURITIES MONEY MARKET FUND
<TABLE>
<CAPTION>
FIDUCIARY SERVICE
CLASS A CLASS CLASS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)...................................... none none none
ANNUAL OPERATING EXPENSES(2)
(as a percentage of average daily net assets)
Investment Advisory Fees (after fee waivers)(3).......................... .22% .22% .22%
12b-1 Fees (after fee waivers)(4)........................................ .25% none .55%
Other Expenses........................................................... .22% .22% .22%
- ----------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES(5).............................................. .69% .44% .99%
- ----------------------------------------------------------------------------------------------------------------
</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 Combined Prospectus/Proxy Statement. The Adviser may
voluntarily agree to waive a part of its fees. Absent this voluntary
reduction, Investment Advisory Fees would be .35% 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 .75% for Service Class shares.
There are no 12b-1 fees charged to Fiduciary Class shares. The 12b-1 fees
include a shareholder servicing fee of .25% of average daily net assets of
the Fund's Class A and Service Class shares. See "The Distributor" in the
One Group Funds prospectuses accompanying this Combined Prospectus/Proxy
Statement.
(5) Total Operating Expenses have been revised to reflect 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
.92% for Class A shares, .57% for Fiduciary Class shares and 1.32% for
Service Class shares.
EXAMPLE: An investor would pay the following expense on a $1,000 investment in
Class A, Fiduciary Class and Service Class shares of the U.S. Treasury Money
Market Fund, assuming: (1) 5% annual return; and (2) 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 $ 7 $ 22 $ 38 $ 86
Fiduciary Class $ 5 $ 14 $ 25 $ 55
</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 $ 9 $ 29 $ 51 $113
Fiduciary Class $ 6 $ 18 $ 32 $ 71
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
Service Class shares are offered to investors requiring additional
administrative and/or accounting services, such as sweep processing. It is not
intended that a shareholder would remain in the Service Class for more than a
very limited period of time. However, a shareholder investing on a continual
basis in the Service Class for a period of one (1) month would pay $1, three (3)
months would pay $3, one (1) year would pay $13. Absent the voluntary fee
reduction a shareholder would pay for a period of one (1) month $1, three (3)
months $3, one (1) year $17.
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.
Investors in the Fund ("Shareholders") who are long-term Shareholders of Class A
shares and Service Class shares may pay more than the equivalent of the maximum
front-end sales charges otherwise permitted by the National Association of
Securities Dealers' Rules.
8
<PAGE>
THE ONE GROUP-REGISTERED TRADEMARK- LIMITED VOLATILITY 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).................................... 3.00% none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable).................................... none 3.00% 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).......................... .30% .30% .30%
12b-1 Fees (after fee waivers)(4)........................................ .25% .75% none
Other Expenses........................................................... .25% .25% .25%
- ----------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES(5).............................................. .80% 1.30% .55%
- ----------------------------------------------------------------------------------------------------------------
</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 Combined Prospectus/Proxy Statement. 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.
(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.
(5) Total Operating Expenses have been revised to reflect waivers effective as
of the date of this Prospectus. Absent the voluntary reduction of Investment
Advisory and 12b-1 fees, Total Operating Expenses would be 1.20% for Class A
shares, 1.84% for Class B shares, and .85% for Fiduciary Class shares.
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 $ 38 $ 55 $ 73 $126
Fiduciary Class $ 6 $ 18 $ 31 $ 69
</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 $ 42 $ 67 $ 94 $171
Fiduciary Class $ 9 $ 27 $ 47 $105
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
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 $ 43 $ 61 $ 71 $130
Assuming no redemption $ 13 $ 41 $ 71 $130
</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 each of
period $ 49 $ 78 $100 $184
Assuming no redemption $ 19 $ 58 $100 $184
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
Class B shares automatically convert to Class A shares after six (6) 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 may, under certain circumstances, qualify for reduced sales charges. See
"How to Invest in The One Group-Registered Trademark-" with the One Group
Prospectuses accompanying this Combined Prospectus/Proxy Statement. 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.
10
<PAGE>
THE ONE GROUP-REGISTERED TRADEMARK- GOVERNMENT 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(4).............................................. .45% .45% .45%
12b-1 Fees (after fee waivers)(3)........................................ .25% .90% none
Other Expenses........................................................... .26% .26% .26%
- ----------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES(4).............................................. .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) 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 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 waivers effective as
of the date of this Combined Prospectus/Proxy Statement. The Adviser may
voluntarily agree to waive a part of its fees. Absent the voluntary 12b-1
waiver, Total Operating Expenses would be 1.06% for Class A shares and 1.71%
for Class B shares.
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 $ 54 $ 74 $ 96 $158
Fiduciary Class $ 7 $ 23 $ 40 $ 88
</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 $ 55 $ 77 $101 $169
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
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 $ 66 $ 81 $108 $174
Assuming no redemption $ 16 $ 51 $ 88 $174
</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>
Assuming a complete redemption at each of
period $ 67 $ 84 $113 $185
Assuming no redemption $ 17 $ 54 $ 93 $185
</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 SEC require that the maximum sales charge be reflected in the
above table. However, investors of the Fund may, under certain circumstances,
qualify for reduced sales charges. See "How to Invest in The One
Group-Registered Trademark-" in the One Group Prospectuses accompanying this
Combined Prospectus/Proxy Statement. 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.
12
<PAGE>
THE ONE GROUP-REGISTERED TRADEMARK- 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 Combined Prospectus/Proxy Statement. 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 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.
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>
13
<PAGE>
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 each 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 SEC require that the maximum sales charge be reflected in the
above table. However, investors of the Fund may, under certain circumstances,
qualify for reduced sales charges. See "How to Invest in The One
Group-Registered Trademark-" in the One Group Prospectuses accompanying this
Combined Prospectus/Proxy Statement. 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.
14
<PAGE>
THE ONE GROUP-REGISTERED TRADEMARK- 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 waivers)(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. The 12b-1 fees include a Shareholder servicing fee
of .25% of 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.
(4) Investment Advisory Fees and Total Operating Expenses have been revised to
reflect fee waivers effective as of the date of this Combined
Prospectus/Proxy Statement. 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.
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 $ 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>
15
<PAGE>
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 $ 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 each of
period $ 71 $ 94
Assuming no redemption $ 21 $ 64
- --------------------------------------------------------------
- --------------------------------------------------------------
</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 SEC require that the maximum sales charge be reflected in the
above table. However, investors of the Fund may, under certain circumstances,
qualify for reduced sales charges. See "How to Invest in The One
Group-Registered Trademark-" in the One Group Prospectuses accompanying this
Combined Prospectus/Proxy Statement. 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.
16
<PAGE>
THE ONE GROUP-REGISTERED TRADEMARK- INCOME EQUITY 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 waivers)(3)........................................ .25% 1.00% none
Other Expenses........................................................... .31% .31% .31%
- ----------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES(4).............................................. 1.30% 2.05% 1.05%
- ----------------------------------------------------------------------------------------------------------------
</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. The 12b-1 fees include a Shareholder servicing fee
of .25% of 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."
(4) Total Operating Expenses have been revised to reflect waivers effective as
of the date of this Combined Prospectus/Proxy Statement. The Adviser may
voluntarily agree to waive a part of its fees. Absent the voluntary 12b-1
waiver, Total Operating Expenses would be 1.40% for Class A shares.
EXAMPLE: An investor would pay the following expense 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 $ 84 $113 $195
Fiduciary Class $ 11 $ 33 $ 58 $128
</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 $ 87 $118 $205
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
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 $ 94 $130 $219
Assuming no redemption $ 21 $ 64 $110 $219
</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 $219 with
the voluntary reduction applicable to Class A shareholders, and $221 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 SEC require that the maximum sales charge be reflected in the
above table. However, investors of the Fund may, under certain circumstances,
qualify for reduced sales charges. See "How to Invest in The One
Group-Registered Trademark-" in the One Group Prospectuses accompanying this
Combined Prospectus/Proxy Statement. 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.
18
<PAGE>
THE ONE GROUP-REGISTERED TRADEMARK- 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 waivers)(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. The 12b-1 fees include a Shareholder servicing fee
of .25% of 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.
(4) Investment Advisory Fees and Total Operating Expenses have been revised to
reflect fee waivers effective as of the date of this Combined
Prospectus/Proxy Statement. 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 Class B shares and 1.06% for
Fiduciary Class shares.
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 $ 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>
- --------------------------------------------------------------
<S> <C> <C>
1 YEAR 3 YEARS
<CAPTION>
- --------------------------------------------------------------
<S> <C> <C>
Class A $ 59 $ 88
Fiduciary Class $ 11 $ 34
- --------------------------------------------------------------
- --------------------------------------------------------------
</TABLE>
19
<PAGE>
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>
- --------------------------------------------------------------
<S> <C> <C>
1 YEAR 3 YEARS
<CAPTION>
- --------------------------------------------------------------
<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>
- --------------------------------------------------------------
<S> <C> <C>
1 YEAR 3 YEARS
<CAPTION>
- --------------------------------------------------------------
<S> <C> <C>
Assuming a complete redemption at each 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.
The rules of the SEC require that the maximum sales charge be reflected in the
above table. However, investors of the Fund may, under certain circumstances,
qualify for reduced sales charges. See "How to Invest in The One
Group-Registered Trademark-" in the One Group Prospectuses accompanying this
Combined Prospectus/Proxy Statement. 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.
20
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Below is a brief discussion of the investment objectives and policies of the
Paragon Funds and the corresponding One Group Funds. The discussion is qualified
in its entirety by the disclosure on such subjects contained in The One Group
Prospectuses and the Paragon Funds Prospectus accompanying this Combined
Prospectus/Proxy Statement. The securities currently held by each Paragon Fund
are substantially similar to those securities which the corresponding One Group
Fund may hold. Consequently, the proposed reorganization of Paragon Money
Market, Paragon Government, Paragon Bond, Paragon Equity, Paragon Louisiana,
Paragon Growth and Paragon Gulf South should not result in significant portfolio
turnover or transaction expenses due to the corresponding One Group Fund's
disposal of investment securities.
PARAGON MONEY MARKET AND ONE GROUP MONEY MARKET
The investment objective of Paragon Money Market is to maximize current
income to the extent consistent with preservation of capital and the maintenance
of liquidity. Paragon Money Market pursues its objective by limiting its
investments to securities issued or guaranteed by the U.S. Treasury and
repurchase agreements relating to such securities. As a matter of fundamental
policy, at least 65% of the Paragon Money Market Fund's total assets will
consist of such securities. Similarly, One Group Money Market seeks current
income with liquidity and stability of principal. Investments by One Group Money
Market are limited to short-term U.S. Treasury obligations and repurchase
agreements collaterized by such obligations, reverse repurchase agreements, and
when-issued securities. One Group Money Market and Paragon Money Market also may
engage in securities lending.
Each Fund seeks to maintain a stable net asset value of $1.00 per share,
although there is no assurance that the Funds will be able to achieve this
objective. In addition, each Fund's portfolio securities are valued by the
amortized cost method in compliance with regulations of the SEC. Consequently,
both Paragon Money Market and One Group Money Market invest only in U.S. dollar-
denominated securities, maintain an average maturity on a dollar-weighted basis
of 90 days or less, and acquire only "eligible securities" that present minimal
credit risk and have a maturity of 397 days or less.
PARAGON GOVERNMENT AND ONE GROUP LIMITED VOLATILITY
The investment objective of Paragon Government is to seek a high level of
current income consistent with stability of principal by investing primarily in
a diversified portfolio of securities of the U.S. Government, its agencies,
authorities and instrumentalities. Similarly, One Group Limited Volatility seeks
current income consistent with preservation of capital through investment in
high and medium-grade fixed-income securities.
One Group Limited Volatility normally invests at least 80% of total assets
in debt securities of all types with short to intermediate maturities. Under
normal market conditions, it is anticipated that the One Group Limited
Volatility's average weighted maturity will range between one and five years.
Paragon Government's portfolio normally consists of securities with remaining
maturities of six years or less.
At least 65% of the total assets of One Group Limited Volatility will
consist of bonds and at least 65% of total assets will consist of obligations
issued by the U.S. government or its agencies or instrumentalities, some of
which may be subject to repurchase agreements.
As a matter of fundamental policy, at least 65% of Paragon Government's
total assets will consist of securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies, authorities and instrumentalities
with a dollar-weighted average portfolio maturity of one to three years. As a
matter of nonfundamental policy, under normal market conditions, at least 80% of
the value of Paragon Government's total assets will be invested in securities
that are issued or guaranteed as to principal and interest by the U.S.
Government, its agencies, authorities or instrumentalities, including
mortgage-related securities, ("U.S. Government Securities") and repurchase
agreements
21
<PAGE>
relating to U.S. Government Securities. Although Paragon Government intends to
invest all of its total assets in such securities, up to 20% of its total assets
may be held in cash or invested in other investment grade fixed-income
securities and cash equivalents.
In addition to the permissible investments described above, One Group
Limited Volatility 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, reverse
repurchase agreements, securities of other investment companies, when-issued
securities, forward commitments, variable and floating rate notes, bankers'
acceptances, commercial paper, mortgage dollar rolls, and securities of foreign
issuers, including sponsored and unsponsored American Depository Receipts
("ADRs"). One Group Limited Volatility also may invest in securities subject to
demand features, mortgage-backed securities, including collateralized mortgage
obligations ("CMOs") and real estate mortgage investment conduits ("REMICs"),
adjustable rate mortgage loans ("ARMS"), fixed rate mortgage loans, asset backed
securities, guaranteed investment contracts, corporate securities, and
restricted securities. One Group Limited Volatility also may engage in
securities lending transactions. Paragon Government also may invest in the above
instruments, other than CUBES, TRS, reverse repurchase agreements, securities of
other investment companies, mortgage dollar rolls, and guaranteed investment
contracts.
The above 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) and asset backed securities.
PARAGON BOND AND ONE GROUP BOND
The investment objective of Paragon Bond is to provide a high level of
current income, consistent with prudent investment risk, by investment in a
diversified portfolio of investment grade fixed-income securities. One Group
Bond seeks a high level of current income with liquidity and safety of
principal.
As a matter of fundamental policy, at least 65% of Paragon Bond's total
assets normally consist of investment grade bonds and debentures with a
dollar-weighted average portfolio maturity of three to ten years. The average
weighted remaining maturity of One Group Bond is expected to be between three
and fifteen years; however, average remaining maturity may be outside this range
if warranted by market conditions.
Paragon Bond may invest its assets in: (i) U.S. Government Securities; (ii)
U.S. dollar denominated debt securities issued by foreign governments and their
political subdivisions and other foreign issuers; (iii) foreign and domestic
corporate debt securities, some of which may involve equity features; (iv)
asset-backed securities; and (v) obligations of banks or savings and loan
associations.
As a matter of nonfundamental policy, under normal market conditions, at
least 80% of the value of Paragon Bond's total assets are invested in the
fixed-income securities described above. For this purpose, Paragon Bond
considers convertible debt securities to be fixed-income securities. Paragon
Bond intends to invest all of its assets in fixed-income securities.
One Group Bond intends to seek to achieve its investment objective
principally through investment in securities issued by the U.S. government and
its agencies and instrumentalities. Accordingly, at least 65% of the total
assets of One Group Bond will be invested in obligations guaranteed as to
principal and interest by the U.S. government or its agencies and
instrumentalities, some of which may be subject to repurchase agreements, and
other securities representing an interest in or collateralized by mortgages that
are issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The primary issuers or guarantors of such securities
currently include the Government National Mortgage Association ("Ginnie Mae"),
the Federal National Mortgage Association ("Fannie Mae"), and the Federal Home
Loan Mortgage Corporation ("Freddie Mac"), although One Group
22
<PAGE>
Bond may invest in securities issued or guaranteed by other agencies or
instrumentalities in the future. One Group Bond's ability to achieve higher
income is not as great as that of funds that may invest in lower-quality
instruments.
The balance of One Group Bond's assets may be invested in debt securities
and municipal securities. Debt securities generally will be rated in one of the
three highest rating categories by at least one nationally recognized
statistical rating organization ("NRSRO") at the time of investment (for
example, A or better by Standard & Poor's Rating Group ("S&P") or Moody's
Investors Service ("Moody's") or, if unrated, determined to be of comparable
quality. However, One Group Bond reserves the right to invest in debt securities
which present attractive opportunities and are rated in the fourth highest
rating category by at least one NRSRO at the time of investment (for example,
BBB by S&P or Baa by Moody's). Preferred stock must be rated in one of the four
highest rating categories by at least one NRSRO at the time of investment (for
example, BBB or better by S&P or Baa or better by Moody's) or, if unrated,
determined by the adviser to be of comparable quality. Securities that are rated
in the fourth highest rating category by an NRSRO are deemed by these ratings
services to have some speculative characteristics.
Paragon Bond invests only in investment grade debt securities, which are
those rated Baa or higher by Moody's or BBB or higher by S&P or, if unrated,
determined to be of comparable quality. In the event that the rating for any
security held in Paragon Bond's portfolio drops below the minimal acceptable
rating, such change will be considered by Premier in evaluating the overall
composition of the Paragon Bond's portfolio.
One Group Bond and Paragon Bond also may purchase taxable or tax-exempt
municipal securities ("Municipal Securities"). Municipal Securities, if bonds,
must be rated in one of the four highest rating categories by at least one NRSRO
at the time of investment (for example, BBB or better by S&P or Baa or better by
Moody's) or, if unrated, is determined to be of comparable quality. Other
Municipal Securities, such as tax-exempt commercial paper, notes or variable
rate demand obligations must be rated in one of the three 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 to
be of comparable quality.
In addition to the permissible investments described above, One Group Bond
also may invest in mortgage-backed securities, securities purchased on a
when-issued basis and forward commitments, variable and floating rate notes,
restricted securities, 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"), securities of other investment companies, bankers' acceptances,
commercial paper, repurchase agreements, reverse repurchase agreements, and
mortgage dollar rolls. One Group Bond also may invest in: options, futures
contracts, options on futures contracts, municipal securities, securities
subject to demand features, multiple class pass-through securities and
collateralized mortgage obligations ("CMOs"), real estate mortgage investment
conduits ("REMICs"), adjustable rate mortgage loans "(ARMS"), stripped
mortgage-backed securities, fixed rate mortgage loans, inverse floating rate
instruments, asset-backed securities, corporate securities, swap transactions,
structured instruments, and municipal leases. One Group Bond also may engage in
securities lending transactions. Paragon Bond may also invest in the above
instruments, other than CUBES, TRS, reverse repurchase agreements, securities of
other investment companies, mortgage dollar rolls, guaranteed investment
contracts, swap transactions, and structured instruments.
In addition, One Group Bond may invest in new options, futures contracts and
other financial products that may be developed, to the extent that these
products are consistent with One Group Bond's investment objective and policies.
23
<PAGE>
This list of permissible investments includes select securities that may be
commonly considered to be derivatives, including: mortgage dollar rolls,
options, futures contracts, options on futures contracts, multiple class
pass-through securities and collateralized mortgage obligations (CMOs and
REMICs), stripped mortgage-backed securities (IOs and POs), inverse floating
rate instruments, asset-backed securities, swap, cap and floor transactions, new
financial products and structured instruments.
PARAGON LOUISIANA AND ONE GROUP LOUISIANA
The investment objective of both Paragon Louisiana and One Group Louisiana
is to seek as high a level of current income exempt from Federal and Louisiana
income tax as is consistent with preservation of capital. Paragon Louisiana is a
diversified mutual fund. One Group Louisiana is a non-diversified mutual fund
and, to the extent permitted by the Internal Revenue Code (the "Code"), is not
limited in the proportion of its assets that may be invested in the securities
of a single issuer.
As a matter of fundamental policy at least 80% of the net assets of Paragon
Louisiana consist of 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.
Both Paragon Louisiana and One Group Louisiana anticipate that they normally
will invest in long-term municipal securities and that the dollar-weighted
average maturity of their portfolios generally will vary between five and 15
years, although they may invest in securities of any maturity. The municipal
securities in which Paragon Louisiana and One Group Louisiana invest may carry
fixed rates of return or have floating or variable rates. Although Paragon
Louisiana and One Group Louisiana intend to invest all of their assets in the
municipal securities described above, up to 20% of its 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.
Both Paragon Louisiana and One Group Louisiana may invest their 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
Paragon Louisiana's and One Group Louisiana's total assets will be invested in
escrow secured bonds and bonds insured as to principal and interest.
All bonds purchased by Paragon Louisiana and One Group Louisiana are
investment grade, which are those rated at least Baa by Moody's or BBB by S&P,
or 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, are determined 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, both Paragon Louisiana and One
Group Louisiana 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 Paragon Louisiana and One
Group Louisiana. 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 Paragon
Louisiana and One Group Louisiana. In considering whether a security meets
Paragon Louisiana's
24
<PAGE>
and One Group Louisiana's quality standards, Paragon Louisiana and One Group
Louisiana will look to the creditworthiness of the party providing Paragon
Louisiana and One Group Louisiana with the right to sell as well as the quality
of the security itself.
In addition to the investments described above, One Group Louisiana also may
invest in securities purchased on a when-issued basis and forward commitments,
variable and floating rate notes, 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"), securities of other investment companies, bankers'
acceptances, commercial paper, repurchase agreements, and reverse repurchase
agreements One Group Louisiana 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. One Group Louisiana and Paragon Louisiana also may
engage in securities lending transactions. Paragon Louisiana also may invest in
the above instruments, other than TRS, CUBES, securities of other investment
companies, reverse repurchase agreements, swap transactions, and structured
instruments.
In addition, One Group Louisiana may invest in new options, futures
contracts and other financial products that may be developed, to the extent that
these products are consistent with One Group Louisiana'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.
PARAGON GROWTH AND ONE GROUP GROWTH
The investment objective of both Paragon Growth and One Group Growth is to
seek long-term capital growth and growth of income while, as a secondary
objective, providing a moderate level of current income. Paragon Growth and One
Group Growth pursue their objectives by investing primarily in a diversified
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 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.
Both Paragon Growth and One Group Growth expect to invest in securities
currently paying a moderate level of income, although they may invest in
non-income producing securities when the potential for growth of capital or
future income is promising. Paragon Growth and One Group Growth diversify their
investments among different industries and companies and change their portfolio
securities for investment considerations and not for trading purposes.
Paragon Growth ordinarily invests at least 80% of the value of its total
assets in securities with the characteristics described above. Although Paragon
Growth intends to invest all of its assets in such securities, up to 20% 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.
One Group Growth ordinarily invests at least 65% of the value of its total
assets in securities with the characteristics described above. Although One
Group Growth 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.
One Group Growth may also enter into futures contracts, provided that the value
of these contracts does not exceed 25% of One Group Growth's total assets. In
addition, One Group Growth may write covered call options on securities it owns
and enter into related closing purchase transactions when such activity will
further One Group Growth's investment objective. One Group Growth may also
engage in other options
25
<PAGE>
transactions in furtherance of its investment objective. The balance of One
Group Growth's assets will be held in cash equivalents rated within one of the
highest two rating categories assigned by at least one NRSRO.
In addition to the permissible investments described above, One Group Growth
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. One
Group Growth 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"). One Group
Growth and Paragon Growth also may engage in securities lending transactions.
Paragon Growth also may invest in the above instruments other than TRS, CUBES,
reverse repurchase agreements, securities of other investment companies,
mortgage dollar rolls, guaranteed investment contracts, swap transactions and
structured instruments.
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.
PARAGON EQUITY AND ONE GROUP EQUITY
The investment objective of Paragon Equity is to seek capital growth and
current income. One Group Equity seeks current income through regular payments
of dividends with the secondary goal of achieving capital appreciation by
investing primarily in equity securities. Paragon Equity pursues its objective
by investing primarily in a diversified portfolio of common stocks, preferred
stocks, convertible securities, warrants and other equity securities of
companies which are undervalued relative to their intrinsic value and to the
stock market in general due to an overly pessimistic appraisal by the
marketplace. A low price-earnings ratio is the dominant factor in the selection
of investments for Paragon Equity's portfolio. Paragon Equity expects to
maintain a dividend yield equal to or in excess of the composite yield on the
securities comprising the Standard & Poor's Index of 500 Common Stocks.
As a matter of nonfundamental policy Paragon Equity ordinarily invests at
least 80% of the value of its total assets in securities with the
characteristics described above. Although Paragon Equity intends to invest all
of its assets in such securities, up to 20% 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.
One Group Equity 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 which are convertible into common stocks.
One Group Equity also may enter into futures contracts, provided that the value
of these contracts does not exceed 25% of the Fund's total assets. In addition,
One Group Equity may write covered call options on securities it owns and enter
into related closing purchase transactions when such activity will further One
Group Equity's investment objective, and also may engage in other options
transactions in furtherance of its investment objective. The balance of One
Group Equity's assets will be held in cash equivalents.
Like Paragon Equity, One Group Equity will select investments with a view to
keeping its yield above the Standard & Poor's 500 Composite Stock Price
Index.(1) Achieving such a yield will be the primary consideration in selecting
securities. However, to the extent not inconsistent with this
- ------------------------
(1) "Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation, which does not sponsor and is in no way affiliated with one
Group Equity.
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<PAGE>
primary consideration, a security's potential for capital appreciation will also
be considered. Investments will be made in common stocks of corporations which
regularly pay dividends, although continued payment of dividends cannot be
assured. One Group Equity will invest primarily in stocks with favorable,
long-term fundamental characteristics, but stocks of companies that are out of
favor in the financial community also may be purchased. One Group Equity may
eliminate its holdings of a stock when there is a significant fundamental change
that impairs a company's ability to pay dividends.
In addition to the permissible investments described above, One Group Equity
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. One
Group Equity also may invest in variable and floating rate notes, bankers'
acceptances, commercial paper and securities of foreign issuers, including
sponsored and unsponsored American Depository Receipts ("ADRs"). One Group
Equity and Paragon Equity also may engage in securities lending transactions.
All of One Group Equity's investments, where applicable, must at the time of
investment possess one of the ratings described in "Description of Ratings" in
the One Group Equity Prospectus accompanying this Combined Prospectus/Proxy
Statement or, if unrated, determined by he Adviser to be of comparable quality.
Paragon Equity also may invest in the above instruments other than CUBES,
TRS, reverse repurchase agreements, and securities of other investment
companies.
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.
PARAGON GULF SOUTH AND ONE GROUP GULF SOUTH
The investment objective of both Paragon Gulf South and One Group Gulf South
is to seek long-term capital growth. Paragon Gulf South and One Group Gulf South
pursue their objectives by investing primarily in a portfolio of common stocks,
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. The portfolios of Paragon Gulf South
and One Group Gulf South will normally consist of securities of approximately
twenty to forty emerging growth companies from Virginia, North Carolina, South
Carolina, Florida, Georgia, Tennessee, Alabama, Mississippi, Arkansas,
Louisiana, Kentucky and Texas. One Group Gulf South's portfolio will normally
consist of securities of approximately twenty-five to sixty emerging growth
companies from those same states. In selecting portfolio securities, Paragon
Gulf South and One Group Gulf South analyze 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,
Paragon Gulf South and One Group Gulf South review 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, though Paragon Gulf South and One Group Gulf
South may occasionally hold securities of companies whose market capitalizations
are considerably larger if doing so contributes to Paragon Gulf South's and One
Group Gulf South's investment objectives. 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 nonfundamental policy, Paragon Gulf South ordinarily invests
at least 75% of the value of its total assets in securities with the
characteristics described above. Although Paragon Gulf
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<PAGE>
South intends to invest all of its assets in such securities, up to 25% 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.
As a matter of nonfundamental policy, One Group Gulf South will ordinarily
invest at least 65% of the value of its total assets in securities with the
characteristics described above. Although One Group Gulf South 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.
One Group Gulf South also may enter into futures contracts, provided that
the value of these contracts does not exceed 25% of the Fund's total assets. In
addition, One Group Gulf South may write covered call options on securities it
owns and enter into related closing purchase transactions when such activity
will further the One Group Gulf South's investment objective. One Group Gulf
South also may engage in other options transactions in furtherance of its
investment objective. The balance of the One Group Gulf South's assets will be
held in cash equivalents rated within one of the highest two rating categories
assigned by at least one NRSRO, at the time of investment or, if unrated, are
determined to be of comparable quality. See "Description of Ratings," in the One
Group Gulf South prospectus accompanying this Combined Prospectus/Proxy
Statement.
In addition to the permissible investments described above, One Group Gulf
South 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 companies, when-issued securities, forward commitments,
options, futures contracts, and options on futures contracts. One Group Gulf
South also may invest in variable and floating rate notes, bankers' acceptances,
commercial paper and securities of foreign issuers, including sponsored and
unsponsored American Depository Receipts ("ADRs"). One Group Gulf South also may
engage in securities lending transactions. All of One Group Gulf South's
investments, where applicable, must possess one of the ratings described in the
"Description of Ratings" in the One Group Gulf South Prospectus accompanying
this Combined Prospectus/Proxy Statement, at the time of investment or, if
unrated, to be of comparable quality.
Paragon Gulf South also may invest in U.S. Treasury obligations, STRIPS,
receipts, including TIGRS and CATS, certificates of deposit, time deposits, U.S.
government agency securities, repurchase agreements, when-issued securities,
forward commitments, restricted securities, municipal leases, options, futures
contracts, and options on futures contracts. Paragon Growth also may invest in
bankers' acceptances, variable and floating rate notes, zero coupon obligations,
commercial paper and securities of foreign issuers, including sponsored and
unsponsored ADRs. Paragon Gulf South also may engage in securities lending.
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.
The foregoing discussions of the investment objective and policies of the
Paragon Funds and the One Group Funds are merely summaries. For a full and
detailed description of permitted investments of the Paragon Funds and the One
Group Funds see the applicable Paragon Fund Prospectus and One Group Prospectus.
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<PAGE>
INVESTMENT RESTRICTIONS
The Paragon Funds and the One Group Funds have each adopted certain
FUNDAMENTAL investment restrictions. These restrictions may be changed only by a
majority vote of the outstanding shares of each Paragon Fund and each One Group
Fund. Neither the Paragon Funds nor the One Group Funds may:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, it 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% (25% for
One Group Louisiana and One Group Gulf South) 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% (50% in the case of Paragon Gulf South, One Group
Louisiana and One Group Gulf South) of the Fund's assets.
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 or
instrumentalities and repurchase agreements involving such securities.
3. Borrow money, except that the Paragon Funds and the One Group Funds
may borrow money from banks for temporary or emergency purposes. Such
borrowings by the Paragon Funds are limited to an aggregate amount not
exceeding one-third of the value of each Paragon Fund's total assets.
Further, a Paragon Fund may not pledge more than 15% of its total assets in
connection with such borrowings. Borrowings by the One Group Funds is
limited to an aggregate amount not exceeding 10% of the value of each One
Group Fund's total assets. Further, a One Group Fund may not pledge any
assets, except in connection with 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 are the time of its borrowing. Neither the Paragon
Funds nor the One Group Funds may purchase securities while such borrowings
exceed 5% of the value of the Funds' total assets.
4. Underwrite the securities of other issuers except to the extent that
a Paragon Fund and a One Group Fund may be deemed to be an underwriter under
certain securities laws in the disposition of "restricted securities."
5. Purchase or sell real estate, including limited partnership
interests (however, each fund other than the One Group Money Market may
purchase securities secured by real estate or interests therein).
6. Make loans, except that a 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.
7. Purchase participation or other direct interests in oil, gas or
mineral exploration or development programs (although investments by the One
Group Funds, other than One Group Money Market, in marketable securities of
companies engaged in such activities are not hereby precluded).
In addition, as a matter of fundamental policy, the One Group Funds may not:
1. Purchase securities on margin, sell securities short, or participate
on a joint or joint and several basis in any securities trading account,
except, in the case of One Group Louisiana, for use of short-term credit
necessary for clearance of purchase of portfolio securities.
2. Invest in any issuer for purposes of exercising control or
management.
3. Purchase securities of other investment companies except as
permitted by the Investment Company Act of 1940 (the "1940 Act") and the
rules and regulations thereunder.
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<PAGE>
4. Purchase or sell commodities or commodity contracts (including
futures contracts), except that for bona fide hedging and other permissible
purposes the Funds may purchase or sell financial futures contracts and may
purchase call or put options on financial futures contracts.
5. With respect to One Group Money Market, buy common stocks or voting
securities, or state, municipal or private activity bonds.
In addition, as a matter of fundamental policy, the Paragon Funds may not:
1. Purchase or sell commodities or commodities contracts (except
futures contracts, including but not limited to contracts for the future
delivery of securities or currency and futures contracts based on securities
indexes or related options thereon).
The following investment restrictions are NONFUNDAMENTAL and therefore can
be changed by the Board of Trustees without prior shareholder approval.
As a matter of nonfundamental policy, the One Group Funds may not:
1. Purchase or retain securities of any issuer if the officers or
Trustees of The One Group or the officers or directors of its investment
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).
3. Invest in illiquid securities in an amount exceeding, in the
aggregate 15% of the Fund's net assets (10% of net assets for One Group
Money Market). 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
and time deposits with a withdrawal penalty, non-negotiable instruments and
instruments for which no market exists.
4. Acquire securities that are subject to restrictions on resale
because they are not registered under the Securities Act of 1933, if such
investments would exceed 5% of the Fund's total assets.
5. With respect to One Group Money Market:
(i) write or purchase call options.
(ii) write or purchase put options.
6. 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, each One Group Fund shall not (1) invest more than 5% of
its 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 its net assets in
securities which are not readily marketable. For purposes of restriction (1)
in the preceding sentence, warrants acquired by the One Group Funds in units
or attached to other securities may be deemed to be without value.
7. So long as the One Group Fund shares are registered under the
securities laws of the State of California and such restrictions are
required as a consequence of such registration, the One Group Funds may
purchase securities of other open-end investment companies, provided that
the adviser to the One Group Funds waives its fee on that portion of the
assets placed in such open-end investment companies.
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<PAGE>
8. So long as their shares are registered under the securities laws of
the State of Arkansas and such restrictions are required as a consequences
of such registration, One Group Money Market, One Group Limited Volatility,
One Group Bond, and One Group Louisiana may not 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
total assets.
As a matter of nonfundamental policy, the Paragon Funds may not:
1. purchase securities of any issuer with a record of less than three
years' continuous operation, including predecessors, except U.S. Government
securities, securities of such issuers which are rated by at least one
NRSRO, municipal obligations, and obligations issued or guaranteed by any
foreign government or its agencies or instrumentalities, if such purchase
would cause the investments of a Fund in all such issuers to exceed 5% of
the value of the total assets of that Fund;
2. purchase from or sell portfolio securities of a Fund to any of the
officers or Trustees of the Trust, its adviser(s), its principal underwriter
or the members, officers or directors of its adviser(s) or principal
underwriter;
3. invest in other companies for the purpose of exercising control or
management;
4. purchase warrants of any issuer, except on a limited basis if, as a
result of such purchases by a Fund, no more than 2% of the value of its
total assets would be invested in warrants which are not listed on the New
York Stock Exchange or the American Stock Exchange and no more than 5% of
the value of the total assets of a Fund would be invested in warrants,
whether or not so listed, such warrants in each case to be valued at the
lesser of cost or market, but assigning no value to warrants acquired by a
Fund in units with or attached to debt securities;
5. knowingly purchase or retain securities of an issuer any of whose
officers, partners, directors, trustees or securities holders is an officer
or Trustee of the Trust or a member, officer or director of an investment
adviser of the Trust if one or more of such individuals owns beneficially
more than one-half of one percent (1/2 of 1%) of the securities (taken at
market value) of such issuer and such individuals owning more than one half
of one percent (1/2 of 1%) of such securities together own beneficially more
than 5% of such securities;
6. purchase securities on margin or make short sales, except in
connection with arbitrage transactions or unless, by virtue of its ownership
of other securities, a Fund has the right to obtain securities equivalent in
kind and amount to the securities sold and, if the right is conditional, the
sale is made upon the same conditions, except that a Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities and in connection with transactions involving forward
foreign currency exchange contracts;
7. invest in repurchase agreements maturing in more than seven days and
securities which are not readily marketable if as a result thereof, more
than 15% (10% in the case of Paragon Money Market) of the net assets of a
Fund (taken at market value) would be invested in such investment, or
8. purchase puts, calls, straddles, spreads and any combination thereof
if the value of the Fund's aggregate investment in such securities exceeds
5% of its total assets.
PURCHASE PROCEDURES
Shares of both the Paragon Funds and the One Group Funds are sold on a
continuous basis. Shares of the Paragon Funds may be purchased by wire or by
check through securities dealers located in Investment Centre Networks ("ICN
Centres") which are located in the offices of Premier Bank, N.A., among other
places, and through certain authorized dealers. Shares of the One Group Funds
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<PAGE>
may be purchased directly from their distributor, the One Group Services Company
(the "Distributor") by mail, telephone or wire. One Group shares also may be
purchased through a financial institution, such as a bank or savings and loan
association or insurance company.
Purchases and redemptions of shares of the Paragon Funds and the One Group
Funds 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
One Group Funds 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. The minimum initial and subsequent investment in the
Paragon Funds are $250 and $50, respectively. The minimums may be waived at the
discretion of Paragon Portfolio's officers.
The One Group Funds offer four classes of shares: Class A, Class B,
Fiduciary Class and Service Class. 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. Service
Class shares are offered to entities purchasing such shares on behalf of
investors requiring additional administrative and/or accounting services, such
as sweep processing. For further information, see "How to Invest in The One
Group" and "Alternative Sales Arrangements" in the One Group Prospectuses
accompanying this Combined Prospectus/ Proxy Statement.
The Paragon Funds offer two classes of shares: Class A and Class B. Class A
and Class B shares are offered to the general public. Class A shares also are
held by Premier Bank, N.A. as fiduciary for its customers. Investors purchasing
shares of Paragon Money Market are generally required to purchase Class A
shares. Class B shares of Paragon Money Market will be typically issued only
upon an exchange of Class B shares of any of the other Paragon Funds. For
further information, see "Alternative Purchase Agreements" in the Paragon Funds
Prospectus accompanying this Combined Prospectus/Proxy Statement.
SALES CHARGE
The One Group Funds and the Paragon Funds have similar sales charge
structures. Both One Group Class A and Paragon Fund Class A shares, other than
One Group Money Market and Paragon Money Market, are subject to a 4.5% (3% for
One Group Limited Volatility) initial sales charge based on a percentage of the
offering price. Persons who purchase $1 million or more of Class A shares are
not assessed a sales charge at the time of purchase. However, if such persons
redeem such shares prior to the first anniversary of purchase, a sales charge of
1.00% of purchase price will be assessed. One Group Class A shares, including
One Group Money Market, also are subject to a distribution and shareholder
services fee ("12b-1 fee") assessed pursuant to a distribution and shareholder
services plan. The 12b-1 fee is equal to .25% of average daily net assets.
Absent a waiver, the 12b-1 fee would be .35% of average daily net assets.
The One Group Services Company, in its role as Distributor, receives the
12b-1 fee from Class A shareholders for marketing and distribution. For this
fee, the Distributor provides comprehensive services, including: wholesaling and
telewholesaling, sales training, and strategic and tactical marketing support.
Shareholders benefit from such activities through asset growth, which could
ultimately enhance fund performance. Goldman, Sachs & Co., the Distributor for
Paragon Portfolio, currently does not provide these services.
Both Paragon Class B Shares and One Group Class B shares, other than One
Group Money Market Class B shares, are subject to a Contingent Deferred Sales
Charge ("CDSC") and a 12b-1 fee. One Group and Paragon shareholders redeeming
Class B shares prior to the sixth (fourth for One Group Limited Volatility)
anniversary of purchase are assessed a contingent deferred sales charge on an
amount equal to the lesser of the then current market value or the cost of the
shares being
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redeemed. The amount of the Contingent Deferred Sales Charge for both the One
Group and the Paragon Funds begins at 5% (3% for One Group Limited Volatility)
and declines over time. The One Group Class B shares are assessed a 12b-1 fee
ranging from .90% to 1.00% of average daily net assets. The Paragon Fund Class B
shares are assessed a 12b-1 fee equal to .75% of average daily net assets.
One Group Fiduciary Class shares are not subject to a sales charge at the
time of purchase or redemption, nor are they subject to a distribution and
shareholder services fee.
One Group Service Class shares are not subject to a sales charge at the time
of purchase or redemption, but are subject to a distribution and shareholder
services fee.
No sales charge will be imposed on any class of shares of the One Group
Funds distributed in the reorganization.
For additional information regarding sales charges for the One Group Funds
and the Paragon Funds see, "Fee Table" in this Combined Prospectus/Proxy
Statement.
EXCHANGE PRIVILEGES
Shareholders in the Paragon Funds and the One Group Funds enjoy different
exchange privileges.
One Group Fiduciary Class shareholders may exchange their shares for Class A
shares of that One Group Fund or for Class A or Fiduciary Class shares of
another fund of The One Group. The exchange of One Group Fiduciary Class shares
for One Group Class A shares may require the payment of a sales charge.
One Group Class A shareholders may exchange their shares for One Group
Fiduciary Class shares of that One Group Fund or for Fiduciary Class or Class A
shares of another Fund of The One Group, if the shareholder is eligible to
purchase such shares.
One Group Class B shareholders of a One Group Fund may exchange their shares
for Class B shares of any other fund of The One Group on the basis of the net
asset value of the exchanged Class B shares, without the payment of any CDSC
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 CDSC of either
the Fund from which the shares were exchanged or the Fund into which the shares
were exchanged.
One Group 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.
Shareholders in the One Group Funds are not assessed an exchange fee.
Shares of the Paragon Funds may be exchanged only for shares of the same
class of another Paragon Fund. No sales charge is imposed on exchanges except
that the applicable initial sales charge may be imposed on exchanges of Class A
shares of Paragon Money Market not previously acquired by exchange from one of
the other Paragon Funds. An exchange of Paragon Fund Class B shares will not be
subject to the applicable CDSC at the time of the exchange. However, Class B
shares acquired in an exchange will be subject to the CDSC of the shares
originally held. The Paragon Funds permit five free exchanges in each twelve
month period. Shareholders making additional exchanges may incur a $5.00
exchange fee.
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For further information on exchange privileges, see "Exchanges" in the One
Group Funds and Paragon Funds Prospectuses accompanying this Combined
Prospectus/Proxy Statement.
AUTOMATIC CONVERSION
One Group Class B shares automatically convert to Class A shares eight years
(six years for One Group Limited Volatility) after the shares were purchased,
and are then subject to the lower 12b-1 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.
Paragon Fund Class B shares automatically convert to Class A shares seven years
after their initial purchase. Like One Group conversions, the Paragon Fund
conversions are on the basis of the relative net asset values of the two
classes. See "Conversion Feature" in the One Group Prospectuses and "Class B
Shares" in the Paragon Funds Prospectus accompanying this Combined
Prospectus/Proxy Statement.
REDEMPTION PROCEDURES
Both the Paragon Funds and the One Group Funds permit shareholders to redeem
their shares without charge (except for the CDSC assessed Class B shares, as
described above under "Sales Charge") on any Business Day; shares may ordinarily
be redeemed by mail, telephone or wire. All redemption orders are effected at
the net asset value per share next determined for One Group and Paragon Class A
shares and One Group Fiduciary Class shares, and at net asset value per share
next determined reduced by any applicable CDSC for Paragon and One Group Class B
shares, after receipt of a valid request for redemption. Payment to One Group
shareholders for shares redeemed are made within seven days after receipt by the
One Group Transfer Agent of the request for redemption. The Paragon Funds
normally will mail redemption proceeds to shareholders on the next Business Day
following the redemption request, provided such redemption request is received
by 3:00 p.m. Louisiana time. For additional information on redemption
procedures, see "Redemptions" in the One Group Prospectuses and "Redemption of
Shares" in the Paragon Funds Prospectus, both accompanying this Combined
Prospectus/Proxy Statement.
DISTRIBUTIONS
On the last Business Day of each month, One Group Equity, One Group Growth
and One Group Gulf South declare substantially all net investment income
(exclusive of capital gains) as a dividend for shareholders of record as of the
close of business on that day. Net investment income is distributed in the form
of periodic dividends to shareholders of record of each Fund on the first
business day of each month. Currently, capital gains, if any, will be
distributed at least annually. Shareholders of the One Group Equity, One Group
Growth, and One Group Gulf South automatically receive all income dividends and
capital gain distributions in additional Class A, Class B and 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.
For further information, see "Dividends" in the One Group Equity, One Group
Growth and One Group Gulf South Prospectuses accompanying this Combined
Prospectus/Proxy Statement.
Substantially all of the net investment income (exclusive of capital gains)
of One Group Money Market is determined and declared on each Business Day 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 One
Group Money Market on the first Business Day of each month. Any capital gains
will be distributed at least annually. Shareholders automatically receive all
income dividends and capital gain distributions in additional Class A, Service
Class 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. Reinvested dividends and distributions receive the same
tax treatment as dividends and distributions paid in cash.
For One Group Limited Volatility, One Group Bond and One Group Louisiana,
net investment income (exclusive of capital gains) is determined and declared
daily, and is distributed in the form of periodic dividends to shareholders of
One Group Limited Liability, One Group Bond and One Group Louisiana on the first
Business Day of each month. Capital gains of the Fund, if any, will be
distributed
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<PAGE>
at least annually. To maintain a relatively even rate of distributions from
these Funds rather than having substantial fluctuations from period to period,
the monthly distributions level from the One Group Limited Liability, One Group
Bond and One Group Louisiana 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. Reinvested dividends and distributions receive the
same tax treatment as dividends and distributions paid in cash.
Each of Paragon Money Market, Paragon Government, Paragon Bond and Paragon
Louisiana declares a dividend of its net investment income daily and distribute
such dividend on or about the last calendar day of the month. All or
substantially all long-term and short-term capital gains in excess of available
capital losses, if any, of Paragon Government, Paragon Bond and Paragon
Louisiana are distributed at least annually.
Net short-term capital gains, if any, of the Paragon Money Market are
distributed in accordance with the requirements of the Code, as amended, and may
be reflected in this Fund's daily distributions. Each of Paragon Growth and
Paragon Equity typically declares and distributes a dividend of net investment
income on or about the last calendar day of every month and distributes all
long-term and short-term capital gains in excess of available capital losses, if
any, at least annually. Paragon Gulf South typically declares and distributes a
dividend of its net investment income semi-annually and distributes all
long-term and short-term capital gains in excess of available capital losses, if
any, at least annually.
A shareholder in a Paragon Fund may elect to have dividends, capital gains
distributions or both either paid in cash or reinvested in shares of the same
class of that Fund or one of the other Paragon Funds, as described under
"Purchase of Shares -- Cross-Reinvestment of Dividends and Distributions" in the
Paragon Fund prospectus accompanying this Combined Prospectus/Proxy Statement.
Such reinvestments will be made at the net asset value per share and will not be
subject to any initial or contingent deferred sales charge.
NET ASSET VALUE
The net asset value of shares of One Group Limited Volatility, One Group
Bond, One Group Equity, One Group Louisiana, One Group Growth, One Group Gulf
South, Paragon Government, Paragon Bond, Paragon Equity, Paragon Louisiana,
Paragon Growth and Paragon Gulf South is determined as of 4:00 p.m., Eastern
time, on the days that the New York Stock Exchange is open for trading. The net
asset value of One Group Money Market is determined daily at 2:00 p.m. and 4:00
p.m., Eastern time on the days that the New York Stock Exchange is open for
trading. The net asset value of Paragon Money Market is determined daily at 4:00
p.m., Eastern time, and immediately after the determination of net investment
income earned by shareholders of record at 4:00 p.m. Eastern time, on each
Business Day.
Both Paragon Money Market and One Group Money Market value securities based
on the amortized cost method of valuation pursuant to Rule 2a-7 under the
Investment Company Act of 1940.
One Group Limited Volatility, One Group Bond, One Group Equity, One Group
Louisiana, One Group Growth, and One Group Gulf South value securities, the
principal market for which is a securities exchange, 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 traded. 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. The Funds value securities and other assets
for which quotations are not readily available at their fair value as determined
in good faith under consistently applied procedures established by and under the
general supervision of the One Group Trustees. The Funds value short-term
securities at either amortized cost or original
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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 One Group or their
delegates.
The Paragon Funds value securities in a substantially similar but slightly
different manner. Portfolio securities of Paragon Government, Paragon Bond,
Paragon Equity, Paragon Louisiana, Paragon Growth and Paragon Gulf South are
valued as follows: (a) stocks which are traded on any U.S. stock exchange or the
Nasdaq National Market ("NASDAQ") are valued at the last sale price on the
principal exchange on which they are traded on NASDAQ (if NASDAQ is the
principal market for such securities) on the valuation day or, if no sale
occurs, at the mean between the closing bid and closing asked price; (b)
over-the-counter stocks not quoted on NASDAQ are valued at the last sale price
on the valuation day or, if no sale occurs, at the mean between the last bid and
asked price; (c) securities listed or traded on foreign exchanges (including
foreign exchanges whose operations are similar to the U.S. over-the-counter
market) are valued at the last sale price on the exchange where they are
principally traded on the valuation day or, if no sale occurs, at the official
bid price (both the last sale price and the official bid price are determined as
of the close of the London Foreign Exchange); (d) debt securities are valued at
prices supplied by a pricing agent selected by the Paragon Portfolio's Trustees,
which prices reflect broker/dealer-supplied valuations and electronic data
processing techniques, if those prices are deemed to be representative of market
values at the close of business of the New York Stock Exchange; (e) options
contracts are valued at the last sale price on the market where any such options
contract is principally traded; and (f) all other securities and other assets,
including debt securities, for which prices are supplied by a pricing agent but
are not deemed by the relevant Adviser to be representative of market values,
but excluding money market instruments with a remaining maturity of sixty days
or less and including restricted securities and securities for which no market
quotation is available, are valued at fair value under procedures established by
the Trustees or the Valuation Committee, if any, although the actual calculation
may be done by others. Portfolio securities traded on more than one United
States national securities exchange or foreign securities exchange are valued at
the last sale price on each Business Day at the close of the exchange
representing the principal market for such securities.
TAX CONSIDERATIONS
Consummation of this transaction is subject to the condition that the One
Group Funds and the Paragon Funds receive an opinion of Ropes & Gray, counsel to
The One Group, to the effect that the transaction will not result in the
recognition of gain or loss for Federal income tax purposes by the Funds under
Sections 361 and 1032 of the Internal Revenue Code of 1986, as amended, (the
"Code") or their respective shareholders under Section 354 of the Code.
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RISK FACTORS
Because of the similarities in investment objectives and policies, the
Paragon Funds and the One Group Funds (for purposes of this discussion only,
collectively the "Funds") are subject to substantially similar investment risk
factors.
For One Group Equity, One Group Growth, One Group Gulf South, Paragon
Equity, Paragon Growth, and Paragon Gulf South, changes in the value of
portfolio securities will not affect cash income, if any, derived from those
securities but will affect the Funds' net asset value. Because the Funds invest
primarily in equity securities, which fluctuate in value, the Funds' shares will
fluctuate in value.
Certain investment management techniques that the Funds may use, such as the
purchase and sale of futures, options and forward commitments, could expose the
Funds to potentially greater risk of loss than more traditional equity
investments. 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, the Funds would be required to make daily
cash payments to maintain the required margin. In such situations, if the Funds
have insufficient cash, they may have to sell portfolio securities to meet daily
margin requirements at a time when it may be disadvantageous to do so. In
addition, the Funds may be required to make delivery of the instruments
underlying futures contracts that they hold. The One Group Funds will enter into
futures contracts only for bona fide hedging purposes and will not enter into
futures contracts to the extent that the value of the futures contracts held
would exceed 25% of the respective One Group Fund's total assets.
The risk associated with options transactions is that the Adviser may
incorrectly predict movements in the prices of individual securities,
fluctuations in markets, and movements in interest rates. In addition, there may
be imperfect correlation, or no correlation, between the changes in market value
of the securities held by the Funds and the price of options. Further, there may
not be a liquid secondary market for the options. Finally, while the Funds will
receive a premium when they write covered call options, they may not participate
fully in a rise in the market value of the underlying security. Each One Group
Fund will limit the writing of call and put options to 25% of its total assets.
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 settlement. In addition, the Funds bear the risk that a seller may not
consummate the trade, resulting in the Funds incurring a loss or missing the
opportunity to obtain an advantageous price. Commitments to purchase when-issued
securities will not, under normal market conditions, exceed 25% of any Funds'
total assets, and a commitment will not exceed 90 days.
The Funds may enter into repurchase agreements and the One Group Funds may
enter into reverse repurchase agreements. With a reverse repurchase agreement,
the One Group Funds bear 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. With a repurchase agreement, the Funds bear the risk
of loss in the event that the other party defaults on its obligations and the
Funds are either delayed or prevented from disposing of the collateral
securities, or the Funds realize a loss on the sale of the collateral
securities. The Funds will enter into repurchase agreements only with financial
institutions deemed to present a minimal risk of bankruptcy during the term of
the agreement.
As stated above, the Funds may purchase U.S. government agency securities.
Obligations of certain agencies and instrumentalities of the U.S. government are
supported by the full faith and credit of the U.S. Treasury. Other obligations
are supported by (l) the right of the issuer to borrow from the Treasury; (2)
the discretionary authority of the U.S. government to purchase the agency's
obligations; and (3) the credit of the instrumentality. No assurance can be
given that the U.S.
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government will provide financial support to U.S. government-sponsored agencies
or instrumentalities if it is not obligated to do so by law. The Funds will
invest in the obligations of such agencies or instrumentalities only when the
Adviser believes that the credit risk is minimal.
The One Group Funds may invest in separately traded interest and principal
components of U.S. Treasury obligations known as STRIPS, CUBES, TIGRS, TRS, and
CATS. The Paragon Funds may invest in STRIPS, TIGRS, and CATS. These instruments
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 principal and interest. Consequently, these securities
may be subject to greater interest rate volatility than interest-paying U.S.
Treasury obligations. The One Group Funds not may invest more than 20% of their
total assets in STRIPES, CUBES, TIGRS, TRS, and CATS.
In order to generate additional income, the Funds may lend up to 33% of the
securities held in their portfolios. The loans will be collateralized to at
least 100% of market value plus accrued interest on the securities lent. These
loans carry the risk of delay in recovery of the securities or even loss of
rights in the collateral should the borrower of the securities fail financially.
Investments in variable and floating rate instruments present the risk that
current interest rates on such obligations may not accurately reflect existing
market rates. The One Group Funds will not invest more than 15% of their total
assets (10% for One Group Money Market) in variable and floating rate
instruments for which no readily available market exists.
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 Funds. 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 Funds; political or
social instability, and diplomatic developments, which could affect the value of
investments in those countries. Investments in all types of foreign obligations
or securities will not exceed 25% of the net assets of the One Group Funds.
Because Paragon Gulf South, One Group Gulf South, and One Group Louisiana
are non-diversified, their 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. In addition, Paragon Gulf South and One
Group Gulf South invest in emerging growth companies. Investing in emerging
growth companies involves greater risk than is customarily associated with
investments in more established companies. Emerging growth companies often have
limited product lines, markets, or financial resources, and they may be
dependent on fewer management resources. The securities of emerging growth
companies may have limited marketability and may be subject to more abrupt or
erratic market movements than securities of larger, more established growth
companies or the market averages in general. Shares of Paragon Gulf South and
One Group Gulf South, therefore, are subject to greater fluctuation in value
than shares of a growth fund which invests entirely in proven growth stocks.
Paragon Gulf South and One Group Gulf South are intended for investors who can
bear the risk of losing a portion or all of their investment.
One Group Louisiana and Paragon Louisiana invest in securities issued by the
State of Louisiana and its political subdivision and instrumentalities.
Louisiana's general obligation bonds are currently rated Baa1 by Moody's and A
by S&P. S&P upgraded Louisiana from BBB+ in December 1990. Both S&P and Moody's
affirmed their ratings for the State in March, 1995. Louisiana's ratings reflect
an ongoing recovery process from the severe financial problems which developed
after oil prices declined
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in the mid-to-late 1980s. 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.
It should be noted that the General Fund of the State of Louisiana could be
impacted by certain pending Medicaid issues. Currently, Louisiana is eligible to
receive up to $1.27 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 funding by
over $300 million. In fiscal year 1996, the estimated loss of disproportionate
share funding is over $270 million.
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.
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 in the nation as a
percentage of property value, 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.
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
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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 stock-holders. 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. 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 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.
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, 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. In addition, 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.
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 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
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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.
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.
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 One Group 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 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.
New options and futures contracts and other financial products continue to
be developed for the One Group Funds. 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.
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As with other extensions of credit there are risks in lending portfolio
securities of delay in recovering or even loss of rights in the collateral
should the borrower of the securities fail financially. However, the loans would
be made only to firms deemed by the Adviser to be of good standing, and when, in
the judgment of the Adviser, the consideration which can be earned currently
form securities loans of this type justifies the attendant risk. If the Adviser
determines to make securities loans, it is intended that the value of the
securities loaned would not exceed 33 1/3% of the value of the total assets of
the lending Fund.
The purchase price and subsequent valuation of restricted securities
normally reflect a discount from the price at which such securities trade when
they are not restricted, since the restriction makes them less liquid. The
amount of the discount from the prevailing market price is expected to vary
depending upon the type of security, the character of the issuer, the party who
will bear the expenses of registering the restricted securities and prevailing
supply and demand conditions.
The above discussion is qualified in its entirety by the disclosure in the
One Group Funds and Paragon Funds Prospectuses accompanying this Combined
Prospectus/Proxy Statement.
MANAGEMENT OF THE FUNDS
THE ADVISER
The One Group 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 One Group, including those of One Group Money Market, One Group
Limited Volatility, One Group Bond, One Group Equity, One Group Louisiana, One
Group Growth and One Group Gulf South, and continuously reviews, supervises and
administers The One Group's investment program. The Adviser discharges its
responsibilities subject to the supervision of, and policies established by, the
Board of Trustees of The One Group. The Adviser is an indirect, wholly-owned
subsidiary of BANC ONE CORPORATION, a bank holding company incorporated in the
State of Ohio.
Paragon Portfolio and the Adviser also have entered into an investment
advisory agreement (the "Advisory Agreement"). Under the Advisory Agreement, the
Adviser makes the investment decisions for the assets of Paragon Portfolio,
including those of Paragon Money Market, Paragon Government, Paragon Bond,
Paragon Equity, Paragon Louisiana, Paragon Growth and Paragon Gulf South, and
continuously reviews, supervises and administers Paragon's investment program.
The Adviser discharges its responsibilities subject to the supervision of, and
policies established by, the Board of Trustees of Paragon Portfolio.
Goldman Sachs Asset Management ("GSAM") currently serves as Sub-Adviser to
Paragon Money Market pursuant to a Sub-Advisory Agreement ("Agreement") between
the Adviser and GSAM. The Agreement terminates in May, 1996 and will not be
renewed.
Richard R. Jandrain, III, Senior Managing Director of Equity Securities, is
responsible for the development and implementation of the equity investment
policies for The One Group, including One Group Equity, One Group Growth and One
Group Gulf South. Mr. Jandrain also serves as Co-Manager of One Group Gulf
South. 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.
R. Lynn Yturri is the Manager of One Group Equity, having served in that
position since July 1993. Mr. Yturri also is Manager of The One Group Large
Company Growth Fund, having served in that position since the Fund commenced
operations in January, 1994 as the successor fund to the Sun Eagle Equity Growth
Fund, which was acquired by The One Group. Prior to January, 1994, Mr. Yturri
served as the Director of Portfolio Management at Banc One Investment Advisors
Corporation in Arizona. Mr. Yturri also served as Manager of Trust Investments
at The Valley National Bank
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of Arizona before the bank was acquired by BANC ONE CORPORATION in 1993 and as
Portfolio Manager of the predecessor funds to One Group Equity since 1981.
Following the reorganization, Mr. Yturri will continue to manage One Group
Equity.
Michael D. Weiner has served as Manager of One Group Growth since its
inception in February, 1996. Mr. Weiner has served as Director of Equity
Research with the Adviser since June 1994. 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.
Donald E. Allred serves as Co-Manager of One Group Gulf South. Mr. Allred
joined the Adviser in January, 1996 when BANC ONE CORPORATION acquired Premier
Bancorp, Premier's parent. Prior to joining the Adviser, Mr. Allred served as
Chief Investment Officer for Premier since 1985. In addition, Mr. Allred was
manager of Premier Bank's Value Growth and Gulf South strategies at the tme of
conversion to the Paragon Value Growth Fund and Paragon Gulf South Growth Fund.
Gary J. Madich, Senior Managing Director of Fixed Income Securities, is
responsible for the development and implementation of the fixed income policies
for The One Group, including One Group Money Market, One Group Bond, One Group
Limited Volatility, and One Group Louisiana. 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.
James Sexton has been Manager of One Group Limited Volatility since March
1995. In addition, Mr. Sexton has managed The One Group Intermediate Bond Fund
since its inception in January 1994. Mr. Sexton has been employed by the Adviser
and its affiliates since 1980.
Thomas E. Donne has been Manager of One Group Bond since January 1995. Mr.
Donne has held various investment management positions with the Adviser or its
affiliates for the past seven years.
All investment decisions with respect to One Group Money Market and One
Group Louisiana are made by a committee, and no one person is primarily
responsible for making recommendations to that committee.
THE DISTRIBUTOR AND ADMINISTRATOR
The One Group Services Company, Inc., a wholly-owned subsidiary of BISYS
Fund Services, Inc., (the "Distributor" and the "Administrator") currently
serves as the distributor and administrator of the One Group Funds. The
Distributor also serves as Distributor of The Paragon Funds, which are
administered by Goldman Sachs Asset Management. The Distributor and
Administrator will continue to serve in those capacities following the
reorganization. The Adviser serves and will continue to serve as
Sub-Administrator to each of the One Group Funds, and as of March 1, 1996 will
serve as Sub-Administrator to each of the Paragon Funds.
THE TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company currently acts as Custodian for the One
Group Funds and the Paragon Funds. The Custodian will not change as a result of
the reorganization. State Street Bank and Trust Company also serves as Transfer
Agent to the One Group Funds. The Transfer Agent for the Paragon Funds is
Goldman, Sachs & Co. Following the reorganization, State Street Bank & Trust
Company will remain as Transfer Agent.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Ropes & Gray currently serves, and after the reorganization will continue to
serve, as counsel to the One Group Funds. Hale and Dorr currently serves as
counsel to the Paragon Funds. Coopers & Lybrand L.L.P. serves as the independent
accountants to the One Group Funds. Coopers & Lybrand L.L.P. will continue in
this capacity after the reorganization. Price Waterhouse LLP currently serves as
independent accountants to the Paragon Funds.
43
<PAGE>
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
Below is a discussion by the management of The One Group and Paragon
Portfolio of Fund performance. This section does not include a discussion of the
performance of One Group Louisiana, One Group Growth and One Group Gulf South
because these Funds have not yet commenced operations.
ONE GROUP MONEY MARKET FUND
The following information was provided by The One Group Annual Report to
Shareholders ("Annual Report") for the period ended June 30, 1995. The
Management Discussion contained in the Annual Report in its entirety, is as
follows:
THE ONE GROUP U.S. TREASURY SECURITIES MONEY MARKET FUND
The seven-day yield on The One Group U.S. Treasury Securities Money Market
Fund Fiduciary share class was 5.62% on June 30, 1995, up from 3.69% on June 30,
1994.
As short-term interest rates rapidly increased during the last six months of
1994, the Fund's earning power increased, as reflected by its yield. Similarly,
as short-term interest rates decreased somewhat during the first six months of
1995, the Fund's yield has stabilized.
The Fund's focus on repurchase agreements coupled with selected longer-dated
maturities helped its performance throughout the one-year period. In
anticipation of the Federal Reserve's aggressive moves to tighten the Federal
Funds rate, the Treasury yield curve remained relatively steep during the final
six months of 1994 and into early 1995. Subsequently, yields on repurchase
agreements increased.
As we moved further into 1995, a slowing economy and expectations that the
Fed soon may ease its monetary policy caused the Treasury yield curve to
flatten. In this environment, there is little to no yield difference between
overnight securities and those with one-year maturities. Consequently, we
increased the Fund's holdings of overnight repurchase agreements, which have
offered the same yield as money market securities with longer maturities but
with less relative risk.
This strategy of focusing on repurchase agreements caused the Fund's average
maturity to decrease to 36 days, down from 49 days on June 30, 1994.
In the months ahead, we do not anticipate making any major changes to the
Fund until the economic outlook becomes clearer. Some signs point to a further
slowing of economic activity, while others point to a possible economic rebound
later in the year. The Fund's future strategy also will be influenced by the
politics surrounding the U.S. budget, ongoing trade disputes with Japan and
worldwide economic conditions.
Roger C. Hale, CFA, CFP
FUND MANAGER
Gary J. Madich, CFA
SENIOR MANAGING DIRECTOR OF FIXED-INCOME SECURITIES
<TABLE>
<CAPTION>
1-YEAR TOTAL RETURN 5-YEAR TOTAL RETURN AVERAGE ANNUAL
CLASS OF 7-DAY YIELD AT AT AT TOTAL RETURN SINCE
SHARES JUNE 30, 1995 JUNE 30, 1995 JUNE 30, 1995 INCEPTION
- -------------- --------------- --------------------- --------------------- -------------------
<S> <C> <C> <C> <C>
Fiduciary 5.62% 5.07% 4.39% 5.58%
Class A 5.37% 4.81% NA 3.37%
</TABLE>
44
<PAGE>
ONE GROUP LIMITED VOLATILITY FUND
The following information was provided by the Annual Report to Shareholders
for the period ended June 30, 1995. The Management Discussion contained in the
Annual Report in its entirety, is as follows:
THE ONE GROUP LIMITED VOLATILITY BOND FUND
For the fiscal year ended June 30, 1995, The One Group Limited Volatility
Bond Fund Fiduciary share class showed a solid total return of 7.96%). Interest
rates, as measured by the two-year U.S. Treasury note, fell by approximately
0.4% during the period. This resulted in a 20-cent gain in the Fund's net asset
value (NAV). (For information on other share classes, please see page 8.)
Despite the sizable decline in interest rates, the Fund's 30- day SEC yield
for the Fiduciary share class rose modestly from June 30, 1994, when it was
5.55%, to June 30, 1995, when it was 5.97%. The Fund's yield benefited from
allocations to investment-grade asset-backed and U.S. agency mortgage-backed
securities.
At 7.96%, the Fund's one-year total return performance compares favorably to
the 8.30% total return on the Lehman Brothers 1- to 3-Year Government index,
which consists of U.S. government and agency securities with maturities of one
to three years (see chart on page 8). The Fund was able to outperform the index
by diversifying into U.S. agency mortgage securities and investment-grade
asset-backed securities. In addition, the Fund's duration, at 2.17 years, is
slightly greater than the index's 1.7 years. (Duration is a measure of a fund's
sensitivity to interest rate changes; a lower number indicates less sensitivity,
a higher number indicates more sensitivity.) While interest rates showed a
steady increase during the last half of 1994 and into early 1995, they
experienced an overall decline during the entire one-year period from July 1,
1994, to June 30, 1995. As a result, investments with higher durations showed
relatively greater price appreciation than those with shorter durations.
During the year, the Fund's prospectus was changed, raising the minimum U.S.
government investment position from 50% to 65%. In practice, the Fund always
held a sizable position in these securities, so the change had little impact.
The Fund also holds up to 35% in investment-grade asset-backed and corporate
securities, and this diversification tends to enhance the Fund's overall return
while controlling risk.
The Fund's overall strategy during the period was to seek a high level of
interest income within the parameters of a short duration and a government- and
high-quality-corporate-bond framework. On June 30, 1995, the Fund was invested
in U.S. Treasury and agency securities (42.7% of portfolio), U.S. agency
mortgage securities (22.5%), corporate securities (17.0%), asset-backed
securities (14.2%) and U.S. government money market securities (3.5%). The
mortgage, corporate and asset-backed components were held to boost the Fund's
interest income. In addition, timely shifting between these sectors as well as
our core position in U.S. Treasury obligations helped to boost total return over
the period.
Within the Treasury component, the Fund held a small percentage of assets in
intermediate-maturity obligations. The overall decline in interest rates during
the period resulted in an approximately 5% price increase for some of these
holdings, in addition to the interest income they also earned. The Fund also
held select floating-rate, investment-grade corporate obligations that earned
high interest income, which helped overall Fund performance.
In the mortgage securities market, the decline in interest rates so far this
year has increased the prospect that mortgage-holders will prepay their existing
loans. Recently, this has caused mortgage-backed securities with the highest
interest rates to lag the market. We have viewed this as an opportunity to add
to the Fund's mortgage securities position, primarily in securities with
mid-level interest rates and relatively low prepayment risk.
45
<PAGE>
We do not expect to make any significant changes to the Fund's investment
policy or strategy over the near term. We will continue to rely on sector
diversification and security selection strategies in the Fund to strive to add
value for shareholders.
James A. Sexton, CFA,
FUND MANAGER
Gary J. Madich, CFA,
SENIOR MANAGING DIRECTOR OF FIXED-INCOME SECURITIES
46
<PAGE>
THE ONE GROUP LIMITED VOLATILITY BOND FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30,
1995
<S> <C> <C>
Since Inception
1 Year (9/4/90)
Fiduciary 7.96% 7.57%
Value of $10,000 Investment
Fiduciary Index
09/04/90 10,000 10,000
06/30/91 10,799 10,768
06/30/92 12,068 11,881
06/30/93 13,066 12,658
06/30/94 13,169 12,850
06/30/95 14,218 13,836
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30,
1995
<S> <C> <C> <C>
Since Inception
1 Year (2/18/92)
Class A 7.67% 5.84%
Class A* 4.43% 4.88%
*Reflects 3.00% Sales Charge
Value of $10,000 Investment
Class A Class A* Index
2/18/92 10,000 9,698 10000
6/30/92 10,356 10,043 10294
6/30/93 11,188 10,851 10967
6/30/94 11,243 10,904 11134
6/30/95 12,105 11,740 11988
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30,
1995
<S> <C> <C> <C>
Since Inception
1 Year (1/14/94)
Class B 7.18% 3.56%
Class B** 4.18% 1.56%
**Reflects Contingent Deferred Sales Charge
Value of $10,000 Investment
Class B Class B** Index
1/14/94 10,000 9,600 10,000
6/30/94 9,819 9,433 9,951
6/30/95 10,524 10,229 10,715
</TABLE>
47
<PAGE>
ONE GROUP BOND FUND
The following information was provided by the Annual Report to Shareholders
for the period ended June 30, 1995. The Management Discussion contained in the
Annual Report in its entirety, is as follows:
THE ONE GROUP GOVERNMENT BOND FUND
The One Group Government Bond Fund Fiduciary share class showed a total
return of 12.04% for the one-year period ended June 30, 1995. (For information
on other share classes, please see page 12.)
Despite the overall decline in interest rates during the period, the Fund's
30-day SEC yield remained relatively stable from June 30, 1994, when it was
6.48%, to June 30, 1995, when it was 6.23%.
On a total return basis, the Fiduciary share class of the Fund performed
better than the 10.82% total return of a comparable market benchmark, the
Solomon Brothers 3- to 7-year Treasury index, which consists of U.S. government
agency and Treasury securities and agency mortgage-backed securities for the
year ended June 30, 1995. (See performance chart for comparisons.)
For the most part, by successfully shifting the portfolio's weightings
between Treasury and mortgage-backed securities, the Fund was able to provide
its attractive one-year total return. During the last half of 1994, all sectors
of the bond market performed poorly. Accordingly, the Fund's Treasury weighting
was increased and its mortgage-security weighting was decreased during this
period.
By returning a significant exposure to the mortgage-backed securities market
during the early part of 1995, the Fund benefited when these bonds rebounded
slightly. Then, as the overall bond market rallied, Treasury securities began
outperforming mortgage securities. We had increased the Fund's weighting toward
Treasury securities and were able to take advantage of this performance. We
maintained this weighting into mid-May, when mortgage-backed securities again
looked relatively more attractive. At the end of May and into June 1995, the
mortgage position once again was increased.
The Fund's performance also benefited from a neutral maturity structure that
allowed it to take advantage of the flattening yield curve. (The Fund's average
duration changed little from June 30, 1994, when it was 4.77 years, to June 30,
1995, when it was 4.60 years.) We also made occasional moves to purchase
securities at the long end of the Treasury market, which modestly helped the
Fund's performance.
To protect the portfolio from 1994's bear market and enable the portfolio to
take advantage of 1995's bull market, we made modest adjustments to the Fund's
duration. (Duration is a measure of a fund's sensitivity to interest rate
changes; a lower number indicates less sensitivity, a higher number indicates
more sensitivity.) Going into 1994 the Fund had a relatively short duration. As
interest rates rose, we gradually increased duration to lock in higher yields.
As interest rates fell during the spring, we gradually lowered duration attempt
to control volatility and preserve portfolio income.
As we look toward the next one-year period, we are enthusiastic about
mortgage-backed securities, and we will continue to adjust the Fund's Treasury
and mortgage securities positions as market conditions warrant.
Thomas E. Donne, CFA,
FUND MANAGER
Gary J. Madich, CFA,
SENIOR MANAGING DIRECTOR OF FIXED-INCOME SECURITIES
48
<PAGE>
THE ONE GROUP GOVERNMENT BOND FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30,
1995
<S> <C> <C>
Since Inception
1 Year (2/8/93)
Fiduciary 12.04% 5.17%
Value of $10,000 Investment
Fiduciary Index
02/08/93 10,000 10,000
06/30/93 10,351 10,100
06/30/94 10,068 9,995
06/30/95 11,281 11,076
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30,
1995
<S> <C> <C> <C>
Since Inception
1 Year (3/5/93)
Class A 11.84% 4.25%
Class A* 6.81% 2.20%
*Reflects 4.50% Sales Charge
Value of $10,000 Investment
Class A Class A* Index
03/05/93 10,000 9,549 10,000
06/30/93 10,171 9,713 10,100
06/30/94 9,849 9,405 9,995
06/30/95 11,015 10,518 11,076
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30,
1995
<S> <C> <C> <C>
Since Inception
1 Year (1/14/94)
Class B 11.20% 3.85%
Class B** 7.20% 1.20%
**Reflects Contingent Deferred Sales Charge
Value of $10,000 Investment
Class B Class B** Index
1/14/94 10,000 9,600 10,000
6/30/94 9,501 9,129 9,684
6/30/95 10,566 10,715 10,731
</TABLE>
49
<PAGE>
ONE GROUP EQUITY FUND
The following information was provided by the Annual Report to Shareholders
for the period ended June 30, 1995. The Management Discussion contained in the
Annual Report in its entirety, is as follows:
THE ONE GROUP INCOME EQUITY FUND
The One Group Income Equity Fund fiduciary share class showed a total return
of 21.04% for the one-year period ended June 30, 1995. (For information on other
share classes, please see page 8.) The Fund, on average, held 82% of its assets
in stocks, 12% of its assets in convertible securities and 5% in cash during the
period.
During the past year the financial markets were highly volatile, with
investors consistently showing their preference for high-quality growth
companies. Our bias toward these high-quality companies allowed the Fund to
weather difficult market conditions during the second half of 1994 and take
advantage of the strong stock market during the first half of 1995.
The Fund performed well against the 16.33% one-year total return of its
benchmark, the Lipper Income Equity Fund average, but lagged the one-year total
return of 26.07% for the S&P 500 index. The difference in performance was due to
volatility in interest rates and its subsequent impact on the income-oriented
nature of the Fund. During the first half of the period interest rates rose,
negatively affecting the portion of the portfolio invested in interest-rate
sensitive companies, such as electrical utilities. In the second half, the Fund
was able to regain some of its earlier losses as short-term rates stayed high
while long-term rates declined. Overall, though, these volatile conditions
caused investors to react nervously.
The Fund's primary strategy during the period was to conduct a focused
industry review designed to maintain a high-quality portfolio. We intensively
reviewed each holding in the Fund according to strict growth and quality
parameters. As a result, we removed eight issues whose fundamentals were
deteriorating and purchased one new issue with improving fundamentals,
specifically greater financial strength and better dividend growth prospects.
Only three of the top 10 issues remained in the top 10 throughout the year. On
June 30, 1995, the Fund's top 10 holdings were Philip Morris Companies, Inc.,
Sears Roebuck & Co., Lincoln National Corp., Warner-Lambert Co., Bristol-Myers
Squibb Co., Baxter International, Inc., Exxon Corp., McGraw-Hill Companies,
Inc., Dow Chemical, and AT&T. We believe that these companies add higher
quality, better earnings prospects, dividend growth potential and
diversification to the portfolio.
Along with the sector review and upgrading process, we maintained a highly
diversified posture during the year, with most market sectors represented in the
Fund. There were many outstanding performances from individual holdings,
particularly among such high-quality growth holdings as Coca-Cola, Boeing,
Browning-Ferris and Xerox. The Fund's performance also benefited from the
mid-1994 takeover of McKesson Corp., a drug distribution company. For the 1994
calendar year, this stock was up 81%, making it the Fund's biggest winner for
the year.
Given the all-time highs recently experienced in the market, we are looking
for new investments in areas that have lagged but also have good value and
improving fundamentals. In addition, we will continue to monitor the economic
and interest rate climates as they influence fund performance. Since there
remains a chance that the U.S. economy will weaken in the coming months, we have
reduced the portion of the portfolio heavily affected by economic activity.
R. Lynn Yturri,
FUND MANAGER
Richard R. Jandrain III,
SENIOR MANAGING DIRECTOR OF EQUITY SECURITIES
50
<PAGE>
THE ONE GROUP INCOME EQUITY FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30,
1995
<S> <C> <C> <C>
Since Inception
1 Year 5 Year (7/2/87)
Fiduciary 21.04% 10.99% 9.73%
Value of $10,000 Investment
Fiduciary Index
7/2/87 10,000 10,000
6/30/88 9,331 8,858
6/30/89 11,065 10,674
6/30/90 12,480 12,430
6/30/91 13,414 13,344
6/30/92 15,072 15,136
6/30/93 16,815 17,195
6/30/94 17,365 17,440
6/30/95 21,019 21,978
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30,
1995
<S> <C> <C> <C>
Since Inception
1 Year (2/18/92)
Class A 20.79% 10.43%
Class A* 15.37% 8.93%
*Reflects 4.50% Sales Charge
Value of $10,000 Investment
Class A Class A* Index
02/18/92 10,000 9,551 10,000
06/30/92 10,079 9,926 9,993
06/30/93 11,226 10,722 11,353
06/30/94 11,557 11,039 11,515
06/30/95 13,961 13,334 14,511
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30,
1995
<S> <C> <C> <C>
Since Inception
1 Year (1/14/94)
Class B 19.91% 10.63%
Class B** 15.91% 8.00%
**Reflects Contingent Deferred Sales Charge
Value of $10,000 Investment
Class B Class B** Index
1/14/94 10,000 9,600 10,000
6/30/94 9,663 9,280 9,658
6/30/95 11,587 11,187 12,171
</TABLE>
51
<PAGE>
PARAGON GOVERNMENT FUND
The following information was provided by the Semi-Annual Report to
Shareholders for the period ended May 31, 1995. The Management Discussion
contained in the Semi-Annual Report in its entirety, is as follows:
PARAGON SHORT-TERM GOVERNMENT FUND
For the six months ended May 31, 1995, the Class A shares of the Fund
achieved a total return of 5.6% based on net asset value ("NAV"). This compares
with the Lipper Short U.S. Government Fund average of 6.4% and the Lehman
Brothers Mutual Fund Short (1-3) Government Index return of 6.2% for the same
period. Class B shares of the Fund recorded a total return of 5.2% based on NAV
for the six months ended May 31, 1995.
The Fund underperformed these benchmarks due to its large holdings in
floating rate securities. These securities served the Fund well in 1994, but
produce a lower total return than comparable fixed rate securities when interest
rates decline. All the floating rate securities except those tied to the prime
rate were sold in May. We anticipate selling the prime-based floaters and moving
into longer fixed rate securities soon. The amount of callable bonds in the
portfolio has also been reduced since these bonds tend to lag behind fixed rate
securities in total return as well.
The portfolio should benefit should the anticipated decline in interest
rates continue.
Further performance information is contained in the Paragon Portfolio Annual
Report, which may be obtained by writing to the address on the cover of this
Combined Prospectus/Proxy Statement.
52
<PAGE>
PARAGON BOND
The following information was provided by the Semi-Annual Report to
Shareholders for the period ended May 31, 1995. The Management Discussion
contained in the Semi-Annual Report in its entirety, is as follows:
PARAGON INTERMEDIATE-TERM BOND FUND
For the six months ended May 31, 1995, the Class A shares of the Fund
achieved a total return of 11.6% based on NAV. This compares with the Lipper
Intermediate U.S. Government Fund average of 9.5% and the Lehman Brothers
Intermediate Government/Corporate Index return of 9.2% for the same time period.
Class B shares of the Fund recorded a total return of 11.3% based on NAV for the
six months ended May 31, 1995.
Several changes have been made in the portfolio to further enhance the total
return should interest rates continue to move downward. The first was to replace
the majority of the callable issues with similar fixed rate securities that will
perform better in the current market environment. The other significant change
is in the mortgage-backed sector where CMO PAC securities are being replaced
with conventional pass-through pools. This change is due to inefficiency in the
current CMO market and the ability of the pools to more closely track the
returns of their corresponding Treasury bonds along the yield curve.
Further performance information is contained in the Paragon Portfolio Annual
Report, which can be obtained by writing to the address on the cover of this
Combined Prospectus/Proxy Statement.
53
<PAGE>
PARAGON EQUITY
The following information was provided by the Semi-Annual Report to
Shareholders for the period ended May 31, 1995. The Management Discussion
contained in the Semi-Annual Report in its entirety, is as follows:
PARAGON VALUE EQUITY INCOME FUND
For the six months ended May 31, 1995, the Class A shares of the Fund
achieved a total return of 17.2% based on NAV, compared with the S&P 500 return
of 19.2% and the Lipper Equity Income Fund Index return of 14.4%. The Class B
shares recorded a total return of 16.7% based on NAV for the same six-month
period. We believe the Fund trailed the performance of the S&P 500 for the
following reasons: (1) Market capitalization was strongly correlated with
returns during the period. The Fund's average market capitalization is less than
the S&P 500. (2) The Fund maintained an underweighted position in the financial
sector, which outperformed the S&P 500 during the last six months. (3) The Fund
held a 6% weighting in convertible bonds, which performed positively, but lagged
behind the S&P 500 returns.
A number of changes were made in the Fund during the reporting period.
Consumer cyclical stocks were reduced from 14% to 9% of net assets due to the
sale of shares in Consolidated Stores Corp., a close-out retailing company, at a
gain of 59%. General Motors Corp. shares were sold at a 31% loss, while
Whirlpool Corp. common shares were sold at a 43% capital gain. We reduced the
Fund's exposure to discretionary consumer spending, which has been slowing in
1995. We remain underweighted in this sector, which makes up 15% of the S&P 500.
The consumer noncyclical stocks were increased from 12% to 18% of net
assets. We moved closer to the S&P 500 weighting of 21% in this sector. As the
economy shows signs of slowing, these stocks should exhibit good relative
performance. Johnson & Johnson shares were sold at a 41% profit, and the
proceeds were used to purchase Baxter International, Inc., another hospital
supply stock. We added to the holdings of Bristol-Myers Squibb Co., a
pharmaceutical manufacturer, and also purchased shares of Columbia/HCA
Healthcare Corp., the nation's largest private acute-care hospital management
company. Finally, we added to our position in Premark International, Inc.,
bringing the Fund's weighting in this security to approximately 3% of net
assets. The consumer noncyclical stocks in the Fund performed nearly as well as
the S&P 500 during the period, rising an average of 16%.
The technology sector experienced significant change during the period. The
Fund's weighting in this sector grew from 8% to 11% of net assets, with most of
this gain arising from price appreciation. Shares of IBM Corp. were purchased
during the period in an effort to increase exposure in this sector. We are
continually searching for stocks with valuation measures which suit the Fund's
investment criteria; however, these stocks are increasingly rare. IBM Corp. is
one security that now meets the Fund's criteria for purchase. The Fund's
holdings in technology achieved returns averaging 30% in the year's first half.
Shareholders benefitted from an overweighted position in this sector which has
been the market leader in the current rally.
54
<PAGE>
The Fund's six-month performance was positively affected by healthy gains in
the Fund's top ten stock holdings. The following table lists the Fund's ten
largest positions as of May 31, 1995.
<TABLE>
<CAPTION>
PERCENT OF PRICE
SECURITY NET ASSETS APPRECIATION*
- ----------------------------------------------------- ------------- ---------------
<S> <C> <C>
Mobil Corp. 3.8% 16.7%
Lockheed Martin Corp. 3.5 33.8
Citicorp Convertible Preferred 3.2 30.0
Raytheon Co. 3.2 23.3
Dow Chemical Co. 3.1 14.4
Philip Morris Companies, Inc. 3.1 21.9
DuPont (E.I.) de Nemours & Co. 3.1 26.0
Premark International, Inc. 3.0 9.6
IBP, Inc. 3.0 11.5
Ford Motor Co. Preferred A 2.9 8.4
</TABLE>
- ------------------------
* For the period from the latter of December 1, 1994 or the purchase date, to
May 31, 1995.
Further performance information is contained in the Paragon Portfolio Annual
Report, which can be obtained by writing to the address on the cover of this
Combined Prospectus/Proxy Statement.
55
<PAGE>
PARAGON LOUISIANA
The following information was provided by the Semi-Annual Report to
Shareholders for the period ended May 31, 1995. The Management Discussion
contained in the Semi-Annual Report in its entirety, is as follows:
PARAGON LOUISIANA TAX-FREE FUND
For the six months ended May 31, 1995, the Class A shares of the Fund
achieved a total return of 8.6% based on NAV. This compares with the Lipper
Intermediate Municipal Debt Fund Average of 9.3% and the Lehman Brothers 7-Year
Municipal Bond Index return of 10.0% for the same time period. Class B shares of
the Fund recorded a total return of 8.4% based on NAV for the six months ended
May 31, 1995.
Lingering problems concerning state funding of Medicaid, as well as
continued rising budget demands, dampened the performance of the returns in the
Louisiana market, compared with the returns in the national market. In an effort
to react to these pressures, we reduced the Fund's exposure to uninsured
hospital debt. The credits remaining are insured issues of the predominately
large hospitals located in Louisiana's larger population centers. We also
reduced the holdings of uninsured Louisiana State general obligation debt and
replaced it with new insured state general obligation debt that was issued in
the first quarter of 1995.
As interest rates decline, refunding of municipal debt should increase,
providing pockets of opportunities for purchasing portfolio securities in the
second half of the year. Current levels of duration and average maturity should
help reduce volatility of the Fund's NAV should concerns continue in the
Louisiana bond market.
Further performance information is contained in the Paragon Portfolio Annual
Report, which can be obtained by writing to the address on the cover of this
Combined Prospectus/Proxy Statement.
56
<PAGE>
PARAGON GROWTH FUND
The following information was provided by the Semi-Annual Report to
Shareholders for the period ended May 31, 1995. The Management Discussion
contained in the Semi-Annual Report in its entirety, is as follows:
PARAGON VALUE GROWTH FUND
During the six-month period ended May 31, 1995, the Paragon Value Growth
Fund Class A shares achieved a total return of 12.9% based on NAV, while the S&P
500 Index ("S&P 500") earned a total return of 19.2%. The Lipper Growth & Income
Mutual Fund Index total return for the same period was 15.4%. Class B shares of
the Fund recorded a total return of 12.6% based on NAV for the six months ended
May 31, 1995.
We can cite several factors that contributed to the Fund's return trailing
that of the S&P 500. First of all, the Fund's median market capitalization as of
March 31, 1995 (the most recent data available) was $8.9 billion, compared with
the S&P 500 median market capitalization of $14.2 billion. As stated previously
in this letter, market capitalization has been strongly correlated with
investment results in 1995. In addition, the Fund held underweighted positions
in some market sectors that experienced strong price gains, causing the Fund's
return to lag behind the index. These include the capital equipment and services
sector, the consumer noncyclical sector and the financial sector. We will
discuss some of these sectors in more detail shortly.
The consumer cyclical sector, which was slightly overweighted in the Fund
versus the S&P 500, underperformed the index. In addition, the Fund's specific
holdings in this group did worse than the sector as a whole. Since this sector
made up over 16% of net assets, there was a noticeable effect on investment
results.
Further performance information is contained in the Paragon Portfolio Annual
Report, which can be obtained by writing to the address on the cover of this
Combined Prospectus/Proxy Statement.
57
<PAGE>
PARAGON GULF SOUTH FUND
The following information was provided by the Semi-Annual Report to
Shareholders for the period ended May 31, 1995. The Management Discussion
contained in the Semi-Annual Report in its entirety, is as follows:
PARAGON GULF SOUTH GROWTH FUND
For the six months ended May 31, 1995, the Class A shares of the Fund
achieved a total return of 11.4% based on NAV, compared with the Russell 2000
Index return of 11.7%. The S&P 500 Index returned 19.2% for the same period. An
appropriate peer group index for this Fund is the Lipper Small Company Growth
Fund Index, which rose 11.2% during the six month period. Class B shares of the
Fund recorded a total return of 11.0% based on NAV for the six months ended May
31, 1995.
We believe the reason for the Fund's lagging performance versus the S&P 500
Index is the unusually strong correlation between market capitalization and
investment results in 1995. The S&P 500, having a much larger average
capitalization than the Fund, experienced greater returns. Note that the S&P 500
also substantially outperformed the other small-capitalization indices listed
above.
The fact that the Fund achieved results similar to the Lipper Small Company
Growth Fund Index ("Lipper Small Company Index") for the six months ended May
31, 1995, hides the substantial volatility relative to this index that occurred
during this period. The Fund performed relatively well during the period from
November 30, 1994 through February 28, 1995. A performance advantage over the
Lipper Small Company Index of approximately 480 basis points was achieved during
these months. Then during March 1995, much of this lead was given up as the Fund
remained flat, while the Lipper Small Company Index rose 2.7%. The first two
weeks of April were positive, as the Fund gained 2%, while the Lipper Small
Company Index gained 1.1%. Then on April 14, the Fund experienced a setback when
the value of its holdings in Health Maintenance Organization ("HMO") stocks
dropped precipitously due to some negative developments that affected a north
central U.S. HMO, but that worried investors in all HMO stocks. The Gulf South
Growth Fund's holdings in this industry include Coastal Healthcare, Coventry
Corporation and HealthWise of America, Inc. During the last two weeks of April,
the Fund declined over 3%, while the Lipper Small Company Index rose slightly
less than 1%. We are encouraged to see that since then, the Fund has regained
the ground lost in April with a return of 2.61% in May, approximately 1% more
than its comparative index. The gain has been fairly broad-based, with numerous
issues contributing.
Sectors that positively affected the Fund's results during the first six
months of the fiscal year include the energy sector, which made up about 7.9% of
net assets as of May 31, 1995. Within this group of stocks we sold two oil
service companies, American Oilfield Divers and Global Industries, while adding
a small exploration and production company, Benton Oil & Gas Co. The energy
group exhibited an average return of 43%, due to a large gain in the price of
Input/Output, Inc., which is the largest holding in the group and the Fund's
fifth largest holding.
Financial stocks, which make up over 21% of net assets as of May 31, 1995,
also performed well, achieving an average return of 49%. Stocks appreciating
strongly include United Companies Financial Corp., Medaphis Corp. and Regional
Acceptance Corp. Some sales were made in this group to recognize substantial
profits. Coral Gables Fedcorp was sold following an announced buy-out of the
company. PMT Services, a payment services company, was bought and sold during
the period for a gain of 50.9%.
Holdings that negatively affected the period's results include some natural
resources/basic materials issues such as Georgia Gulf Corp., Nucor Corp. and
Image Industries, Inc. Industry conditions in which these companies operate were
responsible for these declines. We believe the outlook for these companies
remains promising.
Consumer cyclical issues showed the worst performance of any group of stocks
held in the Fund. A combination of factors involving slowing consumer spending
on discretionary and big-ticket items seems to have weakened the demand for
these stocks. However, we doubt this situation will last long.
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<PAGE>
The Fund's ten largest holdings are listed below.
<TABLE>
<CAPTION>
PRICE
PERCENT OF APPRECIATION
SECURITY NET ASSETS (DEPRECIATION)*
- ---------------------------------------------------- ------------- ----------------
<S> <C> <C>
Medaphis Corp. 5.5% 53.5%
WorldCom, Inc. 5.3 29.2
First Financial Management Corp. 4.4 20.6
United Companies Financial Corp. 3.9 60.9
Input/Output, Inc. 3.8 75.5
Office Depot, Inc. 3.7 1.1
Atlantic Southeast Airlines, Inc. 3.3 58.2
Autozone, Inc. 3.2 (9.3)
Coventry Corp. 2.9 (17.5)
Stewart Enterprises, Inc. 2.9 26.3
</TABLE>
- ------------------------
* For the period from the latter of December 1, 1994, or the purchase date, to
May 31, 1995.
We are generally pleased with the Fund's progress this year, though it is
obvious that we must await the return to favor of small-capitalization stocks
before the Gulf South Growth Fund can truly shine.
Further performance information is contained in the Paragon Portfolio Annual
Report, which can be obtained by writing to the address on the cover of this
Combined Prospectus/Proxy Statement.
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<PAGE>
INFORMATION ABOUT THE PROPOSED TRANSACTION
INTRODUCTION
This Combined Prospectus/Proxy Statement is furnished in connection with the
solicitation of proxies from the shareholders of Paragon Money Market, Paragon
Government, Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon Growth and
Paragon Gulf South by and on behalf of the Trustees of Paragon Portfolio for use
at a Special Meeting of Shareholders (the Special Meeting and any adjournment
thereof, the "Meeting") to approve the reorganization of the Paragon Funds. The
Meeting will be held on Monday, March 25, 1996 at 4900 Sears Tower, Chicago, IL
60606. This Combined Prospectus/Proxy Statement and the enclosed form of proxy
are being mailed to shareholders of the Paragon Funds on or about February 26,
1996.
Any shareholder may revoke a proxy once the proxy is given. The shareholder
revoking such proxy must either submit to the appropriate Paragon Fund a
subsequently dated proxy, deliver to the appropriate Paragon Fund a written
notice of revocation, or otherwise give written notice of revocation in person
at the Meeting. All properly executed proxies received in time for the Meeting
will be voted as specified in the proxy, or, if no specification is made, FOR
the proposal (set forth in Item (1) of the Notice of Special Meeting of
Shareholders).
Only shareholders of record on February 22, 1996 will be entitled to notice
of and to vote at the Meeting. Each share as of the close of business on
February 22, 1996, is entitled to one vote.
The Trustees of Paragon Portfolio know of no matters other than those set
forth herein to be brought before the Meeting. If, however, any other matters
properly come before the Meeting, it is the Trustees' intention that proxies
will be voted on such matters in accordance with the judgment of the persons
named in the enclosed form of proxy.
TERMS OF THE PROPOSED REORGANIZATION
Shareholders of Paragon Money Market, Paragon Government, Paragon Bond,
Paragon Equity, Paragon Louisiana, Paragon Growth and Paragon Gulf South are
being asked to approve or disapprove of an Agreement and Plan of Reorganization
involving the Paragon Funds and the One Group Funds. Pursuant to the Agreement
and Plan of Reorganization, Paragon Money Market, Paragon Government, Paragon
Bond, Paragon Equity, Paragon Louisiana, Paragon Growth and Paragon Gulf South
would be merged with and into One Group Money Market, One Group Limited
Volatility, One Group Bond, One Group Equity, One Group Louisiana, One Group
Growth and One Group Gulf South, respectively, on or about March 26, 1996 (the
"Exchange Date"). On the Exchange Date, the Paragon Funds will transfer all of
their assets and liabilities to the corresponding One Group Funds in exchange
for shares of the corresponding One Group Fund having an aggregate net asset
value equal to the aggregate value of the net assets acquired from the
corresponding Paragon Fund. The assets and liabilities of the Paragon Funds and
The One Group Funds will be valued as of the close of trading on the New York
Stock Exchange on the business day next preceding the Exchange Date. The
following discussion is qualified in its entirety by the full text of the
Agreement and Plan of Reorganization which is attached as Exhibit A to this
Combined Prospectus/Proxy Statement.
Following the transfer, the Paragon Funds will be dissolved and shares of
the respective One Group Funds received by the corresponding Paragon Fund will
be distributed to Paragon Fund shareholders in liquidation of the Paragon Funds.
As a result of the proposed transaction, a Paragon Money Market, Paragon
Government, Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon Growth or
Paragon Gulf South shareholder will receive, on a tax-free basis, a number of
full and fractional shares equal in value at the date of the exchange to the
value of the net assets of the respective Paragon Fund transferred to One Group
Money Market, One Group Limited Volatility, One Group Bond, One Group Equity,
One Group Louisiana, One Group Growth and One Group Gulf South respectively,
attributable to the shareholder. If the Paragon Fund shareholder of record is a
financial organization authorized to act in a fiduciary, advisory, agency,
custodial or similar capacity, that
60
<PAGE>
shareholder will receive One Group Fiduciary Class shares. All other Paragon
Fund Class A shareholders will receive One Group Class A shares. Shareholders of
record holding Paragon Fund Class B shares, other than Class B shareholders of
Paragon Money Market, will receive One Group Class B shares. Paragon Money
Market Class B shareholders will receive One Group Money Market Class A shares.
Paragon Portfolio, on behalf of the Paragon Funds, will pay to the
respective One Group Funds any interest and cash dividends received by the
corresponding Paragon Fund after the Exchange Date with respect to the
investments transferred to the respective One Group Fund. In addition, Paragon
Portfolio, on behalf of the Paragon Funds, will transfer to the respective One
Group Fund any rights, stock dividends or other securities received by the
corresponding Paragon Fund after the Exchange Date as stock dividends or other
distributions with respect to the investments transferred. Such rights, stock
dividends and other securities shall be deemed included in the assets
transferred to the One Group Funds at the Exchange Date and shall not be
separately valued, in which case any such distribution that remains unpaid as of
the Exchange Date shall be included in the determination of the value of the
assets of the respective Paragon Funds acquired by the corresponding One Group
Funds.
At a meeting on October 31, 1995, the Trustees of Paragon Portfolio
unanimously approved the Agreement and Plan of Reorganization and determined
that the reorganization of the Paragon Funds and the One Group Funds would be in
the best interests of each Fund. The Trustees further determined that the
interests of existing shareholders of each Fund would not be diluted upon
effectuation of the reorganization. Consequently, the Trustees recommend
approval of the Agreement and Plan of Reorganization for the following reasons:
1. ENHANCED RANGE OF INVESTMENT OPTIONS
Currently, Paragon shareholders may only exchange shares of one Paragon Fund
for shares of the same class of one of the other six Paragon Funds. The One
Group, however, permits exchanges between the funds comprising The One Group, as
well as between share classes of the Funds. Thus, a Fiduciary Class shareholder
of a One Group Fund may exchange his or her shares for Class A shares of the
same One Group Fund or for Class A or Fiduciary Class shares of another One
Group Fund. One Group Class A shareholders may exchange their shares for
Fiduciary Class shares of the same One Group Fund, or for Fiduciary or Class A
shares of another One Group Fund, if the shareholder is eligible to purchase
such shares. There are currently thirty-two One Group Funds among which
exchanges may be made, excluding The One Group Institutional Money Market Funds.
The One Gpoup offers ten different equity funds, each with a distinct style or
strategy. This range of strategies permits an investor in The One Group to
participate at any point in time in the styles currently prevelant in the
market. Thus, if the Agreement and Plan of Reorganization is approved, Paragon
Fund shareholders will have increased investment options and greater flexibility
to change investments.
2. TAX-FREE CONVERSION OF PARAGON FUND SHARES
If a shareholder of a Paragon Fund were to redeem an investment in a Paragon
Fund in order to invest in a One Group Fund or another investment product, gain
or loss would be recognized by that shareholder for Federal income tax purposes
upon the redemption of those shares. By contrast, the proposed reorganization of
each Paragon Fund will permit shareholders of the Paragon Funds to exchange
their investment in the Paragon Funds for an investment in the One Group Funds
without recognition of gain or loss for Federal income tax purposes. After the
reorganization, as shareholders of an open-end fund, shareholders will continue
to be free to redeem any or all of their shares at net asset value at any time,
at which point a taxable gain or loss would be recognized.
3. INVESTMENT LEVERAGE AND MARKET PRESENCE
The merger is expected to result in greater investment leverage and market
presence for the One Group Funds. If the Agreement and Plan of Reorganization is
approved, The One Group would have
61
<PAGE>
approximately $12 billion in assets under management. Fund expenses normally
decline as assets increase. Consequently, Paragon Fund shareholders would
benefit from the resulting economies of scale attributable to the larger asset
size of the One Group Funds.
4. PERFORMANCE
The total returns of the One Group Money Market, One Group Limited
Volatility, One Group Bond, and One Group Equity, are competitive with those of
Paragon Money Market, Paragon Government, Paragon Bond, and Paragon Equity,
respectively (One Group Growth, One Group Louisiana, and One Group Gulf South
have not yet commenced operations). The Adviser presently serves as investment
adviser to both The One Group and Paragon Portfolio. The individuals managing
the Paragon Portfolios will continue to be associated with The One Group
following the proposed reorganization. For information regarding the total
returns of each of the Funds in question, see "Financial Highlights" in the One
Group and Paragon Prospectuses accompanying this Combined Prospectus/ Proxy
Statement. Of course, past performance does not predict future results.
5. MANAGEMENT FEES
Following the merger of the Paragon Funds with the One Group Funds,
investment advisory fees will generally remain the same or decline. Below is a
comparison of the current investment advisory fee paid by each of the Paragon
Funds and the fee that will be assessed following the merger:
<TABLE>
<CAPTION>
CURRENT PROPOSED (2)
------------ ---------------
<S> <C> <C> <C>
Paragon Government.................... .50% One Group Limited Volatility.......... .30%
Paragon Equity........................ .65% One Group Equity...................... .74%
Paragon Bond.......................... .50% One Group Bond........................ .45%
Paragon Money Market.................. .20% One Group Money Market................ .22%
Paragon Louisiana..................... .40% One Group Louisiana................... .40%
Paragon Gulf South.................... .65% One Group Gulf South.................. .65%
Paragon Growth........................ .65% One Group Growth...................... .65%
</TABLE>
- ------------------------
(2) Investment Advisory fees have been revised to reflect fee waivers as of the
date of this Combined Prospectus/Proxy Statement. Absent this voluntary
waiver, investment advisory fees would be .60% for One Group Limited
Volatility, .35% for One Group Money Market, .60% for One Group Louisiana,
.74% for One Group Gulf South and .74% for One Group Growth.
Although the advisory fees for One Group Equity and One Group Money Market
are higher than those paid by the corresponding Paragon Funds, BOIA possesses
superior investment management resources that enable the One Group Funds to
achieve and sustain a high level of performance. In order to develop and
maintain a money market expertise, BOIA invested a substantial amount of
resources in attracting and retaining qualified investment professionals, as
well as system supports. Significant investments also have been made to develop
a dynamic equity research group that has fifteen dedicated analysts that follow
eleven major market sectors and 37 specific industries. In addition, a highly
efficient and effective trading operation exists which ultimately benefits the
Funds through securities trades executed at costs lower than industry standards.
FEDERAL TAX CONSEQUENCES
As part of the reorganization, The One Group will have receive an opinion of
Ropes & Gray, counsel to The One Group addressed to The One Group and each One
Group Fund and to Paragon Portfolio and each Paragon Fund, in a form reasonably
satisfactory to The One Group and Paragon Portfolio and dated the Exchange Date,
to the effect that for Federal income tax purposes (i) no gain or loss will be
recognized by any Paragon Fund upon the transfer of its assets to the
corresponding One Group Fund in exchange for shares of such One Group Fund and
the assumption by such One Group Fund of the liabilities of the Paragon Fund or
upon the distribution of shares by the Paragon Fund to its shareholders in
liquidation; (ii) no gain or loss will be recognized by the shareholders of any
Paragon Fund upon the exchange of their shares for shares of the corresponding
One Group Fund (iii) the basis of the shares a Paragon Fund shareholder receives
in connection with the transaction
62
<PAGE>
will be the same as the basis of his or her Paragon Fund shares exchanged
therefor; (iv) a Paragon shareholder's holding period for his or her shares will
be determined by including the period for which he or she held the Paragon Fund
shares exchanged therefor, provided that he or she held such Paragon Fund shares
as capital assets; (v) no gain or loss will be recognized by any One Group Fund
upon the receipt of the assets of the corresponding Paragon Fund in exchange for
shares and the assumption by the One Group Fund of the liabilities of the
corresponding Paragon Fund; and (vi) the basis in the hands of the One Group
Fund of the assets of the corresponding Paragon Fund transferred to the One
Group Fund will be the same as the basis of the assets in the hands of the
corresponding Paragon Fund immediately prior to the transfer.
FEES AND EXPENSES OF REORGANIZATION
All fees and expenses, including accounting expenses, portfolio transfer
taxes (if any) or other similar expenses incurred in connection with the
consummation by One Group and Paragon Portfolio of the transactions contemplated
by this Agreement and Plan of Reorganization will be paid by the party directly
incurring such fees and expenses, except that the costs of proxy materials and
proxy solicitation, including legal expenses, will be borne by One Group;
PROVIDED HOWEVER, that such expenses will in any event be paid by the party
directly incurring such expenses if and to the extent that the payment by the
other party of such expenses would result in the disqualification of any One
Group or Paragon Fund, as the case may be, as a "regulated investment company"
within the meaning of Section 851 of the Code.
COMPARISON OF SHAREHOLDER RIGHTS
Both the One Group Funds and the Paragon Funds are series of open-end
management investment companies. As shown above, each Fund has substantially
similar purchase and redemption procedures, sales charge structure, exchange and
conversion privileges, and voting rights. While the Paragon Funds offer two
classes of shares, the One Group Funds offer four classes of shares.
EXISTING AND PRO FORMA CAPITALIZATION
The following tables set forth as of December 31, 1995, (l) the
capitalization of the Paragon Funds and the One Group Funds and (ii) the pro
forma capitalization of the Paragon Funds and the One Group Funds as adjusted
giving effect to the proposed acquisition of assets at net asset value:
PARAGON TREASURY MONEY MARKET FUND AND ONE GROUP U.S. TREASURY SECURITIES MONEY
MARKET FUND
<TABLE>
<CAPTION>
PARAGON ONE GROUP PRO FORMA COMBINED
------------------------ ------------------------ --------------------------
CLASS A CLASS B FIDUCIARY CLASS A FIDUCIARY CLASS A
----------- ----------- ------------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Assets (000s).................. $348,338 $4 $1,324,613 $91,995 $1,362,930 $402,020
Shares (000s)...................... 348,338 4 1,324,613 91,995 1,362,930 402,020
Net Asset Value.................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
</TABLE>
Paragon Class A shareholders that are financial organizations authorized to
act in a fiduciary, advisory, agency, custodial or similar capacity receive One
Group Fiduciary Class shares. All other Paragon shareholders receive One Group
Class A shares.
PARAGON SHORT-TERM GOVERNMENT FUND AND ONE GROUP LIMITED VOLATILITY BOND FUND
<TABLE>
<CAPTION>
PARAGON ONE GROUP PRO FORMA COMBINED
---------------------- ------------------------------------- -------------------------------------
CLASS A CLASS B FIDUCIARY CLASS A CLASS B FIDUCIARY CLASS A CLASS B
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets (000s)..... $128,343 $312 $420,247 $13,311,935 $2,991 $463,884 $13,396,642 $3,303
Shares (000s)......... 12,525 30 39,386 1,248,774 279 43,476 1,256,721 308
Net Asset Value....... $10.25 $10.25 $10.67 $10.66 $10.73 $10.67 $10.66 $10.73
</TABLE>
Paragon Class A shareholders that are financial organizations authorized to
act in a fiduciary, advisory, agency, custodial or similar capacity receive One
Group Fiduciary Class shares. All other Paragon Class A shareholders receive One
Group Class A shares. Paragon Class B shareholders receive One Group Class B
shares.
63
<PAGE>
PARAGON INTERMEDIATE-TERM BOND FUND AND ONE GROUP GOVERNMENT BOND FUND
<TABLE>
<CAPTION>
PARAGON ONE GROUP PRO FORMA COMBINED
---------------------- ------------------------------------- -----------------------------------
CLASS A CLASS B FIDUCIARY CLASS A CLASS B FIDUCIARY CLASS A CLASS B
--------- ----------- ----------- ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets (000s)........... $314,374 $1,523 $414,298 $11,261 $5,044 $536,904 $203,029 $6,567
Shares (000s)............... 29,915 145 41,060 1,115 500 53,211 20,102 651
Net Asset Value............. $10.51 $10.53 $10.09 $10.10 $10.09 $10.09 $10.10 $10.09
</TABLE>
Paragon Class A shareholders that are financial organizations authorized to
act in a fiduciary, advisory, agency, custodial or similar capacity receive One
Group Fiduciary Class shares. All other Paragon Class A shareholders receive One
Group Class A shares. Paragon Class B shareholders receive One Group Class B
shares.
PARAGON VALUE EQUITY INCOME FUND AND ONE GROUP INCOME EQUITY FUND
<TABLE>
<CAPTION>
PARAGON ONE GROUP PRO FORMA COMBINED
---------------------- ------------------------------------- -------------------------------------
CLASS A CLASS B FIDUCIARY CLASS A CLASS B FIDUCIARY CLASS A CLASS B
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets (000s)............ $129,625 $1,028 $181,271 $21,419 $9,109 $237,010 $95,305 $10,137
Shares (000s)................ 8,986 71 10,979 1,300 551 14,356 5,783 614
Net Asset Value.............. $14.42 $14.42 $16.51 $16.48 $16.52 $16.51 $16.48 $16.52
</TABLE>
Paragon Class A shareholders that are financial organizations authorized to
act in a fiduciary, advisory, agency, custodial or similar capacity receive One
Group Fiduciary Class shares. All other Paragon Class A shareholders receive One
Group Class A shares. Paragon Class B shareholders receive One Group Class B
shares.
64
<PAGE>
VOTING INFORMATION
Proxies are being solicited from shareholders of Paragon Money Market,
Paragon Government, Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon
Growth and Paragon Gulf South by the Trustees of Paragon Portfolio for the
Meeting to be held on Monday, March 25, 1996 at 9:00 a.m. Central Standard Time
at, 4900 Sears Tower, Chicago, IL, or at such later time made necessary by
adjournment. A proxy may be revoked at any time at or before the meeting by
submitting to the appropriate Paragon Fund a subsequently dated proxy,
delivering a written notice of revocation to the appropriate Paragon Fund, 4900
Sears Tower, Chicago, IL 60606, or as otherwise described in the "Introduction"
above. Unless revoked, all valid proxies will be voted in accordance with the
instructions thereon or, in the absence of instructions, will be voted FOR
approval of the Agreement and Plan of Reorganization. The transaction
contemplated by the Agreement and Plan of Reorganization will be consummated
only if approved by the affirmative vote of a majority of all votes attributable
to the voting securities of each class of each Paragon Fund voting separately as
a class. In the event the shareholders do not approve the reorganization, the
Paragon Trustees will consider possible alternative arrangements in the best
interests of the Paragon Funds and their shareholders. Shares of the Paragon
Funds are redeemable for cash at net asset value on Monday through Friday,
except Federal holidays and Good Friday. See "Redemption Procedures" in the One
Group and Paragon Prospectuses accompanying this Combined Prospectus/Proxy
Statement.
Proxies are being solicited by mail. Shareholders of record of Paragon Money
Market, Paragon Government, Paragon Bond, Paragon Equity, Paragon Louisiana,
Paragon Growth and Paragon Gulf South, on the close of business on February 22,
1996 (the "Record Date"), will be entitled to vote at the Meeting or any
adjournment thereof. The holders of a majority of votes attributable to the
outstanding voting shares of Paragon Money Market, Paragon Government, Paragon
Bond, Paragon Equity, Paragon Louisiana, Paragon Growth and Paragon Gulf South
represented in person or by proxy at the Meeting will constitute a quorum for
the Meeting; however, the affirmative vote of the lesser of (a) 67% or more of
the votes attributable to all voting securities of each class of each Paragon
Fund present at such Meeting if holders of more than 50% of the votes
attributable to all voting securities of each class of each Paragon Fund are
present or represented by proxy or (b) more than 50% of the votes attributable
to the outstanding voting securities of each class of each Paragon Fund is
necessary to approve the reorganization. Shareholders are entitled to one vote
per share and a proportionate fractional vote for any fractional share.
Votes cast by proxy or in person at the Meeting will be counted by the
Inspector of Election appointed by Paragon Portfolio. The Inspector of Election
will count the total number of votes cast FOR approval of the proposal for
purposes of determining whether sufficient affirmative votes have been cast. The
Inspector of Election will count shares represented by proxies that reflect
abstentions as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum; however, the Inspector of
Election will not count "broker non-votes" (I.E., shares held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owners or the persons entitled to vote and (ii) the broker or nominee does not
have the discretionary voting power on a particular matter) as shares that are
present and entitled to vote on the matter for purposes of determining the
presence of a quorum. For purposes of determining whether an issue has been
approved, abstentions have the effect of a negative vote on the proposal, and
broker non-votes are treated as "against" votes in those instances where
approval of an issue requires a certain percentage of all votes outstanding, but
are given no effect in those instances where approval of an issue requires a
certain percentage of the votes constituting the quorum for such issue.
65
<PAGE>
As of February 16, 1996, as shown on the books of Paragon, there were issued
and outstanding 443,825,021.13 shares of beneficial interest of the Paragon
Funds allocated among the Funds and classes as follows:
<TABLE>
<S> <C>
PARAGON MONEY MARKET
a. Class A Shares 353,469,288.113
b. Class B Shares 19,197.860
PARAGON GOVERNMENT
a. Class A Shares 12,409,623.614
b. Class B Shares 30,736.144
PARAGON BOND
a. Class A Shares 29,659,873.859
b. Class B Shares 173,135.502
PARAGON EQUITY
a. Class A Shares 9,090,131.339
b. Class B Shares 84,106.256
PARAGON LOUISIANA
a. Class A Shares 19,106,087.806
b. Class B Shares 240,241.110
PARAGON GROWTH
a. Class A Shares 13,814,110.463
b. Class B Shares 222,757.650
PARAGON GULF SOUTH
a. Class A Shares 5,387,266.909
b. Class B Shares 118,464.505
</TABLE>
As of February 16, 1996, the officers and Trustees of Paragon as a group
beneficially owned less than 1% of the outstanding Class A and Class B shares of
the Paragon Funds. As of February 16, 1996, to the best of the knowledge of
Paragon Portfolio the following owned beneficially 5% or more of the outstanding
Class A and Class B shares of the following Paragon Funds:
<TABLE>
<CAPTION>
PERCENTAGE TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ---------------------------------------------------------- ---------------------------- ------------ ------------
<S> <C> <C> <C>
Labanc & Co. Paragon Money Market/Class A 93.07 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
State Street Bank & Trust Paragon Money Market/Class B 24.67 % Beneficial
IRA A/C Ozone J Martinez
104 Mars St.
Thibodaux, LA 70301
Emile David Ameen Cust Paragon Money Market/Class B 6.50 % Beneficial
Glynn D Kirtland
Unif Trans Min Act - La
Rt 3 Box 12.
Pollack, LA 71467
</TABLE>
66
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ---------------------------------------------------------- ---------------------------- ------------ ------------
Doris Lagarde Cust Paragon Money Market/Class B 11.43 % Beneficial
Angela Lagarde
Unif Trans Min Act - La
321 Sako Dr.
Raceland, LA 70394
<S> <C> <C> <C>
Patricia F Trahan Cust Paragon Money Market/Class B 20.52 % Beneficial
Justin Kenneth Trahan UGMA
3702 S Saratoga St
New Orleans, LA 70115
Doris Lagarde Cust Paragon Money Market/Class B 11.43 % Beneficial
Christopher M Lagarde
Unif Trans Min Act - La
321 Sako Dr.
Raceland, LA 70394
Doris Lagarde Cust Paragon Money Market/Class B 12.92 % Beneficial
Christopher M Lagarde
Unif Trans Min Act - La
200 Rodriguez Dr.
Raceland, LA 70394
Doris Lagarde Cust Paragon Money Market/Class B 11.43 % Beneficial
Jeffrey Lagarde
Unif Trans Min Act - La
200 Rodriguez Dr.
Raceland, LA 70394
Sheriffs Pension & Relief Fund Paragon Money Market/Class A 10.50 % Beneficial
Attn: Yvonne Richardson
P.O. Box 3163
Monroe, LA 71210-3163
Labanc & Co. Paragon Government/ Class A 92.13 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
Woman's Hospital Foundation Paragon Government/ Class A 6.88 % Beneficial
Attn: Vickie Romero
P.O. Box 95009
Baton Rouge, LA 70895
Louisiana Sheriff's Association Paragon Government/ Class A 5.22 % Beneficial
Medical Benefits Plan
1175 Nicholson Drive
Baton Rouge, LA 70802
Catholic Diocese of Paragon Government/ Class A 5.70 % Beneficial
Baton Rouge
Attn: J. Erroll Gautreau
P.O Box 2028
Baton Rouge, LA 70821
</TABLE>
67
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ---------------------------------------------------------- ---------------------------- ------------ ------------
Margaret L Strike Paragon Government/ Class B 20.96 % Beneficial
5705 E Texas St Apt 46
Bossier, LA 71111
<S> <C> <C> <C>
State Street Bank & Trust. Paragon Government/ Class B 6.70 % Beneficial
IRA A/C Allen L Cox
22 Dover Circle.
Bossier City, LA 71111
State Street Bank & Trust. Paragon Government/ Class B 22.76 % Beneficial
Dir R/O Everett Voisin Jr
100 Haricot Rd.
Lafayette, LA 70508
Alcide Lewis Jr Cust. Paragon Government/ Class B 5.19 % Beneficial
Trudi N Lewis
Unif Trans Min Act - La
P O Box 417
Duson, LA 70529
Alcide Lewis Jr Cust. Paragon Government/ Class B 5.19 % Beneficial
Alcide J Lewis III
Unif Trans Min Act - La
P O Box 417
Duson, LA 70529
Aileen L Stevens Paragon Government/ Class B 5.76 % Beneficial
306 Monroe St.
Lafayette, LA 70501
Kenneth W and John A Nabours. Paragon Government/ Class B 6.97 % Beneficial
And Sharon Elizabeth Moret TTEES
U/A 12/01/94
Nabours Class Trust
5185 Thompson Rd.
Sulphur, LA 70663
Labanc & Co. Paragon Bond/Class A 89.42 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
AIM High Inc. Paragon Bond/Class B 5.56 % Beneficial
Joe B Ponsock Jr. President
6125 Villa Ashley Dr.
Baton Rouge, LA 70806
Labanc & Co. Paragon Equity/ Class A 92.09 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
</TABLE>
68
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ---------------------------------------------------------- ---------------------------- ------------ ------------
Labanc & Co. Paragon Louisiana/ Class A 70.61 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
<S> <C> <C> <C>
Chanda Renee Rubin & Paragon Louisiana/ Class B 5.04 % Beneficial
Bernadette F Rubin Ten Com
101 Tyro Lane
Carencro, LA 70520
Roy D Jackson Paragon Louisiana/ Class B 5.87 % Beneficial
Alice Turner Ten Com
P O Box 1087
Zwolle, LA 71488
Labanc & Co. Paragon Growth/ Class A 81.94 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
Labanc & Co. Paragon Gulf South/ Class A 77.87 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
</TABLE>
In addition, as of February 16, 1996, 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:
<TABLE>
<CAPTION>
PERCENTAGE TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ---------------------------------------------------------- ---------------------------- ------------ ------------
<S> <C> <C> <C>
Labanc & Co. Paragon Money Market/Class A 93.07 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
Labanc & Co. Paragon Government/ Class A 92.13 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
Labanc & Co. Paragon Bond/Class A 89.42 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
Labanc & Co. Paragon Equity/ Class A 92.09 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
</TABLE>
69
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ---------------------------------------------------------- ---------------------------- ------------ ------------
Labanc & Co. Paragon Louisiana/ Class A 70.61 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
<S> <C> <C> <C>
Labanc & Co. Paragon Growth/ Class A 81.94 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
Labanc & Co. Paragon Gulf South/ Class A 77.87 % Record
Premier Bank
Attn: Bob Riche
P.O. Box 1511
Baton Rouge, LA 70821
</TABLE>
Premier Bank will cast votes attributable to any shares for which it serves
as fiduciary in the same proportion as votes cast by other Shareholders.
The votes of the shareholders of the One Group Funds are not being
solicited, since their approval or consent is not necessary for the approval of
the Agreement and Plan of Reorganization. However, the vote required for
approval of the proposal, including the treatment of abstention and "broker
nonvotes" would be the same as that of the Paragon Funds. Also, whole shares of
One Group Money Market, One Group Limited Volatility, One Group Bond, One Group
Equity, One Group Louisiana, One Group Growth and One Group Gulf South are
entitled to one vote and fractional shares are entitled to a proportionate
fractional vote. As of February 16, 1996, as shown on the books of The One
Group, there were issued and outstanding 1,701,966,800.600 shares of beneficial
interest of the One Group Funds allocated between the Funds and classes as
follows.
<TABLE>
<S> <C>
ONE GROUP MONEY MARKET
a. Class A Shares 97,977,080.660
b. Fiduciary Shares 1,506,911,962.360
ONE GROUP LIMITED VOLATILITY
a. Class A Shares 1,232,917.258
b. Class B Shares 290,454.780
c. Fiduciary Shares 38,773,959.066
ONE GROUP BOND
a. Class A Shares 1,238,266.770
b. Class B Shares 620,977.474
c. Fiduciary Shares 41,602,453.565
ONE GROUP EQUITY
a. Class A Shares 1,406,828.707
b. Class B Shares 711,103.069
c. Fiduciary Shares 11,200,796.936
ONE GROUP LOUISIANA
a. Class A Shares 0
b. Class B Shares 0
c. Fiduciary Shares 0
</TABLE>
70
<PAGE>
<TABLE>
<S> <C>
ONE GROUP GROWTH
a. Class A Shares 0
b. Class B Shares 0
c. Fiduciary Shares 0
ONE GROUP GULF SOUTH
a. Class A Shares 0
b. Class B Shares 0
c. Fiduciary Shares 0
</TABLE>
As of February 16, 1996, the officers and Trustees of The One Group as a
group beneficially owned less than 1% of the outstanding shares of Class A,
Class B, Fiduciary Class and Service Class shares of The One Group Funds. As of
February 16, 1996, to the best of the knowledge of The One Group the following
owned beneficially 5% or more of the outstanding Class A, Class B, Fiduciary
Class and Service Class shares of The One Group Funds:
<TABLE>
<CAPTION>
PERCENTAGE TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------------------------------------------------------ ------------------------------- ------------ ------------
<S> <C> <C> <C>
W E Engle & One Group Money Market/Class A 6.06 % Beneficial
Garnet M Engle Jt Ten
P.O. Box 315
McArthur, OH 45651
Benedict Inc. One Group Money Market/Class A 5.50 % Beneficial
P.O. Box 315
McArthur, OH 45651
Strafe & Co One Group Money 50.64 % Record
Bank One Ohio TrustCo., NA Market/Fiduciary
Department 0393 S.T.I.F.
Columbus, OH 43271
Clark & Co One Group Money 30.63 % Record
C/O Bank One Wisconsin Market/Fiduciary
P.O. Box 1631
Waukesha, WI 53187
Bank One Trust Company NA One Group Money 18.03 % Record
Omnibus-Corporate Cash Sweep Market/Fiduciary
Attn: Cash Management DB3
235 W Schrock Rd
Westerville, OH 43081
440 Financial Group 401K One Group Limited 13.49 % Record
C/O Ann Sheputa Volatility/Class A
440 Lincoln St.
Worcester, MA 01653
Donaldson Lufkin Jenrette One Group Limited 8.85 % Record
Securities Corporation Inc. Volatility/Class A
PO Box 2052
Jersey City, NJ 07303
Clark & Co One Group Limited 26.20 % Record
101 West Broadway Volatility/Fiduciary
P.O. Box 1631
Waukesha, WI 53187
</TABLE>
71
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------------------------------------------------------ ------------------------------- ------------ ------------
Strafe & Co One Group Limited 24.83 % Record
Attn: Mutual Funds 0393 Volatility/Fiduciary
100 E Broad Street
Columbus, OH 43215
<S> <C> <C> <C>
Strafe & Co One Group Limited 24.54 % Record
Attn: Mutual Funds 0393 Volatility/Fiduciary
100 E Broad Street
Columbus, OH 43215
Bank One Wisconsin Trust NA One Group Limited 8.72 % Record
101 West Broadway Volatility/Fiduciary
Waukesha, WI 53186
Strafe & Co One Group Limited 6.81 % Record
Attn: Bank One Trust Volatility/Fiduciary
235 W Schrock Rd
Westerville, OH 43081
Clark & Co One Group Limited 6.27 % Record
235 W Schrock Rd Volatility/Fiduciary
Westerville, OH 43081
440 Financial Group 401K One Group Bond/Class A 9.42 % Record
C/O Ann Sheputa
440 Lincoln St.
Worcester, MA 01653
Strafe & Co One Group Bond/ Fiduciary 38.84 % Record
Attn: Mutual Funds 0393
100 E Broad Street
Columbus, OH 43215
Clark & Co One Group Bond/ Fiduciary 26.46 % Record
101 West Broadway
Waukesha, WI 53187
Strafe & Co One Group Bond/ Fiduciary 10.35 % Record
Attn: Bank One Trust
235 W Schrock Rd
Westerville, OH 43081
Strafe & Co One Group Bond/ Fiduciary 10.26 % Record
Attn: Mutual Funds 0393
100 E Broad Street
Columbus, OH 43215
Bank One Wisconsin Trust NA One Group Bond/ Fiduciary 8.90 % Record
101 West Broadway
Waukesha, WI 53186
Clark & Co One Group Equity/ Fiduciary 25.72 % Record
C/O Bank One Wisconsin
P.O. Box 1631
Waukesha, WI 53187
</TABLE>
72
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------------------------------------------------------ ------------------------------- ------------ ------------
Strafe & Co One Group Equity/ Fiduciary 25.62 % Record
Attn: Mutual Funds 0393
100 E Broad Street
Columbus, OH 43215
<S> <C> <C> <C>
Bank One Wisconsin Trust NA One Group Equity/ Fiduciary 14.22 % Record
101 West Broadway
Waukesha, WI 53186
Strafe & Co One Group Equity/ Fiduciary 14.13 % Record
Attn: Mutual Funds 0393
100 E Broad Street
Columbus, OH 43215
Strafe & Co One Group Equity/ Fiduciary 9.38 % Record
Attn: Bank One Trust
235 W Schrock Rd
Westerville, OH 43081
</TABLE>
In addition, as of February 16, 1996, 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:
<TABLE>
<CAPTION>
PERCENTAGE TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- --------------------------------------------------- ---------------------------------- ------------ ------------
<S> <C> <C> <C>
Strafe & Co One Group Money Market/ Fiduciary 50.64 % Record
Bank One Ohio TrustCo.,NA
Department 0393 S.T.I.F.
Columbus, OH 43271
Clark & Co One Group Money Market/ Fiduciary 30.63 % Record
C/O Bank One Wisconsin
P.O. Box 1631
Waukesha, WI 53187
Clark & Co 101 West Broadway One Group Limited 26.20 % Record
P.O. Box 1631 Volatility/Fiduciary
Waukesha, WI 53187
Strafe & Co One Group Bond/Fiduciary 38.84 % Record
Attn: Mutual Funds 0393
100 E Broad Street
Columbus, OH 43215
Clark & Co One Group Bond/Fiduciary 26.46 % Record
101 West Broadway
Waukesha, WI 53187
Clark & Co One Group Equity/Fiduciary 25.72 % Record
C/O Bank One Wisconsin
P.O. Box 1631
Waukesha, WI 53187
Strafe & Co One Group Equity/Fiduciary 25.62 % Record
Attn: Mutual Funds 0393
100 E Broad Street
Columbus, OH 43215
</TABLE>
73
<PAGE>
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
BOIA may be deemed to have an interest in the reorganization because it
provides investment advisory services to the One Group Funds pursuant to an
advisory agreement with The One Group and Paragon Portfolio. Future growth of
assets of The One Group can be expected to increase the total amount of fees
payable to BOIA and to reduce the amount of fees required to be waived to
maintain total fees of the Funds at agreed upon levels.
FINANCIAL STATEMENTS
The audited financial statements of Paragon Money Market, Paragon
Government, Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon Growth and
Paragon Gulf South as of November 30, 1994, the statement of operations for the
year then ended, and statement of changes in net assets for each of the two
years in the period then ended and financial highlights, are have been
incorporated by reference into this Prospectus/Proxy Statement in reliance on
the reports of Price Waterhouse LLP, independent accountants, given on the
authority of such firm as an expert in accounting and auditing. Unaudited
financial statements for Paragon Money Market, Paragon Government, Paragon Bond,
Paragon Equity, Paragon Louisiana, Paragon Growth and Paragon Gulf South for the
period ended May 31, 1995, are contained in the Statement of Additional
Information relating to the reorganization of the Paragon Portfolio described in
this Combined Prospectus/Proxy Statement.
The audited financial statements of One Group Money Market, One Group
Limited Volatility, One Group Bond and One Group Equity as of June 30, 1995, and
the statements of operations, changes in net assets and financial highlights for
the year then ended, have been incorporated by reference into this
Prospectus/Proxy Statement in reliance on the reports of Coopers & Lybrand,
L.L.P., independent accountants, given on authority of such firm as an expert in
accounting and auditing. One Group Louisiana, One Group Growth and One Group
Gulf South had not commenced operations as of June 30, 1995.
Unadudited pro forma combined financial statements of Paragon Money Market,
Paragon Government, Paragon Bond and Paragon Equity and One Group Money Market,
One Group Limited Volatility, One Group Bond and One Group Equity as of and for
the twelve month period ending June 30, 1995 are included in the Statement of
Additional Information. Also included in the Statement of Additional Information
are unaudited pro forma combined financial statements of Paragon Louisiana,
Paragon Growth and Paragon Gulf South, and One Group Louisiana, One Group Growth
and One Group Gulf South as of and for the twelve month period ended May 31,
1995. Because the Agreement and Plan of Reorganization provides that the One
Group Funds will be the surviving funds following the reorganization and because
the One Group Funds' investment objectives and policies will remain unchanged,
the pro forma combined financial statements reflect the transfer of the assets
and liabilities of each Paragon Fund to the corresponding One Group Fund as
contemplated by the Agreement and Plan of Reorganization.
In addition, prospectuses for One Group Money Market, One Group Limited
Volatility, One Group Bond, and One Group Equity Funds, dated November 1, 1995,
and the One Group Louisiana, One Group Growth and One Group Gulf South Funds,
dated February 7, 1996; as well as the current prospectus relating to Paragon
Money Market, Paragon Government, Paragon Bond, Paragon Equity, Paragon
Louisiana, Paragon Growth and Paragon Gulf South, dated March 30, 1995; and the
current Statement of Additional Information of The One Group, dated November 1,
1995, as amended February 7, 1996; and the current Statement of Additional
Information for Paragon Portfolio, dated March 30, 1995, have been incorporated
by reference into this Combined Prospectus/Proxy Statement.
THE BOARD OF TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMEND APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION.
74
<PAGE>
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
This Combined Prospectus/Proxy Statement and the related Statement of
Additional Information do not contain all of the information set forth in the
registration statements and the exhibits relating thereto which The One Group
has filed with the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933 and the Investment Company Act of 1940, to which
reference is hereby made. The file number for The One Group Prospectuses and the
related Statement of Additional Information which are incorporated herein by
reference is Registration No. 2-95973. The file number for the Paragon Portfolio
Prospectus and the related Statement of Additional Information which are
incorporated herein by reference is Registration No. 33-31334.
The One Group and Paragon Portfolio are subject to the informational
requirements of the Securities Exchange Act of 1934 and in accordance therewith
file reports and other information with the SEC. Proxy material, reports, proxy
and information statements, registration statements and other information filed
by The One Group and Paragon Portfolio can be inspected and copied at the SEC's
public reference facilities located at 450 Fifth Street, N.W. Washington, D.C.
20549. Copies of such filings may be available at the following SEC regional
offices: 90 Devonshire Street, Suite 700, Boston, MA 02109; 500 West Madison
Street, Suite 1400, Chicago, IL 60611; and 601 Walnut Street, Suite 1005E,
Philadelphia, PA 19106. Copies of such materials can also be obtained by mail
from the Public Reference Branch, Office of Consumer Affairs and Informational
Services, SEC, Washington, D.C. 20549 at prescribed rates.
75
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
January 19, 1996 by and between The One Group-Registered Trademark-, a
Massachusetts business trust, ("One Group") and Paragon Portfolio, a
Massachusetts business trust ("Paragon"). The capitalized terms used herein
shall have the meaning ascribed to them in this Agreement.
I. PLAN OF REORGANIZATION
(a) Paragon will sell, assign, convey, transfer and deliver to One Group,
and One Group will acquire, on the Exchange Date all of the properties and
assets existing at the Valuation Time in Paragon Treasury Money Market Fund
("Paragon Money Market"), Paragon Short-Term Government Fund ("Paragon
Government"), Paragon Intermediate-Term Bond Fund ("Paragon Bond"), Paragon
Value Equity Income Fund ("Paragon Equity"), Paragon Louisiana Tax-Free Fund
("Paragon Louisiana"), Paragon Value Growth Fund ("Paragon Growth") and Paragon
Gulf South Growth Fund ("Paragon Gulf South") (Paragon Money Market, Paragon
Government, Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon Growth and
Paragon Gulf South, each is a "Paragon Fund" and are collectively the "Paragon
Funds"), such acquisition to be made by The One Group Treasury Securities Money
Market Fund ("One Group Money Market"), The One Group Limited Volatility Bond
Fund ("One Group Limited Volatility"), The One Group Government Bond Fund ("One
Group Bond"), One Group Income Equity Fund ("One Group Equity"), The One Group
Louisiana Municipal Bond Fund ("One Group Louisiana"), The One Group Value
Growth Fund ("One Group Growth") and The One Group Gulf South Fund ("One Group
Gulf South") (One Group Money Market, One Group Limited Volatility, One Group
Bond, One Group Income Equity, One Group Louisiana, One Group Growth and One
Group Gulf South, each is a "One Group Fund" and are collectively the "One Group
Funds"), respectively, of One Group. For purposes of this Agreement the
respective Paragon Funds correspond to the One Group Funds as follows: Paragon
Money Market corresponds to One Group Money Market; Paragon Government
corresponds to One Group Limited Volatility; Paragon Bond corresponds to One
Group Bond; Paragon Equity corresponds to One Group Income Equity; Paragon
Louisiana corresponds to One Group Louisiana; Paragon Growth corresponds to One
Group Growth; and One Group Gulf South corresponds to Paragon Gulf South. In
consideration therefor, each One Group Fund shall, on the Exchange Date, assume
all of the liabilities of the corresponding Paragon Fund in exchange for a
number of full and fractional One Group Class A, Fiduciary Class or Class B
shares of the corresponding One Group Fund (collectively, "Shares") having an
aggregate net asset value equal to the value of all of the assets of each
Paragon Fund transferred to the corresponding One Group Fund on such date less
the value of all of the liabilities of each Paragon Fund assumed by the
corresponding One Group Fund on that date. It is intended that each
reorganization described in this Agreement shall be a tax-free reorganization
under the Internal Revenue Code of 1986, as amended (the "Code").
(b) Upon consummation of the transactions described in paragraph (a) of this
Agreement, each Paragon Fund shall distribute in complete liquidation to its
respective shareholders of record as of the Exchange Date the Shares received by
it, each shareholder being entitled to receive that number of Shares equal to
the proportion which the number of shares of beneficial interest of the
applicable class of the Paragon Fund held by such shareholder bears to the
number of such shares of such class of the Paragon Fund outstanding on such
date. If the Paragon shareholder of record is a financial organization
authorized to act in a fiduciary, advisory, custodial or similar capacity, that
shareholder will receive One Group Fiduciary Class Shares. All other Paragon
Class A shareholders will receive One Group Class A Shares. Shareholders of
record holding Paragon Class B Shares, other than Class B shareholders of
Paragon Money Market, will receive One Group Class B shares. Paragon Money
Market Class B Shares will receive One Group Money Market Class A shares.
A-1
<PAGE>
II. AGREEMENT
One Group and Paragon represent, warrant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF PARAGON. Paragon and each Paragon
Fund jointly and severally represent and warrant to and agree with One Group and
each One Group Fund that:
(a) Paragon is a business trust duly established and validly existing
under the laws of the Commonwealth of Massachusetts and has power to own all
of its properties and assets and to carry out its obligations under this
Agreement. Paragon and each Paragon Fund is not required to qualify as a
foreign association in any jurisdiction. Paragon and each Paragon Fund has
all necessary federal, state and local authorizations to carry on its
business as now being conducted and to fulfill the terms of this Agreement,
except as set forth in Section 1(l).
(b) Paragon is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and
such registration has not been revoked or rescinded and is in full force and
effect. Each Paragon Fund has elected to qualify and has qualified as a
regulated investment company under Part I of Subchapter M of the Code, as of
and since its first taxable year, and qualifies and intends to continue to
qualify as a regulated investment company for its taxable year ending upon
its liquidation. Each Paragon Fund has been a regulated investment company
under such sections of the Code at all times since its inception.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of portfolio investments
(indicating their market values) for each Paragon Fund at and for the year
ended November 30, 1995, such statements and schedules having been audited
by Price Waterhouse LLP, independent accountants to Paragon, have been
furnished to One Group.
(d) The combined prospectus of the Paragon Funds dated March 30, 1995
(the "Paragon Prospectus") and the Statement of Additional Information for
the Paragon Funds dated March 30, 1995 and on file with the Securities and
Exchange Commission (the "Commission"), which have been previously furnished
to One Group, did not as of their dates and do not as of the date hereof
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Paragon or any Paragon Fund, threatened
against Paragon or any Paragon Fund which assert liability on the part of
Paragon or any Paragon Fund.
(f) There are no material contracts outstanding to which Paragon or any
Paragon Fund is a party, other than as disclosed in the Paragon Prospectus
and the corresponding Statement of Additional Information, or in the
Registration Statement and the Proxy Statement as defined herein.
(g) Neither Paragon nor any Paragon Fund has any known liabilities of a
material nature, contingent or otherwise, other than those shown as
belonging to it on its statement of assets and liabilities as of November
30, 1995, and those incurred in the ordinary course of Paragon's business as
an investment company since that date. Prior to the Exchange Date, Paragon
will advise One Group of all known material liabilities, contingent or
otherwise, incurred by it and each Paragon Fund subsequent to November 30,
1995, whether or not incurred in the ordinary course of business.
(h) As used in this Agreement, the term "Investments" shall mean each
Paragon Fund's investments shown on the schedule of its portfolio
investments as of November 30, 1995 referred to in Section 1(c) hereof, as
supplemented with such changes as Paragon or each Paragon Fund shall make
after November 30, 1995, which changes have been disclosed to One Group, and
A-2
<PAGE>
changes made on and after the date of this Agreement after advising One
Group of such proposed changes, and changes resulting from stock dividends,
stock split-ups, mergers and similar corporate actions.
(i) Each Paragon Fund has filed or will file all federal and state tax
returns which, to the knowledge of Paragon's officers, are required to be
filed by each Paragon Fund and has paid or will pay all federal and state
taxes shown to be due on said returns or on any assessments received by each
Paragon Fund. All tax liabilities of each Paragon Fund have been adequately
provided for on its books, and no tax deficiency or liability of any Paragon
Fund has been asserted, and no question with respect thereto has been
raised, by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.
(j) As of both the Valuation Time and the Exchange Date and except for
shareholder approval as described in Section 8(a) and otherwise as described
in Section 1(1), Paragon on behalf of each Paragon Fund will have full
right, power and authority to sell, assign, transfer and deliver the
Investments and any other assets and liabilities of each Paragon Fund to be
transferred to the corresponding One Group Fund pursuant to this Agreement.
At the Exchange Date, subject only to the delivery of the Investments and
any such other assets and liabilities as contemplated by this Agreement, One
Group will, on behalf of each One Group Fund, acquire the Investments and
any such other assets subject to no encumbrances, liens or security
interests in favor of any third party creditor of Paragon or a Paragon Fund
and, except as described in Section 1(k), without any restrictions upon the
transfer thereof.
(k) No registration under the Securities Act of 1933, as amended (the
"1933 Act"), of any of the Investments would be required if they were, as of
the time of such transfer, the subject of a public distribution by either of
Paragon or One Group, except as previously disclosed to One Group by
Paragon.
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Paragon or any
Paragon Fund of the transactions contemplated by this Agreement, except such
as may be required under the 1933 Act, the Securities Exchange Act of 1934,
as amended (the "1934 Act"), the 1940 Act, state securities or blue sky laws
(which term as used herein shall include the laws of the District of
Columbia and of Puerto Rico) or the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "H-S-R Act").
(m) The registration statement (the "Registration Statement") filed with
the Commission by One Group on Form N-14 relating to the Shares issuable
hereunder, and the proxy statement of Paragon included therein (the "Proxy
Statement"), on the effective date of the Registration Statement and insofar
as they relate to Paragon and the Paragon Funds, (i) will comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder and (ii) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and at the time of the shareholders' meeting referred to in
Section 8(a) below and on the Exchange Date, the prospectus contained in the
Registration Statement of which the Proxy Statement is a part (the
"Prospectus"), as amended or supplemented by any amendments or supplements
filed with the Commission by One Group, insofar as it relates to Paragon and
the Paragon Funds, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that the
representations and warranties in this subsection shall apply only to
statements of fact relating to Paragon and any Paragon Fund contained in the
Registration Statement, the Prospectus or the Proxy Statement, or omissions
to state in any thereof a material fact relating to Paragon or any Paragon
Fund, as such Registration Statement, Prospectus and Proxy Statement shall
be furnished to Paragon in definitive form as soon as practicable following
effectiveness of the Registration Statement and before any public
distribution of the Prospectus or Proxy Statement.
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(n) All of the issued and outstanding shares of beneficial interest of
each Paragon Fund have been offered for sale and sold in conformity with all
applicable federal and state securities laws.
(o) Each of the Paragon Funds is qualified, and will at all times
through the Exchange Date qualify for taxation as a "regulated investment
company" under Sections 851 and 852 of the Code.
(p) At the Exchange Date, each of the Paragon Funds will have sold such
of its assets, if any, as necessary to assure that, after giving effect to
the acquisition of the assets pursuant to this Agreement, each of the One
Group Funds (othe than One Group Louisiana and One Group Gulf South) will
remain a "diversified company" within the meaning of Section 5(b) (l) of the
1940 Act and in compliance with such other mandatory investment restrictions
as are set forth in the One Group Prospectuses previously furnished to
Paragon.
2. REPRESENTATIONS AND WARRANTIES OF ONE GROUP. One Group and each One
Group Fund jointly and severally represent and warrant to and agree with Paragon
and each Paragon Fund that:
(a) One Group is a business trust duly established and validly existing
under the laws of The Commonwealth of Massachusetts and has power to carry
on its business as it is now being conducted and to carry out this
Agreement. One Group and each One Group Fund is not required to qualify as a
foreign association in any jurisdiction. One Group and each One Group Fund
has all necessary federal, state and local authorizations to own all of its
properties and assets and to carry on its business as now being conducted
and to fulfill the terms of this Agreement, except as set forth in Section
2(i).
(b) One Group is registered under the 1940 Act as an open-end management
investment company, and such registration has not been revoked or rescinded
and is in full force and effect. Each One Group Fund that has had active
operations prior to the Exchange Date, has elected to qualify and has
qualified as a regulated investment company under Part I of Subchapter M of
the Code, as of and since its first taxable year, and qualifies and intends
to continue to qualify as a regulated investment company for its taxable
year ending June 30, 1995. Each One Group Fund that has had actual
operations prior to the Exchange Date has been a regulated investment
company under such sections of the Code at all times since its inception.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of investments (indicating
their market values) for each One Group Fund for the year ended June 30,
1995, such statements and schedules having been audited by Coopers &
Lybrand, independent accountants to One Group, have been furnished to
Paragon. Unaudited statements of assets and liabilities, statements of
operations, statements of changes in net assets and schedules of investments
(indicating their market values) for each One Group Fund as of December 31,
1995 have also been furnished to Paragon. Such statements of assets and
liabilities and schedules fairly present the financial position of the One
Group Funds as of their respective dates, and said statements of operations
and changes in net assets fairly reflect the results of its operations and
changes in financial position for the periods covered thereby in conformity
with generally accepted accounting principles.
(d) The prospectuses of each One Group Fund dated November 1, 1995,
other than those relating to the One Group Louisiana, One Group Growth and
One Group Gulf South, (collectively, the "One Group Prospectuses") and the
Statement of Additional Information for the One Group Funds, dated November
1, 1995, and on file with the Commission, which have been previously
furnished to Paragon, did not as of their dates and do not as of the date
hereof contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The One Group Louisiana, One Group Growth
and One Group Gulf South Prospectuses and the Statements of Additional
Information, as amended, filed with the Commission on November 24, 1995,
which have been previously
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furnished to Paragon, did not as of their dates and do not as of the date
hereof contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of One Group or any One Group Fund, threatened
against One Group or any One Group Fund which assert liability on the part
of One Group or any One Group Fund.
(f) There are no material contracts outstanding to which One Group or
any One Group Fund is a party, other than as disclosed in the One Group
Prospectuses and the corresponding Statement of Additional Information or in
the Registration Statement.
(g) Neither One Group nor any One Group Fund has any known liabilities
of a material nature, contingent or otherwise, other than those shown on its
statement of assets and liabilities as of December 31, 1995 referred to
above and those incurred in the ordinary course of the business of One Group
as an investment company or any One Group Fund since such date. Prior to the
Exchange Date, One Group will advise Paragon of all known material
liabilities, contingent or otherwise, incurred by it and each One Group Fund
subsequent to December 31, 1995, whether or not incurred in the ordinary
course of business.
(h) Each One Group Fund has filed or will file all federal and state tax
returns which, to the knowledge of One Group's officers, are required to be
filed by each One Group Fund and has paid or will pay all federal and state
taxes shown to be due on said returns or on any assessments received by each
One Group Fund. All tax liabilities of each One Group Fund have been
adequately provided for on its books, and no tax deficiency or liability of
any One Group Fund has been asserted, and no question with respect thereto
has been raised, by the Internal Revenue Service or by any state or local
tax authority for taxes in excess of those already paid.
(i) No consent, approval, authorization or order of any governmental
authority is required for the consummation by One Group or any One Group
Fund of the transactions contemplated by this Agreement, except such as may
be required under the 1933 Act, the 1934 Act, the 1940 Act, state securities
or Blue Sky laws or the H-S-R Act.
(j) As of both the Valuation Time and the Exchange Date and otherwise
as described in Section 2 (i), One Group on behalf of each One Group Fund
will have full right, power and authority to purchase the Investments and
any other assets and assume the liabilities of each Paragon Fund to be
transferred to the corresponding One Group Fund pursuant to this Agreement.
(k) The Registration Statement, the Prospectus and the Proxy Statement,
on the effective date of the Registration Statement and insofar as they
relate to One Group and the One Group Funds: (i) will comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act
and the rules and regulations thereunder and (ii) will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and at the time of the shareholders' meeting referred to in
Section 8(a) and at the Exchange Date, the Prospectus, as amended or
supplemented by any amendments or supplements filed with the Commission by
One Group or any One Group Fund, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided,
however, that none of the representations and warranties in this subsection
shall apply to statements in or omissions from the Registration Statement,
the Prospectus or the Proxy Statement made in reliance upon and in
conformity with information furnished by Paragon or any Paragon Fund for use
in the Registration Statement, the Prospectus or the Proxy Statement.
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(l) Shares to be issued to each Paragon Fund have been duly authorized
and, when issued and delivered pursuant to this Agreement and the
Prospectus, will be legally and validly issued and will be fully paid and
nonassessable by One Group and no shareholder of One Group will have any
preemptive right of subscription or purchase in respect thereof.
(m) The issuance of Shares pursuant to this Agreement will be in
compliance with all applicable federal and state securities laws.
(n) Each of One Group Money Market, One Group Bond, One Group Limited
Volatility, and One Group Equity is qualified and will at all times through
the Exchange Date qualify for taxation as a "regulated investment company"
under Sections 851 and 852 of the Code. Each of One Group Louisiana, One
Group Growth and One Group Gulf South, upon filing of its first income tax
return at the completion of its first taxable year, will elect to be a
regulated investment company and until such time will take all steps
necessary to ensure qualification as a regulated investment company.
3. REORGANIZATION. (a) Subject to the requisite shareholder approval as
described in Section 8(a) and to the other terms and conditions contained herein
(including each Paragon Fund's obligation to distribute to its respective
shareholders all of its investment company taxable income and net capital gain
as described in Section 9(k) hereof), Paragon and each Paragon Fund agree to
sell, assign, convey, transfer and deliver to the corresponding One Group Fund,
and One Group and each One Group Fund agree to acquire from the corresponding
Paragon Fund, on the Exchange Date all of the Investments and all of the cash
and other assets of each Paragon Fund in exchange for that number of Shares of
the corresponding One Group Fund provided for in Section 4 and the assumption by
the corresponding One Group Fund of all the liabilities of the Paragon Fund.
Pursuant to this Agreement, each Paragon Fund will, as soon as practicable after
the Exchange Date, distribute in liquidation all of the Shares received by it to
its shareholders in exchange for their shares of beneficial interest of such
Paragon Fund.
(b) Paragon, on behalf of each Paragon Fund, will pay or cause to be paid to
the corresponding One Group Fund any interest and cash dividends received by it
on or after the Exchange Date with respect to the Investments transferred to the
One Group Funds hereunder. Paragon, on behalf of each Paragon Fund, will
transfer to the corresponding One Group Fund any rights, stock dividends or
other securities received by Paragon or any Paragon Fund after the Exchange Date
as stock dividends or other distributions on or with respect to the Investments
transferred, which rights, stock dividends and other securities shall be deemed
included in the assets transferred to each One Group Fund at the Exchange Date
and shall not be separately valued, in which case any such distribution that
remains unpaid as of the Exchange Date shall be included in the determination of
the value of the assets of the Paragon Fund acquired by the corresponding One
Group Fund.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, One Group will
deliver to Paragon a number of Shares having an aggregate net asset value equal
to the value of the assets of the Corresponding Paragon Fund acquired by each
One Group Fund, less the value of the liabilities of such Paragon Fund assumed,
determined as hereafter provided in this Section 4.
(a) Subject to Section 4(d) hereof, the value of each Paragon Fund's net
assets will be computed as of the Valuation Time using the valuation procedures
for the corresponding One Group Fund as set forth in the One Group Prospectus
for the particular One Group Fund
(b) Subject to Section 4(d) hereof, the net asset value of a share of each
One Group Fund will be determined to the nearest full cent as of the Valuation
Time, using the valuation procedures set forth in the One Group Prospectus for
the particular One Group Fund.
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(c) Subject to Section 4(d), the Valuation Time shall be 4:00 p.m. Eastern
Standard time on March 22, 1996 or such earlier or later day as may be mutually
agreed upon in writing by the parties hereto (the "Valuation Time").
(d) No formula will be used to adjust the net asset value of any Paragon
Fund or One Group Fund to take into account differences in realized and
unrealized gains and losses.
(e) Each One Group Fund shall issue its Shares to the corresponding Paragon
Fund on one share deposit receipt registered in the name of the corresponding
Paragon Fund. Each Paragon Fund shall distribute in liquidation the Shares
received by it hereunder pro rata to its shareholders of each class of shares by
redelivering such share deposit receipt to One Group's transfer agent which will
as soon as practicable set up open accounts for each Paragon Fund shareholder in
accordance with written instructions furnished by Paragon.
(f) Each One Group Fund shall assume all liabilities of the corresponding
Paragon Fund, whether accrued or contingent, in connection with the acquisition
of assets and subsequent dissolution of the corresponding Paragon Fund or
otherwise, except that recourse for assumed liabilities relating to a particular
Paragon Fund will be limited to the corresponding One Group Fund.
5. EXPENSES, FEES, ETC. (a) Subject to subsections 5(b) through 5(e), all
fees and expenses, including accounting expenses, portfolio transfer taxes (if
any) or other similar expenses incurred in connection with the consummation by
One Group and Paragon of the transactions contemplated by this Agreement will be
paid by the party directly incurring such fees and expenses, except that the
costs of proxy materials and proxy solicitation, including legal expenses, will
be borne by the One Group; PROVIDED, HOWEVER, that such expenses will in any
event be paid by the party directly incurring such expenses if and to the extent
that the payment by the other party of such expenses would result in the
disqualification of any One Group Fund or any Paragon Fund, as the case may be,
as a "regulated investment company" within the meaning of Section 851 of the
Code.
(b) In the event the transactions contemplated by this Agreement are not
consummated by reason of Paragon being either unwilling or unable to go forward
(other than by reason of the nonfulfillment or failure of any condition to
Paragon's obligations referred to in Section 8(a) or Section 10) Paragon shall
pay directly all reasonable fees and expenses incurred by One Group in
connection with such transactions, including, without limitation, legal,
accounting and filing fees.
(c) In the event the transactions contemplated by this Agreement are not
consummated by reason of One Group being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any condition
to One Group's obligations referred to in Section 8(a) or Section 9), One Group
shall pay directly all reasonable fees and expenses incurred by Paragon in
connection with such transactions, including without limitation legal,
accounting and filing fees.
(d) In the event the transactions contemplated by this Agreement are not
consummated for any reason other than (i) One Group or Paragon being either
unwilling or unable to go forward or (ii) the nonfulfillment or failure of any
condition to Paragon or One Group's obligations referred to in Section 8(a),
Section 9 or Section 10 of this Agreement, then each of Paragon and One Group
shall bear the expenses it has actually incurred in connection with such
transactions.
(e) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated, no
party shall be liable to the other party for any damages resulting therefrom,
including without limitation consequential damages, except as specifically set
forth above.
6. PERMITTED ASSETS. One Group agrees to advise Paragon promptly if at any
time prior to the Exchange Date the assets of any Paragon Fund include any
assets that the corresponding One Group Fund is not permitted, or reasonably
believes to be unsuitable for it, to acquire, including without limitation any
security that, prior to its acquisition by any Paragon Fund, One Group has
informed Paragon is unsuitable for the corresponding One Group Fund to acquire.
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<PAGE>
7. EXCHANGE DATE. Delivery of the assets of the Paragon Funds to be
transferred, assumption of the liabilities of the Paragon Funds to be assumed,
and the delivery of Shares to be issued shall be made at the offices of Banc One
Investment Advisors Corporation at 9:00 am. on March 25, 1996, or at such other
time and date agreed to by Paragon and One Group, the date and time upon which
such delivery is to take place being referred to herein as the "Exchange Date."
8. SPECIAL MEETING OF SHAREHOLDERS; DISSOLUTION. (a) Paragon agrees to
call a special meeting of the shareholders of each Paragon Fund as soon as is
practicable after the effective date of the Registration Statement for the
purpose of considering the sale of all of the assets of each Paragon Fund to and
the assumption of all of the liabilities of each Paragon Fund by the
corresponding One Group Fund as herein provided, adopting this Agreement, and
authorizing the liquidation and dissolution of any Paragon Fund, and, except as
set forth in Section 13, it shall be a condition to the obligations of each of
the parties hereto that the holders of the shares of beneficial interest of each
Paragon Fund, and each class of shares of each Paragon Fund if such is required
under the 1940 Act, shall have approved this Agreement and the transactions
contemplated herein in the manner required by law and Paragon's Declaration of
Trust at such a meeting on or before the Valuation Time.
(b) Paragon and each Paragon Fund agree that the liquidation and dissolution
of each Paragon Fund will be effected in the manner provided in Paragon's
Declaration of Trust in accordance with applicable law, and that it will not
make any distributions of any Shares to the shareholders of a Paragon Fund
without first paying or adequately providing for the payment of all of such
Paragon Fund's known debts, obligations and liabilities.
(c) Each of One Group and Paragon will cooperate with the other, and each
will furnish to the other the information relating to itself required by the
1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder
to be set forth in the Registration Statement, including the Prospectus and the
Proxy Statement.
9. CONDITIONS TO ONE GROUP'S OBLIGATIONS. The obligations of One Group and
each One Group Fund hereunder shall be subject to the following conditions:
(a) That this Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the
Paragon Funds, shall have been approved as set forth in Section 8(a).
(b) Paragon shall have furnished to One Group a statement of each
Paragon Fund's assets and liabilities, with values determined as provided in
Section 4 of this Agreement, together with a list of Investments with their
respective tax costs, all as of the Valuation Time, certified on Paragon's
behalf by its President (or any Vice President) and Treasurer, and a
certificate of both such officers, dated the Exchange Date, to the effect
that as of the Valuation Time and as of the Exchange Date there has been no
material adverse change in the financial position of any Paragon Fund since
November 30, 1995, other than changes in the Investments since that date or
changes in the market value of the Investments, or changes due to net
redemptions of shares of the Paragon Funds, dividends paid or losses from
operations.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Paragon and each Paragon Fund made in this
Agreement are true and correct in all material respects as if made at and as
of such dates, Paragon and each Paragon Fund has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to each of such dates, and Paragon shall have
furnished to One Group a statement, dated the Exchange Date, signed by
Paragon's President (or any Vice President) and Treasurer certifying those
facts as of such dates.
(d) Paragon shall have delivered to One Group a letter from Price
Waterhouse LLP dated the Exchange Date stating that such firm reviewed the
federal and state income tax returns of each Paragon Fund for the year ended
November 30, 1995 and that, in the course of such review, nothing came to
their attention which caused them to believe that such returns did not
properly
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reflect, in all material respects, the federal and state income taxes of
each Paragon Fund for the periods covered thereby, or that each Paragon Fund
would not qualify as a regulated investment company for federal income tax
purposes.
(e) There shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(f) One Group shall have received an opinion of Hale and Dorr, in form
reasonably satisfactory to One Group and dated the Exchange Date, to the
effect that (i) Paragon is a business trust duly established and validly
existing under the laws of the Commonwealth of Massachusetts, and neither
Paragon nor any Paragon Fund is, to the knowledge of such counsel, required
to qualify to do business as a foreign association in any jurisdiction, (ii)
this Agreement has been duly authorized, executed, and delivered by Paragon
and, assuming that the Registration Statement, the Prospectus and the Proxy
Statement comply with the 1933 Act, the 1934 Act and the 1940 Act and
assuming due authorization, execution and delivery of this Agreement by One
Group, is a valid and binding obligation of Paragon, (iii) Paragon and each
Paragon Fund has power to sell, assign, convey, transfer and deliver the
Investments and other assets contemplated hereby and, upon consummation of
the transactions contemplated hereby in accordance with the terms of this
Agreement, Paragon and each Paragon Fund will have duly sold, assigned,
conveyed, transferred and delivered such Investments and other assets to One
Group, (iv) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, violate
Paragon's Declaration of Trust, or Bylaws, as amended, or any provision of
any agreement known to such counsel to which Paragon or any Paragon Fund is
a party or by which it is bound, it being understood that with respect to
investment restrictions as contained in Paragon's Declaration of Trust, or
Bylaws, or then-current prospectus or statement of additional information,
such counsel may rely upon a certificate of an officer of Paragon whose
responsibility it is to advise Paragon with respect to such matters and (v)
no consent, approval, authorization or order of any court or governmental
authority is required for the consummation by Paragon or any Paragon Fund of
the transactions contemplated hereby, except such as have been obtained
under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities or blue sky laws and the H-S-R Act, and it
being understood that such opinion shall not be deemed to apply to One
Group's compliance obligations under the 1933 Act, 1934 Act, 1940 Act, state
securities or blue sky laws and H-S-R Act. For purposes of analysis
regarding the 1940 Act, Hale & Dorr may assume as fact that the Paragon
Funds and the One Group Funds may be considered affiliated persons or
affiliated persons of an affiliated person solely by reason of having a
common investment adviser.
(g) One Group shall have received an opinion of Ropes & Gray, counsel to
One Group addressed to The One Group and each One Group Fund, in form
reasonably satisfactory to One Group and dated the Exchange Date, to the
effect that for Federal income tax purposes (i) no gain or loss will be
recognized by any Paragon Fund upon the transfer of the assets to the
corresponding One Group Fund in exchange for Shares and the assumption by
such One Group Fund of the liabilities of the Paragon Fund or upon the
distribution of Shares by the Paragon Fund to its shareholders in
liquidation; (ii) no gain or loss will be recognized by the shareholders of
any Paragon Fund upon the exchange of their shares for Shares; (iii) the
basis of the Shares a Paragon shareholder receives in connection with the
transaction will be the same as the basis of his or her Paragon Fund shares
exchanged therefor; (iv) a Paragon shareholder's holding period for his or
her Shares will be determined by including the period for which he or she
held the Paragon Fund shares exchanged therefor, provided that he or she
held such Paragon Fund shares as capital assets; (v) no gain or loss will be
recognized by any One Group Fund upon the receipt of the assets of the
corresponding Paragon Fund in exchange for Shares and the assumption by the
One Group Fund of the liabilities of the corresponding Paragon Fund; (vi)
the basis in the hands of the One Group Fund of the assets of the
corresponding Paragon Fund transferred to the One Group Fund in the
transaction will be the same as the basis of the assets in the hands of the
corresponding
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Paragon Fund immediately prior to the transfer; and (vii) the holding
periods of the assets of the corresponding Paragon Fund in the hands of the
One Group Fund will include the periods for which such assets were held by
the corresponding Paragon Fund.
(h) The assets of each Paragon Fund to be acquired by the corresponding
One Group Fund will include no assets which the corresponding One Group
Fund, by reason of limitations contained in its Declaration of Trust or of
investment restrictions disclosed in the One Group Prospectuses in effect on
the Exchange Date, may not properly acquire.
(i) The Registration Statement shall have become effective under the
1933 Act and applicable blue sky provisions, and no stop order suspending
such effectiveness shall have been instituted or, to the knowledge of One
Group contemplated by the Commission and or any state regulatory authority.
(j) All proceedings taken by Paragon in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto reasonably shall be satisfactory in form and substance to One Group
and Ropes & Gray.
(k) Prior to the Exchange Date, each Paragon Fund shall have declared a
dividend or dividends which, together with all previous such dividends,
shall have the effect of distributing to its shareholders all of its
investment company taxable income for its taxable year ended November 30,
1995 and the short taxable year beginning on December 1, 1995 and ending on
the Exchange Date (computed without regard to any deduction for dividends
paid), and all of its net capital gain realized in its taxable year ended
November 30, 1995 and the short taxable year beginning on December 1, 1995
and ending on the Exchange Date (after reduction for any capital loss
carryover).
(l) Paragon shall have furnished to One Group a certificate, signed by
the President (or any Vice President) and the Treasurer of Paragon, as to
the tax cost to One Group of the securities delivered to One Group pursuant
to this Agreement, together with any such other evidence as to such tax cost
as One Group may reasonably request.
(m) Paragon's custodian shall have delivered to One Group a certificate
identifying all of the assets of each Paragon Fund held by such custodian as
of the Valuation Time.
(n) Paragon's transfer agent shall have provided to One Group (i) the
originals or true copies of all of the records of each Paragon Fund in the
possession of such transfer agent as of the Exchange Date, (ii) a
certificate setting forth the number of shares of each class of Paragon Fund
outstanding as of the Valuation Time and (iii) the name and address of each
holder of record of any such shares of each Paragon Fund and the number of
shares of each class held of record by each such shareholder.
(o) All of the issued and outstanding shares of beneficial interest of
each Paragon Fund shall have been offered for sale and sold in conformity
with all applicable federal or state securities or blue sky laws and, to the
extent that any audit of the records of Paragon or any Paragon Fund or its
transfer agent by One Group or its agents shall have revealed otherwise,
either (i) Paragon and each Paragon Fund shall have taken all actions that
in the reasonable opinion of One Group or Ropes & Gray are necessary to
remedy any prior failure on the part of Paragon to have offered for sale and
sold such shares in conformity with such laws or (ii) Paragon shall have
furnished (or caused to be furnished) surety, or deposited (or caused to be
deposited) assets in escrow, for the benefit of One Group in amounts
sufficient and upon terms satisfactory, in the opinion of One Group or its
counsel, to indemnify One Group against any expense, loss, claim, damage or
liability whatsoever that may be asserted or threatened by reason of such
failure on the part of Paragon to have offered and sold such shares in
conformity with such laws.
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(p) Paragon shall have duly executed and delivered to One Group bills of
sale, assignments, certificates and other instruments of transfer ("Transfer
Documents") as One Group may deem necessary or desirable to transfer all of
Paragon's and each Paragon Fund's entire right, title and interest in and to
the Investments and all other assets of each Paragon Fund.
10. CONDITIONS TO PARAGON'S OBLIGATIONS. The obligations of Paragon and
each Paragon Fund hereunder shall be subject to the following conditions:
(a) This Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the
Paragon Funds, shall have been approved as described in Section 8(a).
(b) One Group shall have furnished to Paragon a Statement of each One
Group Fund's net assets, together with a list of portfolio holdings with
values determined as provided in Section 4, all as of the Valuation Time,
certified on One Group's behalf by its President (or any Vice President) and
Treasurer (or any Assistant Treasurer), and a certificate of both such
officers, dated the Exchange Date, to the effect that as of the Valuation
Time and as of the Exchange Date there has been no material adverse change
in the financial position of any One Group Fund since December 31, 1995,
other than changes in its portfolio securities since that date, changes in
the market value of its portfolio securities, changes due to net
redemptions, dividends paid or losses from operations.
(c) One Group shall have executed and delivered to Paragon an Assumption
of Liabilities dated as of the Exchange Date pursuant to which each One
Group Fund will assume all of the liabilities of the corresponding Paragon
Fund existing at the Valuation Time in connection with the transactions
contemplated by this Agreement.
(d) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of One Group and each One Group Fund made in
this Agreement are true and correct in all material respects as if made at
and as of such dates, One Group and each One Group Fund has complied with
all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied at or prior to each of such dates, and One Group
shall have furnished to Paragon a statement, dated the Exchange Date, signed
by One Group's President (or any Vice President) and Treasurer certifying
those facts as of such dates.
(e) There shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(f) Paragon shall have received an opinion of Ropes & Gray, in form
reasonably satisfactory to Paragon and dated the Exchange Date, to the
effect that (i) One Group is a business trust and validly existing in
conformity with the laws of The Commonwealth of Massachusetts, and, (to the
knowledge of such counsel), neither One Group nor any One Group Fund is
required to qualify to do business as a foreign association in any
jurisdiction, (ii) the Shares to be delivered to Paragon as provided for by
this Agreement are duly authorized and upon such delivery will be validly
issued and will be fully paid and nonassessable by One Group and no
shareholder of One Group has any preemptive right to subscription or
purchase in respect thereof, (iii) this Agreement has been duly authorized,
executed and delivered by One Group and, assuming that the Prospectus, the
Registration Statement and the Proxy Statement comply with the 1933 Act, the
1934 Act and the 1940 Act and assuming due authorization, execution and
delivery of this Agreement by Paragon, is a valid and binding obligation of
One Group, (iv) the execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, violate
One Group's Declaration of Trust, as amended, or Code of Regulations, or any
provision of any agreement known to such counsel to which One Group or any
One Group Fund is a party or by which it is bound, it being understood that
with respect to investment restrictions as contained in One Group's
Declaration of Trust, as amended, Code of Regulations or then-current
prospectus or statement of additional information of each One Group Fund,
such counsel may rely upon a
A-11
<PAGE>
certificate of an officer of One Group whose responsibility it is to advise
One Group with respect to such matters, (v) no consent, approval,
authorization or order of any court or governmental authority is required
for the consummation by One Group or any One Group Fund of the transactions
contemplated herein, except such as have been obtained under the 1933 Act,
the 1934 Act and the 1940 Act and such as may be required under state
securities or blue sky laws and the H-S-R Act and it being understood that
such opinion shall not be deemed to apply to Paragon's compliance
obligations under the 1933 Act, 1934 Act, 1940 Act, state securities or blue
sky laws and the H-S-R Act; and (vi) the Registration Statement has become
effective under the 1933 Act, and to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act.
(g) Paragon shall have received an opinion of Ropes & Gray addressed to
Paragon, each Paragon Fund, and in a form reasonably satisfactory to Paragon
dated the Exchange Date, with respect to the matters specified in Section
9(g) of this Agreement.
(h) All proceedings taken by One Group in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto reasonably shall be satisfactory in form and substance to Paragon
and Hale and Dorr.
(i) The Registration Statement shall have become effective under the
1933 Act and applicable blue sky provisions, and no stop order suspending
such effectiveness shall have been instituted or, to the knowledge of
Paragon, contemplated by the Commission or any state regulatory authority.
11. INDEMNIFICATION. (a) The Paragon Funds will indemnify and hold
harmless One Group, its trustees and its officers (for purposes of this
subsection, the "Indemnified Parties") against any and all expenses, losses,
claims, damages and liabilities at any time imposed upon or reasonably incurred
by any one or more of the Indemnified Parties in connection with, arising out
of, or resulting from any claim, action, suit or proceeding in which any one or
more of the Indemnified Parties may be involved or with which any one or more of
the Indemnified Parties may be threatened by reason of any untrue statement or
alleged untrue statement of a material fact relating to Paragon or any Paragon
Fund contained in the Registration Statement, the Prospectus or the Proxy
Statement or any amendment or supplement to any of the foregoing, or arising out
of or based upon the omission or alleged omission to state in any of the
foregoing a material fact relating to Paragon or any Paragon Fund required to be
stated therein or necessary to make the statements relating to Paragon or any
Paragon Fund therein not misleading, including, without limitation, any amounts
paid by any one or more of the Indemnified Parties in a reasonable compromise or
settlement of any such claim, action, suit or proceeding or threatened claim,
action, suit or proceeding made with the prior consent of Paragon. The
Indemnified Parties will notify Paragon in writing within ten days after the
receipt by any one or more of the Indemnified Parties of any notice of legal
process or any suit brought against or claim made against such Indemnified Party
as to any matters covered by this Section 11(a). Paragon shall be entitled to
participate at its own expense in the defense of any claim, action, suit or
proceeding covered by this Section 11(a), or, if it so elects, to assume at its
expense by counsel satisfactory to the Indemnified Parties the defense of any
such claim, action, suit or proceeding, and if Paragon elects to assume such
defense, the Indemnified Parties shall be entitled to participate in the defense
of any such claim, action, suit or proceeding at their expense. The Paragon
Funds' obligation under this Section 11(a) to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that the Paragon
Funds will pay in the first instance any expenses, losses, claims, damages and
liabilities required to be paid by it under this Section 11(a) without the
necessity of the Indemnified Parties first paying the same.
(b) The One Group Funds will indemnify and hold harmless Paragon, its
trustees and its officers (for purposes of this subparagraph, the "Indemnified
Parties") against any and all expenses, losses, claims, damages and liabilities
at any time imposed upon or reasonably incurred by any one or more of
A-12
<PAGE>
the Indemnified Parties in connection with, arising out of, or resulting from
any claim, action, suit or proceeding in which any one or more of the
Indemnified Parties may be involved or with which any one or more of the
Indemnified Parties may be threatened by reason of any untrue statement or
alleged untrue statement of a material fact relating to One Group or any One
Group Fund contained in the Registration Statement, the Prospectus or the Proxy
Statement, or any amendment or supplement to any of the foregoing, or arising
out of or based upon the omission or alleged omission to state in any of the
foregoing a material fact relating to One Group or any One Group Fund required
to be stated therein or necessary to make the statements relating to One Group
or any One Group Fund therein not misleading, including, without limitation, any
amounts paid by any one or more of the Indemnified Parties in a reasonable
compromise or settlement of any such claim, action, suit or proceeding, or
threatened claim, action, suit or proceeding made with the prior consent of One
Group. The Indemnified Parties will notify One Group in writing within ten days
after the receipt by any one or more of the Indemnified Parties of any notice of
legal process or any suit brought against or claim made against any Indemnified
Party as to any matters covered by this Section 11(b). One Group shall be
entitled to participate at its own expense in the defense of any claim, action,
suit or proceeding covered by this Section 11(b), or, if it so elects, to assume
at its expense by counsel satisfactory to the Indemnified Parties the defense of
any such claim, action, suit or proceeding, and, if One Group elects to assume
such defense, the Indemnified Parties shall be entitled to participate in the
defense of any such claim, action, suit or proceeding at their own expense. The
One Group Funds' obligation under this Section 11(b) to indemnify and hold
harmless the Indemnified Parties shall constitute a guarantee of payment so that
the One Group Funds will pay in the first instance any expenses, losses, claims,
damages and liabilities required to be paid by it under this Section 11(b)
without the necessity of the Indemnified Parties first paying the same.
12. NO BROKER, ETC. Each of One Group and Paragon represents that there is
no person who has dealt with it who by reason of such dealings is entitled to
any broker's or finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement.
13. TERMINATION. One Group and Paragon may, by mutual consent of their
respective trustees, terminate this Agreement, and One Group or Paragon, after
consultation with counsel and by consent of their respective trustees or an
officer authorized by such trustees, may waive any condition to their respective
obligations hereunder. If the transactions contemplated by this Agreement have
not been substantially completed by June 30, 1996, this Agreement shall
automatically terminate on that date unless a later date is agreed to by One
Group and Paragon.
Notwithstanding any other provision in this Agreement, in the event
shareholder approval of this Agreement and the transactions contemplated by this
Agreement is obtained with respect to only one or more Paragon Funds but not all
of the Paragon Funds, One Group and Paragon agree to consummate those
transactions with respect to those Paragon Funds whose shareholders have
approved this Agreement and those transactions.
In the event that shareholder approval of this Agreement and the
transactions contemplated by this Agreement is required, but not obtained with
respect to only one class of shares of a Paragon Fund, the transaction with
respect to that Paragon Fund will not be consummated unless and until
shareholder approval is obtained with respect to both classes.
14. RULE 145. Pursuant to Rule 145 under the 1933 Act, One Group will, in
connection with the issuance of any Shares to any person who at the time of the
transaction contemplated hereby is deemed to be an affiliate of a party to the
transaction pursuant to Rule 145 (c), cause to be affixed upon the certificates
issued to such person (if any) a legend as follows:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO THE
ONE GROUP OR ITS PRINCIPAL UNDERWRITER UNLESS (i) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
A-13
<PAGE>
SECURITIES ACT OF 1933, AS AMENDED, OR (ii) IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ONE GROUP SUCH REGISTRATION IS NOT
REQUIRED."
and, further, One Group will issue stop transfer instructions to One Group's
transfer agent with respect to such shares. Paragon will provide One Group on
the Exchange Date with the name of any shareholder of the Paragon Funds who is
to the knowledge of Paragon an affiliate of Paragon on such date.
15. COVENANTS, ETC. DEEMED MATERIAL. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding any investigation made by
them or on their behalf.
16. SOLE AGREEMENT; AMENDMENTS. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts.
17. AGREEMENT AND DECLARATION OF TRUST. Paragon Portfolio is a business
trust organized under Massachusetts law and under a Declaration of Trust, to
which reference is hereby made and a copy of which is on file at the office of
the Secretary of The Commonwealth of Massachusetts and elsewhere as required by
law, and to any and all amendments thereto so filed or hereafter filed. The
obligations of "The Paragon Funds" entered into in the name or on behalf thereof
by any of the Trustees, officers, employees or agents are made not individually,
but in such capacities, and are not binding upon any of the Trustees, officers,
employees, agents or shareholders of Paragon personally, but bind only the
assets of Paragon, and all persons dealing with any of the series or funds of
Paragon, such as the Paragon Funds, must look solely to the assets of Paragon
belonging to such series or funds for the enforcement of any claims against
Paragon.
The names "The One Group-Registered Trademark-" and "Trustees of The One
Group-Registered Trademark-" refer respectively to One Group and the Trustees,
as trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated May 23, 1985 to which reference is hereby made and a
copy of which is on file at the office of the Secretary of The Commonwealth of
Massachusetts and elsewhere as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of "The One
Group-Registered Trademark-" entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, Shareholders or
representatives of One Group personally, but bind only the assets of One Group
such as the One Group Funds, must look solely to the assets of One Group
belonging to such series for the enforcement of any claims against One Group.
This Agreement may be executed in any number of counter-parts, each of
which, when executed and delivered, shall be deemed to be an original.
PARAGON PORTFOLIO
By: ________Michael J. Richman________
THE ONE GROUP-Registered Trademark-
By: __________Mark A. Dillon__________
A-14
<PAGE>
PARAGON TREASURY MONEY MARKET FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of the Paragon Treasury Money Market Fund ("Paragon Money Market")
on March 25, 1996 at 9:00 am., Central standard time, and at any adjournments
thereof, all of the shares of beneficial interest in Paragon Money Market which
the undersigned would be entitled to vote upon the following matter if
personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Money Market will be transferred to
The One Group U.S. Treasury Securities Money Market Fund ("One Group Money
Market") in return for Class A and Fiduciary class shares of One Group Money
Market, followed by the dissolution and liquidation of Paragon Money Market, and
the distribution of shares of One Group Money Market to the shareholders of
Paragon Money Market.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON TREASURY MONEY MARKET FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of the Paragon Treasury Money Market Fund ("Paragon Money Market")
on March 25, 1996 at 9:00 am., Central standard time, and at any adjournments
thereof, all of the shares of beneficial interest in Paragon Money Market which
the undersigned would be entitled to vote upon the following matter if
personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Money Market will be transferred to
The One Group U.S. Treasury Securities Money Market Fund ("One Group Money
Market") in return for Class A and Fiduciary class shares of One Group Money
Market, followed by the dissolution and liquidation of Paragon Money Market, and
the distribution of shares of One Group Money Market to the shareholders of
Paragon Money Market.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON SHORT-TERM GOVERNMENT FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Short-Term Government Fund ("Paragon Government") on
March 25, 1996 at 9:00 am., Central standard time, and at any adjournments
thereof, all of the shares of beneficial interest in Paragon Government which
the undersigned would be entitled to vote upon the following matter if
personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Government will be transferred to
The One Group Limited Volatility Bond Fund ("One Group Limited Volatility") in
return for Class A, Class B and Fiduciary class shares of One Group Limited
Volatility, followed by the dissolution and liquidation of Paragon Government,
and the distribution of shares of One Group Limited Volatility to the
shareholders of Paragon Government.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON SHORT-TERM GOVERNMENT FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Short-Term Government Fund ("Paragon Government") on
March 25, 1996 at 9:00 am., Central standard time, and at any adjournments
thereof, all of the shares of beneficial interest in Paragon Government which
the undersigned would be entitled to vote upon the following matter if
personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Government will be transferred to
The One Group Limited Volatility Bond Fund ("One Group Limited Volatility") in
return for Class A, Class B and Fiduciary class shares of One Group Limited
Volatility, followed by the dissolution and liquidation of Paragon Government,
and the distribution of shares of One Group Limited Volatility to the
shareholders of Paragon Government.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON INTERMEDIATE-TERM BOND FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Intermediate Term Bond Fund ("Paragon Bond") on March
25, 1996 at 9:00 am., Central standard time, and at any adjournments thereof,
all of the shares of beneficial interest in Paragon Intermediate which the
undersigned would be entitled to vote upon the following matter if personally
present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Bond will be transferred to The One
Group Government Bond Fund ("One Group Bond") in return for Class A, Class B and
Fiduciary class shares of One Group Bond, followed by the dissolution and
liquidation of Paragon Bond, and the distribution of shares of One Group Bond to
the shareholders of Paragon Bond.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON INTERMEDIATE-TERM BOND FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Intermediate Term Bond Fund ("Paragon Bond") on March
25, 1996 at 9:00 am., Central standard time, and at any adjournments thereof,
all of the shares of beneficial interest in Paragon Intermediate which the
undersigned would be entitled to vote upon the following matter if personally
present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Bond will be transferred to The One
Group Government Bond Fund ("One Group Bond") in return for Class A, Class B and
Fiduciary class shares of One Group Bond, followed by the dissolution and
liquidation of Paragon Bond, and the distribution of shares of One Group Bond to
the shareholders of Paragon Bond.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON VALUE EQUITY INCOME FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Value Equity Income Fund ("Paragon Equity") on March 25,
1996 at 9:00 am., Central standard time, and at any adjournments thereof, all of
the shares of beneficial interest in Paragon Equity which the undersigned would
be entitled to vote upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Equity will be transferred to The
One Group Income Equity Fund ("One Group Equity") in return for Class A, Class B
and Fiduciary class shares of One Group Equity, followed by the dissolution and
liquidation of Paragon Equity, and the distribution of shares of One Group
Equity to the shareholders of Paragon Equity.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON VALUE EQUITY INCOME FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Value Equity Income Fund ("Paragon Equity") on March 25,
1996 at 9:00 am., Central standard time, and at any adjournments thereof, all of
the shares of beneficial interest in Paragon Equity which the undersigned would
be entitled to vote upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Equity will be transferred to The
One Group Income Equity Fund ("One Group Equity") in return for Class A, Class B
and Fiduciary class shares of One Group Equity, followed by the dissolution and
liquidation of Paragon Equity, and the distribution of shares of One Group
Equity to the shareholders of Paragon Equity.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON LOUISIANA TAX-FREE FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Louisiana Tax-Free Fund ("Paragon Louisiana") on March
25, 1996 at 9:00 am., Central standard time, and at any adjournments thereof,
all of the shares of beneficial interest in Paragon Louisiana which the
undersigned would be entitled to vote upon the following matter if personally
present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Louisiana will be transferred to
The One Group Louisiana Municipal Bond Fund ("One Group Louisiana") in return
for Class A, Class B and Fiduciary class shares of One Group Louisiana, followed
by the dissolution and liquidation of Paragon Louisiana, and the distribution of
shares of One Group Louisiana to the shareholders of Paragon Louisiana.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON LOUISIANA TAX-FREE FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Louisiana Tax-Free Fund ("Paragon Louisiana") on March
25, 1996 at 9:00 am., Central standard time, and at any adjournments thereof,
all of the shares of beneficial interest in Paragon Louisiana which the
undersigned would be entitled to vote upon the following matter if personally
present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Louisiana will be transferred to
The One Group Louisiana Municipal Bond Fund ("One Group Louisiana") in return
for Class A, Class B and Fiduciary class shares of One Group Louisiana, followed
by the dissolution and liquidation of Paragon Louisiana, and the distribution of
shares of One Group Louisiana to the shareholders of Paragon Louisiana.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON VALUE GROWTH FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Value Growth Fund ("Paragon Growth") on March 25, 1996
at 9:00 am., Central standard time, and at any adjournments thereof, all of the
shares of beneficial interest in Paragon Growth which the undersigned would be
entitled to vote upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Growth will be transferred to The
One Group Value Growth Fund ("One Group Growth") in return for Class A, Class B
and Fiduciary class shares of One Group Growth, followed by the dissolution and
liquidation of Paragon Growth, and the distribution of shares of One Group
Growth to the shareholders of Paragon Growth.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON VALUE GROWTH FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Value Growth Fund ("Paragon Growth") on March 25, 1996
at 9:00 am., Central standard time, and at any adjournments thereof, all of the
shares of beneficial interest in Paragon Growth which the undersigned would be
entitled to vote upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Growth will be transferred to The
One Group Value Growth Fund ("One Group Growth") in return for Class A, Class B
and Fiduciary class shares of One Group Growth, followed by the dissolution and
liquidation of Paragon Growth, and the distribution of shares of One Group
Growth to the shareholders of Paragon Growth.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON GULF SOUTH GROWTH FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Gulf South Growth Fund ("Paragon Gulf South") on March
25, 1996 at 9:00 am., Central standard time, and at any adjournments thereof,
all of the shares of beneficial interest in Paragon Gulf South which the
undersigned would be entitled to vote upon the following matter if personally
present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Gulf South will be transferred to
The One Group Gulf South Growth Fund ("One Group Gulf South") in return for
Class A, Class B and Fiduciary class shares of One Group Gulf South, followed by
the dissolution and liquidation of Paragon Gulf South, and the distribution of
shares of One Group Gulf South to the shareholders of Paragon Gulf South.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
PARAGON GULF SOUTH GROWTH FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
MARCH 25, 1996
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF PARAGON PORTFOLIO.
The undersigned hereby appoints Michael Richman, Scott Gilman, John Mosior
and Nancy Mucker each of them with full power of substitution as proxies of the
undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Paragon Gulf South Growth Fund ("Paragon Gulf South") on March
25, 1996 at 9:00 am., Central standard time, and at any adjournments thereof,
all of the shares of beneficial interest in Paragon Gulf South which the
undersigned would be entitled to vote upon the following matter if personally
present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Paragon Gulf South will be transferred to
The One Group Gulf South Growth Fund ("One Group Gulf South") in return for
Class A, Class B and Fiduciary class shares of One Group Gulf South, followed by
the dissolution and liquidation of Paragon Gulf South, and the distribution of
shares of One Group Gulf South to the shareholders of Paragon Gulf South.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Signature of Shareholder(s)
Dated: _______________________ , 1996.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
THE ONE GROUP
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information contains information which may be
of interest to investors but which is not included in the Combined
Prospectus/Proxy Statement (the "Prospectus") of The One Group dated February
22, 1996 relating to the transfer of the assets and liabilities of Paragon
Treasury Money Market Fund, Paragon Short-Term Government Fund, Paragon
Intermediate-Term Bond Fund, Paragon Value Equity Income Fund, Paragon Louisiana
Fund Tax-Free Fund, Paragon Value Growth Fund, and Paragon Gulf South Fund to
One Group Money Market, One Group Limited Volatility, One Group Bond, One Group
Equity, One Group Louisiana, One Group Growth and One Group Gulf South,
respectively. This Statement of Additional Information is not a prospectus and
is authorized for distribution only when it accompanies or follows delivery of
the Prospectus. This Statement of Additional Information should be read in
conjunction with the Prospectus. A copy of the Prospectus may be obtained,
without charge, by writing The One Group Services Company, 3435 Stelzer Road,
Columbus, Oh 43219, or by calling 1-800-554-3862.
The Statement of Additional Information for The One Group dated November 1,
1995, as amended February 7, 1996, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. The Statement of
Additional Information for Paragon Portfolio dated March 30, 1995 has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference.
Unaudited financial statements for Paragon Money Market, Paragon Government,
Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon Growth and Paragon Gulf
South for the period ended May 31, 1995, are contained in the Paragon Portfolio
Semi-Annual Report, which was filed with the Securities and Exchange Commission
and is incorprated herein by reference.
THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS FEBRUARY 22, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Financial Statements of the Combined Funds on a pro-forma basis for the periods ended June 30, 1995 (One
Group Money Market, Paragon Money Market, One Group Limited Volatility, Paragon Government, One Group
Bond, Paragon Bond, One Group Equity and Paragon Equity) and May 31, 1995 (One Group Louisiana, Paragon
Louisiana, One Group Growth, Paragon Growth, One Group Gulf South and Paragon Gulf South).................
</TABLE>
<PAGE>
PARAGON PORTFOLIO
PARAGON TREASURY MONEY MARKET FUND
PARAGON SHORT-TERM GOVERNMENT FUND
PARAGON INTERMEDIATE-TERM BOND FUND
PARAGON VALUE EQUITY INCOME FUND
PARAGON LOUISIANA TAX-FREE FUND
PARAGON VALUE GROWTH FUND
PARAGON GULF SOUTH GROWTH FUND
THE ONE GROUP
ONE GROUP U.S. TREASURY SECURITIES MONEY MARKET FUND
ONE GROUP LIMITED VOLATILITY BOND FUND
ONE GROUP GOVERNMENT BOND FUND
ONE GROUP INCOME EQUITY FUND
ONE GROUP LOUISIANA MUNICIPAL BOND FUND
ONE GROUP VALUE GROWTH FUND
ONE GROUP GULF SOUTH GROWTH FUND
INTRODUCTION TO PROPOSED FUND MERGERS
The accompanying unaudited Pro Forma Combining Statements of Assets and
Liabilities, Statements of Operations and Schedules of Portfolio Investments and
the Financial Highlights reflect the accounts of Paragon Portfolios: Treasury
Money Market Fund, Short-Term Government Fund, Intermediate-Term Bond Fund and
Value Equity Income Fund and The One Group: U.S. Treasury Securities Money
Market Fund, Limited Volatility Bond Fund, Government Bond Fund and Income
Equity Fund as of and for the year ended June 30, 1995 and Paragon Portfolios:
Louisiana Tax-Free Fund, Value Growth Fund and Gulf South Growth Fund and The
One Group: Louisiana Municipal Bond Fund, Value Growth Fund and Gulf South
Growth Fund as of and for the year ended May 31, 1995. These statements have
been derived from the funds' books and records utilized in calculating daily net
asset value at June 30,1995 and at May 31, 1995, respectively.
76
<PAGE>
- --------------------------------------------------------------------------------
PARAGON TREASURY MONEY MARKET FUND
THE ONE GROUP U.S. TREASURY SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in Thousands except per Share Amounts)
TREASURY
MONEY U.S. TREASURY PRO FORMA PRO FORMA
MARKET SECURITIES MONEY ADJUSTMENTS COMBINED
FUND MARKET FUND (NOTE 1) (NOTE 1)
-------- ---------------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value................................................. $63,376 $ 353,385 $ $ 416,761
Repurchase agreements................................................. 236,900 928,810 1,165,710
-------- ---------------- ----------- ----------
300,276 1,282,195 1,582,471
Cash.................................................................. 22 22
Interest receivable................................................... 369 219 588
Receivable for capital shares issued.................................. 170 170
Receivable from advisor............................................... 167 167
Prepaid expenses and other assets..................................... 21 36 57
-------- ---------------- ----------- ----------
TOTAL ASSETS.......................................................... 300,858 1,282,617 0 1,583,475
-------- ---------------- ----------- ----------
LIABILITIES:
Dividends payable..................................................... 1,458 5,248 6,706
Payable for capital shares redeemed................................... 11 11
Cash overdraft........................................................ 1 1
Accrued expenses and other payables:
Investment advisory fees.......................................... 50 357 407
Administration fees............................................... 38 171 209
12b-1 fees (Class A).............................................. 26 26
Transfer agent fees............................................... 15 15
Other............................................................. 36 36
-------- ---------------- ----------- ----------
TOTAL LIABILITIES..................................................... 1,608 5,803 0 7,411
-------- ---------------- ----------- ----------
NET ASSETS:
Capital............................................................... 299,187 1,276,812 1,575,999
Accumulated undistributed (distributions in excess of) net investment
income............................................................... 63 27 90
Accumulated undistributed net realized losses from investment
transactions......................................................... (25) (25 )
-------- ---------------- ----------- ----------
NET ASSETS............................................................ $299,250 $1,276,814 $ 0 $1,576,064
-------- ---------------- ----------- ----------
-------- ---------------- ----------- ----------
Net Assets
Fiduciary......................................................... $1,178,091 32,912 $1,211,003
Class A........................................................... 299,250 98,723 (32,912) 365,061
-------- ---------------- ----------
$299,250 $1,276,814 $1,576,064
-------- ---------------- ----------
-------- ---------------- ----------
Outstanding units of beneficial interest (shares)
Fiduciary......................................................... 1,178,070 32,912 1,210,982
Class A........................................................... 299,200 98,740 (32,912) 365,028
-------- ---------------- ----------- ----------
299,200 1,276,810 0 1,576,010
-------- ---------------- ----------- ----------
-------- ---------------- ----------- ----------
Net asset value--offering and redemption price per share.............. $ 1.00 $ 1.00 $ 1.00
-------- ---------------- ----------
-------- ---------------- ----------
Investments, at cost.................................................. $300,276 $1,282,195 $1,582,471
-------- ---------------- ----------
-------- ---------------- ----------
</TABLE>
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
77
<PAGE>
- --------------------------------------------------------------------------------
PARAGON SHORT-TERM GOVERNMENT FUND
THE ONE GROUP LIMITED VOLATILITY BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in Thousands except per Share Amounts)
SHORT-TERM LIMITED PRO FORMA PRO FORMA
GOVERNMENT VOLATILITY ADJUSTMENTS COMBINED
FUND BOND FUND (NOTE 1) (NOTE 1)
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value................... $122,737 $409,960 $ $532,697
Repurchase agreements................... 7,245 15,252 22,497
---------- ---------- ----------- -----------
129,982 425,212 555,194
Cash.................................... 4 4
Interest receivable..................... 1,260 5,461 6,721
Receivable for capital shares issued.... 225 1,469 1,694
Receivable from adviser................. 111 111
Deferred organization costs............. 3 3
Prepaid expenses and other assets....... 2 2 4
---------- ---------- ----------- -----------
TOTAL ASSETS............................ 131,473 432,258 0 563,731
---------- ---------- ----------- -----------
LIABILITIES:
Dividends payable....................... 534 1,318 1,852
Payable to brokers for investments
purchased............................. 3,346 3,346
Payable for capital shares redeemed..... 127 364 491
Cash overdraft.......................... 741 741
Accrued expenses and other payables:
Investment advisory fees............ 54 209 263
Administration fees................. 58 58
12b-1 fees (Class A)................ 3 3
12b-1 fees (Class B)................ 2 2
Transfer agent fees................. 23 23
Other............................... 72 49 121
---------- ---------- ----------- -----------
TOTAL LIABILITIES....................... 810 6,090 0 6,900
---------- ---------- ----------- -----------
NET ASSETS:
Capital................................. 132,933 427,533 560,466
Distributions in excess of net
investment income..................... (122) (122)
Accumulated undistributed net realized
losses from investment transactions... (1,174) (7,604) (8,778)
Net unrealized appreciation
(depreciation) from investments....... (1,096) 6,361 5,265
---------- ---------- ----------- -----------
NET ASSETS.............................. $130,663 $426,168 $ 0 $556,831
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Net Assets
Fiduciary........................... $ $410,746 $ 44,305 $455,051
Class A............................. 130,355 12,516 (44,305) 98,566
Class B............................. 308 2,906 3,214
---------- ---------- ----------- -----------
$130,663 $426,168 $ 0 $556,831
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Outstanding units of beneficial interest
(shares)
Fiduciary........................... 38,999 4,208 43,207
Class A............................. 12,902 1,189 (4,727) 9,364
Class B............................. 30 274 (1) 303
---------- ---------- ----------- -----------
12,932 40,462 (520) 52,874
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Net asset value
Fiduciary--offering and redemption
price per share................... $10.53 $10.53
---------- -----------
---------- -----------
Class A--redemption price per
share............................. $10.10 $10.52 $10.52
---------- ---------- -----------
---------- ---------- -----------
Class B--offering price per share
(a)............................... $10.11 $10.60 $10.60
---------- ---------- -----------
---------- ---------- -----------
4.50% 4.50% 4.50%
Maximum Sales Charge....................
---------- ---------- -----------
---------- ---------- -----------
Maximum Offering Price
(100%/(100%--Maximum Sales Charge) of
net asset value adjusted to nearest
cent) per share (Class A)............. $10.58 $11.02 $11.02
---------- ---------- -----------
---------- ---------- -----------
Investments, at cost.................... $131,078 $418,851 $549,929
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
- -------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
78
<PAGE>
- --------------------------------------------------------------------------------
PARAGON INTERMEDIATE-TERM BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
-----------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in Thousands except per Share Amounts)
<S> <C> <C> <C> <C>
INTERMEDIATE- GOVERNMENT PRO FORMA PRO FORMA
TERM BOND BOND ADJUSTMENTS COMBINED
FUND FUND (NOTE 1) (NOTE 1)
------------ ------------ ------------ -----------
ASSETS:
Investments, at value..................................... $ 295,145 $ 371,122 $ $ 666,267
Repurchase agreements..................................... 18,205 16,852 35,057
------------ ------------ ------------ -----------
313,350 387,974 701,324
Cash...................................................... 2 2
Interest receivable....................................... 4,102 3,676 7,778
Receivable for capital shares issued...................... 16 1,484 1,500
Receivable from adviser................................... 6 6
Deferred organization costs............................... 9 9
Prepaid expenses and other assets......................... 11 35 46
------------ ------------ ------------ -----------
TOTAL ASSETS.............................................. 317,481 393,184 0 710,665
------------ ------------ ------------ -----------
LIABILITIES:
Dividends payable......................................... 1,689 1,191 2,880
Payable for capital shares redeemed....................... 3 898 901
Cash overdraft............................................ 425 425
Accrued expenses and other payables:
Investment advisory fees.............................. 125 143 268
Administration fees................................... 39 53 92
12b-1 fees (Class A).................................. 2 2
12b-1 fees (Class B).................................. 2 2
Transfer agent fees................................... 17 17
Other................................................. 69 1 70
------------ ------------ ------------ -----------
TOTAL LIABILITIES......................................... 1,942 2,715 0 4,657
------------ ------------ ------------ -----------
NET ASSETS:
Capital................................................... 315,270 396,664 711,934
Undistributed (distributions in excess of) net investment
income.................................................. 280 (302) (22)
Accumulated undistributed net realized losses from
investment transactions................................. (4,336) (13,541) (17,877)
Net unrealized appreciation from investments.............. 4,325 7,648 11,973
------------ ------------ ------------ -----------
NET ASSETS................................................ $ 315,539 $ 390,469 $ 0 $ 706,008
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Net Assets
Fiduciary............................................. $ $ 379,826 $ 122,771 $ 502,597
Class A............................................... 314,751 8,130 (122,771) 200,110
Class B............................................... 788 2,513 3,301
------------ ------------ ------------ -----------
$ 315,539 $ 390,469 $ 0 $ 706,008
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Outstanding units of beneficial interest (shares)
Fiduciary............................................. 38,720 12,515 51,235
Class A............................................... 30,682 828 (11,107) 20,403
Class B............................................... 77 256 4 337
------------ ------------ ------------ -----------
30,759 39,804 1,412 71,975
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Net asset value
Fiduciary--offering and redemption price per share.... $ 9.81 $ 9.81
------------ -----------
------------ -----------
Class A--redemption price per share................... $10.26 $ 9.81 $ 9.81
------------ ------------ -----------
------------ ------------ -----------
Class B--offering price per share (a)................. $10.33 $ 9.81 $ 9.81
------------ ------------ -----------
------------ ------------ -----------
4.50% 4.50% 4.50%
Maximum Sales Charge......................................
------------ ------------ -----------
------------ ------------ -----------
Maximum Offering Price (100%/(100%--Maximum Sales Charge)
of net asset value adjusted to nearest cent) per share
(Class A)............................................... $10.74 $10.27 $10.27
------------ ------------ -----------
------------ ------------ -----------
Investments, at cost...................................... $ 309,025 $ 380,326 $ 689,351
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
79
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE EQUITY INCOME FUND
THE ONE GROUP INCOME EQUITY FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995
(Amounts in Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
VALUE
EQUITY INCOME PRO FORMA PRO FORMA
INCOME EQUITY ADJUSTMENTS COMBINED
FUND FUND (NOTE 1) (NOTE 1)
---------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value................................................... $ 118,417 $ 186,634 $ $ 305,051
Repurchase agreements................................................... 1,675 1,416 3,091
---------- ---------- ------------- -----------
120,092 188,050 308,142
Cash.................................................................... 2 2
Interest and dividends receivable....................................... 546 675 1,221
Receivable from brokers for investments sold............................ 162 162
Receivable for capital shares issued.................................... 254 404 658
Deferred organization costs............................................. 2 2
Prepaid expenses and other assets....................................... 7 66 73
---------- ---------- ------------- -----------
TOTAL ASSETS............................................................ 121,063 189,197 0 310,260
---------- ---------- ------------- -----------
LIABILITIES:
Dividends payable....................................................... 231 198 429
Payable for capital shares redeemed..................................... 643 643
Cash overdraft.......................................................... 30 30
Accrued expenses and other payables:
Investment advisory fees............................................ 60 115 175
Administration fees................................................. 18 26 44
12b-1 fees (Class A)................................................ 3 3
12b-1 fees (Class B)................................................ 2 2
Transfer agent fees................................................. 16 16
Other............................................................... 35 35
---------- ---------- ------------- -----------
TOTAL LIABILITIES....................................................... 360 1,017 0 1,377
---------- ---------- ------------- -----------
NET ASSETS:
Capital................................................................. 96,095 141,600 237,695
Undistributed (distributions in excess of) net investment income........ (1) 41 40
Accumulated undistributed net realized gains from investment
transactions.......................................................... 2,140 6,380 8,520
Net unrealized appreciation from investments............................ 22,469 40,159 62,628
---------- ---------- ------------- -----------
NET ASSETS.............................................................. $ 120,703 $ 188,180 $ 0 $ 308,883
---------- ---------- ------------- -----------
---------- ---------- ------------- -----------
Net Assets
Fiduciary........................................................... $ $ 170,919 $ 51,769 $ 222,688
Class A............................................................. 120,400 13,793 (51,769) 82,424
Class B............................................................. 303 3,468 3,771
---------- ---------- ------------- -----------
$ 120,703 $ 188,180 $ 0 $ 308,883
---------- ---------- ------------- -----------
---------- ---------- ------------- -----------
Outstanding units of beneficial interest (shares)
Fiduciary........................................................... 11,297 3,422 14,719
Class A............................................................. 8,998 913 (4,456) 5,455
Class B............................................................. 23 229 (3) 249
---------- ---------- ------------- -----------
9,021 12,439 (1,037) 20,423
---------- ---------- ------------- -----------
---------- ---------- ------------- -----------
Net asset value
Fiduciary--offering and redemption price per share.................. $15.13 $15.13
---------- ---------- -----------
---------- ---------- -----------
Class A--redemption price per share................................. $13.38 $15.11 $15.11
---------- ---------- -----------
---------- ---------- -----------
Class B--offering price per share................................... $13.40 $15.14 $15.14
---------- ---------- -----------
---------- ---------- -----------
Maximum Sales Charge.................................................... 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)................... $14.01 $15.82 $15.82
---------- ---------- -----------
---------- ---------- -----------
Investments, at cost.................................................... $ 97,623 $ 147,891 $ 245,514
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
80
<PAGE>
- --------------------------------------------------------------------------------
PARAGON LOUISIANA TAX-FREE FUND
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
LOUISIANA PRO FORMA PRO FORMA
LOUISIANA MUNICIPAL ADJUSTMENTS COMBINED
TAX-FREE FUND BOND FUND (NOTE 1) (NOTE 1)
------------- ------------ ---------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value............................................. $192,231,927 $ 0 $ $192,231,927
Repurchase agreements.............................................
------------- ----- ----- -------------
192,231,927 192,231,927
Cash.............................................................. 563,395 563,395
Interest receivable............................................... 3,251,444 3,251,444
Receivable for capital shares issued.............................. 46,630 46,630
Prepaid expenses and other assets................................. 2,363 2,363
------------- ----- ----- -------------
TOTAL ASSETS...................................................... 196,095,759 0 0 196,095,759
------------- ----- ----- -------------
LIABILITIES:
Dividends payable................................................. 648,737 648,737
Payable to brokers for investments purchased...................... 1,867,217 1,867,217
Payable for capital shares redeemed............................... 58,164 58,164
Accrued expenses and other payables:
Investment advisory fees...................................... 67,295 67,295
Administration fees........................................... 16,821 16,821
12b-1 fees (Class A).......................................... 0
12b-1 fees (Class B).......................................... 0
Transfer agent fees........................................... 25,039 25,039
Other......................................................... 90,040 90,040
------------- ----- ----- -------------
TOTAL LIABILITIES................................................. 2,773,313 0 0 2,773,313
------------- ----- ----- -------------
NET ASSETS:
Capital........................................................... 190,800,935 190,800,935
Accumulated undistributed net realized losses from investment
transactions.................................................... (748,781) (748,781)
Net unrealized appreciation from investments...................... 3,270,292 3,270,292
------------- ----- ----- -------------
NET ASSETS........................................................ $193,322,446 $ 0 $ 0 $193,322,446
------------- ----- ----- -------------
------------- ----- ----- -------------
Net Assets
Class A....................................................... $192,392,293 $ 0 $192,392,293
Class B....................................................... 930,153 0 930,153
------------- ----- -------------
$193,322,446 $ 0 $193,322,446
------------- ----- -------------
------------- ----- -------------
Outstanding units of beneficial interest (shares)
Class A....................................................... 18,165,248 18,165,248
Class B....................................................... 87,823 87,823
------------- ----- -------------
18,253,071 0 18,253,071
------------- ----- -------------
------------- ----- -------------
Net asset value
Class A--redemption price per share........................... $10.59 $ $10.59
------------- ----- -------------
------------- ----- -------------
Class B--offering price per share (a)......................... $10.62 $ $10.62
------------- ----- -------------
------------- ----- -------------
Maximum Sales Charge.............................................. 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)....... $11.09 $0.00 $11.09
------------- ----- -------------
------------- ----- -------------
Investments, at cost.............................................. $188,961,635 $ $188,961,635
------------- ----- -------------
------------- ----- -------------
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
81
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE GROWTH FUND
THE ONE GROUP VALUE GROWTH FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
VALUE VALUE ADJUSTMENTS COMBINED
GROWTH FUND GROWTH FUND (NOTE 1) (NOTE 1)
----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value............................................. $195,905,211 $ 0 $ $195,905,211
Cash.............................................................. 1,330 1,330
Interest and dividends receivable................................. 516,024 516,024
Receivable for capital shares issued.............................. 37,801 37,801
Prepaid expenses and other assets................................. 3,106 3,106
----------- ----------- ------------- -----------
TOTAL ASSETS...................................................... 196,463,472 0 0 196,463,472
----------- ----------- ------------- -----------
LIABILITIES:
Dividends payable................................................. 31,787 31,787
Payable to brokers for investments purchased...................... 1,617,535 1,617,535
Payable for capital shares redeemed............................... 16,189 16,189
Accrued expenses and other payables:
Investment advisory fees...................................... 106,859 106,859
Administration fees........................................... 24,668 24,668
12b-1 fees (Class A).......................................... 0
12b-1 fees (Class B).......................................... 0
Transfer agent fees........................................... 42,605 42,605
Other......................................................... 36,650 36,650
----------- ----------- ------------- -----------
TOTAL LIABILITIES................................................. 1,876,293 0 0 1,876,293
----------- ----------- ------------- -----------
NET ASSETS:
Capital........................................................... 150,654,300 150,654,300
Distributions in excess of net investment income.................. (2,478) (2,478)
Accumulated undistributed net realized gains from investment
transactions..................................................... 8,456,766 8,456,766
Net unrealized appreciation from investments...................... 35,478,591 35,478,591
----------- ----------- ------------- -----------
NET ASSETS........................................................ $194,587,179 $ 0 $ 0 $194,587,179
----------- ----------- ------------- -----------
----------- ----------- ------------- -----------
Net Assets
Class A....................................................... $193,132,902 $ 0 $193,132,902
Class B....................................................... 1,454,277 0 1,454,277
----------- ----------- -----------
$194,587,179 $ 0 $194,587,179
----------- ----------- -----------
----------- ----------- -----------
Outstanding units of beneficial interest (shares)
Class A....................................................... 12,964,665 12,964,665
Class B....................................................... 97,623 97,623
----------- ----------- -----------
13,062,288 0 13,062,288
----------- ----------- -----------
----------- ----------- -----------
Net asset value
Class A--redemption price per share........................... $14.90 $ $14.90
----------- ----------- -----------
----------- ----------- -----------
Class B--offering price per share(a).......................... $14.88 $ $14.88
----------- ----------- -----------
----------- ----------- -----------
Maximum Sales Charge.............................................. 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)........ $15.60 $15.60
----------- -----------
----------- -----------
$160,426,620 $ $160,426,620
Investments, at cost..............................................
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
82
<PAGE>
- --------------------------------------------------------------------------------
PARAGON GULF SOUTH GROWTH FUND
THE ONE GROUP GULF SOUTH GROWTH FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
GULF
SOUTH PRO FORMA PRO FORMA
GULF SOUTH GROWTH ADJUSTMENTS COMBINED
GROWTH FUND FUND (NOTE 1) (NOTE 1)
------------ --------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value...................................................... $87,892,875 $ 0 $ $87,892,875
Cash....................................................................... 3,467 3,467
Interest and dividends receivable.......................................... 17,753 17,753
Receivable from brokers for investments sold............................... 803,403
Receivable for capital shares issued....................................... 35,313 35,313
Deferred organization costs................................................ 6,091 6,091
Prepaid expenses and other assets.......................................... 1,088 1,088
------------ --------- ----------- ------------
TOTAL ASSETS............................................................... 88,759,990 0 0 87,956,587
------------ --------- ----------- ------------
LIABILITIES:
Payable to brokers for investments purchased............................... 256,250 256,250
Payable for capital shares redeemed........................................ 9,716 9,716
Accrued expenses and other payables:
Investment advisory fees............................................... 48,273 48,273
Administration fees.................................................... 11,140 11,140
12b-1 fees (Class A)................................................... 0
12b-1 fees (Class B)................................................... 0
Transfer agent fees.................................................... 18,152 18,152
Other.................................................................. 26,284 26,284
------------ --------- ----------- ------------
TOTAL LIABILITIES.......................................................... 369,815 0 0 369,815
------------ --------- ----------- ------------
NET ASSETS:
Capital.................................................................... 67,102,635 67,102,635
Distributions in excess of net investment income........................... (104,878) (104,878)
Accumulated undistributed net realized gains from investment transactions.. 3,074,158 3,074,158
Net unrealized appreciation from investments............................... 18,318,260 18,318,260
------------ --------- ----------- ------------
NET ASSETS................................................................. $88,390,175 $ 0 $ 0 $87,586,772
------------ --------- ----------- ------------
------------ --------- ----------- ------------
Net Assets
$87,356,267 $ $87,356,267
Class A................................................................
1,033,908 0 1,033,908
Class B................................................................
------------ --------- ------------
$88,390,175 $ 0 $88,390,175
------------ --------- ------------
------------ --------- ------------
Outstanding units of beneficial interest (shares)
Class A................................................................ 5,431,525 5,431,525
Class B................................................................ 64,285 64,285
------------ --------- ------------
5,495,810 0 5,495,810
------------ --------- ------------
------------ --------- ------------
Net asset value
Class A--redemption price per share.................................... $16.08 $ $16.08
------------ --------- ------------
------------ --------- ------------
Class B--offering price per share (a).................................. $15.99 $ $15.99
------------ --------- ------------
------------ --------- ------------
Maximum Sales Charge....................................................... 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)...................... $16.84 $ $16.84
------------ --------- ------------
------------ --------- ------------
Investments, at cost....................................................... $69,574,615 $ $69,574,615
------------ --------- ------------
------------ --------- ------------
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
83
<PAGE>
- --------------------------------------------------------------------------------
PARAGON TREASURY MONEY MARKET FUND
THE ONE GROUP U.S. TREASURY SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C> <C> <C> <C>
U.S.
TREASURY TREASURY
MONEY SECURITIES PRO FORMA PRO FORMA
MARKET MONEY MARKET ADJUSTMENTS COMBINED
FUND FUND (NOTE 1) (NOTE 1)
---------- ------------ ------------- ----------
INVESTMENT INCOME:
Interest income.............................................. $ 16,019 $ 64,651 $ $ 80,670
---------- ------------ ----- ----------
TOTAL INCOME................................................. 16,019 64,651 0 80,670
---------- ------------ ----- ----------
EXPENSES:
Investment advisory fees..................................... 586 4,214 440 5,240
Administration fees.......................................... 439 2,030 53 2,522
12b-1 fees (Class A)......................................... 232 232
Custodian and accounting fees................................ 69 168 237
Legal and audit fees......................................... 30 205 235
Organization costs........................................... 9 9
Trustees' fees and expenses.................................. 6 13 19
Transfer agent fees.......................................... 56 49 105
Registration and filing fees................................. 2 279 281
Printing costs............................................... 30 30
Other........................................................ 38 70 108
---------- ------------ ----- ----------
Total expenses before waivers/reimbursements................. 1,235 7,290 493 9,018
Less waivers/reimbursements.................................. (2,145) (163) (2,308)
---------- ------------ ----- ----------
TOTAL EXPENSES............................................... 1,235 5,145 330 6,710
---------- ------------ ----- ----------
Net Investment Income........................................ 14,784 59,506 (330) 73,960
---------- ------------ ----- ----------
REALIZED/UNREALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions.............. 145 14 0 159
---------- ------------ ----- ----------
Change in net assets resulting from operations............... $ 14,929 $ 59,520 $ (330) $ 74,119
---------- ------------ ----- ----------
---------- ------------ ----- ----------
</TABLE>
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
84
<PAGE>
- --------------------------------------------------------------------------------
PARAGON SHORT-TERM GOVERNMENT FUND
THE ONE GROUP LIMITED VOLATILITY BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C> <C> <C> <C>
LIMITED
SHORT-TERM VOLATILITY PRO FORMA PRO FORMA
GOVERNMENT BOND ADJUSTMENTS COMBINED
FUND FUND (NOTE 1) (NOTE 1)
------------ ---------- ------------- ----------
INVESTMENT INCOME:
Interest income............................................... $ 8,743 $ 26,927 $ $ 35,670
------ ---------- ----- ----------
TOTAL INCOME.................................................. 8,743 26,927 35,670
------ ---------- ----- ----------
EXPENSES:
Investment advisory fees...................................... 716 2,548 143 3,407
Administration fees........................................... 215 716 26 957
12b-1 fees (Class A).......................................... 47 47
12b-1 fees (Class B).......................................... 1 24 25
12b-1 fees (Service).......................................... 1 1
Custodian and accounting fees................................. 61 77 138
Legal and audit fees.......................................... 25 54 79
Organization costs............................................ 4 14 18
Trustees' fees and expenses................................... 4 8 12
Transfer agent fees........................................... 59 93 152
Registration and filing fees.................................. 10 44 54
Printing costs................................................ 31 31
Other......................................................... 15 36 51
------ ---------- ----- ----------
Total expenses before waivers/reimbursements.................. 1,110 3,693 169 4,972
Less waivers/reimbursements................................... (1,415) (72) (1,487)
------ ---------- ----- ----------
TOTAL EXPENSES................................................ 1,110 2,278 97 3,485
------ ---------- ----- ----------
Net Investment Income......................................... 7,633 24,649 (97) 32,185
------ ---------- ----- ----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized losses from investment transactions.............. (390) (7,605) (7,995)
Net change in unrealized appreciation from investments........ 1,649 14,800 16,449
------ ---------- ----- ----------
Net realized/unrealized gains on investments.................. 1,259 7,195 0 8,454
------ ---------- ----- ----------
Change in net assets resulting from operations................ $ 8,892 $ 31,844 $ (97) $ 40,639
------ ---------- ----- ----------
------ ---------- ----- ----------
</TABLE>
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
85
<PAGE>
- --------------------------------------------------------------------------------
PARAGON INTERMEDIATE-TERM BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C> <C> <C> <C>
INTERMEDIATE- GOVERNMENT PRO FORMA PRO FORMA
TERM BOND BOND ADJUSTMENTS COMBINED
FUND FUND (NOTE 1) (NOTE 1)
------------ ----------- ------------ ----------
INVESTMENT INCOME:
Interest income............................................. $ 23,383 $ 21,138 $ $ 44,521
------------ ----------- ------------ ----------
TOTAL INCOME................................................ 23,383 21,138 0 44,521
------------ ----------- ------------ ----------
EXPENSES:
Investment advisory fees.................................... 1,532 1,291 1,379 4,202
Administration fees......................................... 460 483 55 998
12b-1 fees (Class A)........................................ 14 14
12b-1 fees (Class B)........................................ 2 13 1 16
Custodian and accounting fees............................... 112 65 177
Legal and audit fees........................................ 49 42 91
Organization costs.......................................... 15 3 18
Trustees' fees and expenses................................. 9 6 15
Transfer agent fees......................................... 55 71 126
Registration and filing fees................................ 21 84 105
Printing costs.............................................. 36 36
Other....................................................... 87 22 89
------------ ----------- ------------ ----------
Total expenses before waivers/reimbursements................ 2,322 2,130 1,435 5,887
Less waivers/reimbursements................................. (59) (47) (106)
------------ ----------- ------------ ----------
TOTAL EXPENSES.............................................. 2,322 2,071 1,388 5,781
------------ ----------- ------------ ----------
Net Investment Income....................................... 21,061 19,067 (1,388) 38,740
------------ ----------- ------------ ----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized losses from investment transactions............ (261) (7,094) (7,355)
Net change in unrealized appreciation from investments...... 12,188 16,133 28,321
------------ ----------- ------------ ----------
Net realized/unrealized gains on investments................ 11,927 9,039 0 20,966
------------ ----------- ------------ ----------
Change in net assets resulting from operations.............. $ 32,988 $ 28,106 $ (1,388) $ 59,706
------------ ----------- ------------ ----------
------------ ----------- ------------ ----------
</TABLE>
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
86
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE EQUITY INCOME FUND
THE ONE GROUP INCOME EQUITY FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C> <C> <C> <C>
VALUE
EQUITY INCOME PRO FORMA PRO FORMA
INCOME EQUITY ADJUSTMENTS COMBINED
FUND FUND (NOTE 1) (NOTE 1)
---------- ---------- ------------- ----------
INVESTMENT INCOME:
Interest income................................................. $ 760 $ 397 $ $ 1,157
Dividend income................................................. 3,069 7,297 10,366
Foreign taxes withheld.......................................... (36) (36)
---------- ---------- ----- ----------
TOTAL INCOME.................................................... 3,793 7,694 0 11,487
---------- ---------- ----- ----------
EXPENSES:
Investment advisory fees........................................ 759 1,474 105 2,338
Administration fees............................................. 162 336 54 552
12b-1 fees (Class A)............................................ 43 43
12b-1 fees (Class B)............................................ 1 23 24
Custodian and accounting fees................................... 40 24 64
Legal and audit fees............................................ 12 52 64
Organization costs.............................................. 4 5 9
Trustees' fees and expenses..................................... 2 4 6
Transfer agent fees............................................. 52 60 112
Registration and filing fees.................................... 4 37 41
Printing costs.................................................. 18 18
Other........................................................... 17 5 22
---------- ---------- ----- ----------
Total expenses before waivers/reimbursements.................... 1,053 2,081 159 3,293
Less waivers/reimbursements..................................... (19) (2) (21)
---------- ---------- ----- ----------
TOTAL EXPENSES.................................................. 1,053 2,062 157 3,272
---------- ---------- ----- ----------
Net Investment Income........................................... 2,740 5,632 (157) 8,215
---------- ---------- ----- ----------
REALIZED/UNREALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions................. 3,075 11,040 14,115
Net change in unrealized appreciation from investments.......... 15,565 20,447 36,012
---------- ---------- ----- ----------
Net realized/unrealized gains on investments.................... 18,640 31,487 0 50,127
---------- ---------- ----- ----------
Change in net assets resulting from operations.................. $ 21,380 $ 37,119 $ (157) $ 58,342
---------- ---------- ----- ----------
---------- ---------- ----- ----------
</TABLE>
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
87
<PAGE>
- --------------------------------------------------------------------------------
PARAGON LOUISIANA TAX-FREE FUND
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF OPERATIONS FOR THE YEAR ENDED MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
LOUISIANA LOUISIANA PRO FORMA PRO FORMA
TAX-FREE MUNICIPAL ADJUSTMENTS COMBINED
FUND BOND FUND (NOTE 1) (NOTE 1)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income................................... $11,452,213 $ $ $11,452,213
Other income...................................... 219 219
----------- ----------- ----------- -----------
TOTAL INCOME...................................... 11,452,432 0 0 11,452,432
----------- ----------- ----------- -----------
EXPENSES:
Investment advisory fees.......................... 995,714 995,714
Administration fees............................... 298,714 298,714
12b-1 fees (Class B).............................. 2,184 2,184
Custodian and accounting fees..................... 108,746 108,746
Legal and audit fees.............................. 30,103 30,103
Organization costs................................ 3,230 3,230
Trustees' fees and expenses....................... 5,012 5,012
Transfer agent fees............................... 94,105 94,105
Registration and filing fees...................... 20,214 20,214
Other............................................. 43,826 43,826
----------- ----------- ----------- -----------
Total expenses before waivers/reimbursements...... 1,601,848 0 0 1,601,848
Less waivers/reimbursements....................... (298,714) (298,714)
----------- ----------- ----------- -----------
TOTAL EXPENSES.................................... 1,303,134 0 0 1,303,134
----------- ----------- ----------- -----------
Net Investment Income............................. 10,149,298 0 0 10,149,298
----------- ----------- ----------- -----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized losses from investment
transactions..................................... (819,928) (819,928)
Net change in unrealized appreciation from
investments...................................... 2,840,774 2,840,774
----------- ----------- ----------- -----------
Net realized/unrealized gains on investments...... 2,020,846 0 0 2,020,846
----------- ----------- ----------- -----------
Change in net assets resulting from operations.... $12,170,144 $ 0 $ 0 $12,170,144
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
88
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE GROWTH FUND
THE ONE GROUP VALUE GROWTH FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF OPERATIONS FOR THE YEAR ENDED MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
VALUE VALUE PRO FORMA PRO FORMA
GROWTH GROWTH ADJUSTMENTS COMBINED
FUND FUND (NOTE 1) (NOTE 1)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income................................... $ 709,812 $ $ $ 709,812
Dividend income................................... 3,752,808 3,752,808
Other income...................................... 209 209
----------- ----------- ----------- -----------
TOTAL INCOME...................................... 4,462,829 0 0 4,462,829
----------- ----------- ----------- -----------
EXPENSES:
Investment advisory fees.......................... 1,177,028 1,177,028
Administration fees............................... 271,623 271,623
12b-1 fees (Class B).............................. 3,707 3,707
Custodian and accounting fees..................... 62,792 62,792
Legal and audit fees.............................. 22,724 22,724
Organization costs................................ 3,031 3,031
Trustees' fees and expenses....................... 4,147 4,147
Transfer agent fees............................... 172,438 172,438
Registration and filing fees...................... 10,620 10,620
Other............................................. 15,799 15,799
----------- ----------- ----------- -----------
TOTAL EXPENSES.................................... 1,743,909 0 0 1,743,909
----------- ----------- ----------- -----------
Net Investment Income............................. 2,718,920 0 0 2,718,920
----------- ----------- ----------- -----------
REALIZED/UNREALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions... 4,085,545 4,085,545
Net change in unrealized appreciation from
investments...................................... 6,425,267 6,425,267
----------- ----------- ----------- -----------
Net realized/unrealized gains on investments...... 10,510,812 0 0 10,510,812
----------- ----------- ----------- -----------
Change in net assets resulting from operations.... $13,229,732 $ 0 $ 0 $13,229,732
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
89
<PAGE>
- --------------------------------------------------------------------------------
PARAGON GULF SOUTH GROWTH FUND
THE ONE GROUP GULF SOUTH GROWTH FUND
- --------------------------------------------------------------------------------
PRO FORMA COMBINING STATEMENT OF OPERATIONS FOR THE YEAR ENDED MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
GULF SOUTH GULF SOUTH PRO FORMA PRO FORMA
GROWTH GROWTH ADJUSTMENTS COMBINED
FUND FUND (NOTE 1) (NOTE 1)
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income................................... $ 406,598 $ $ $ 406,598
Dividend income................................... 181,673 181,673
Other income...................................... 77 77
---------- ---------- ------------ ----------
TOTAL INCOME...................................... 588,348 0 0 588,348
---------- ---------- ------------ ----------
EXPENSES:
Investment advisory fees.......................... 534,714 534,714
Administration fees............................... 123,396 123,396
12b-1 fees (Class B).............................. 2,565 2,565
Custodian and accounting fees..................... 40,535 40,535
Legal and audit fees.............................. 10,977 10,977
Organization costs................................ 5,554 5,554
Trustees' fees and expenses....................... 1,965 1,965
Transfer agent fees............................... 108,884 108,884
Registration and filing fees...................... 5,790 5,790
Other............................................. 7,005 7,005
---------- ---------- ------------ ----------
TOTAL EXPENSES.................................... 841,385 0 0 841,385
---------- ---------- ------------ ----------
Net Investment Income (Loss)...................... (253,037) 0 0 (253,037)
---------- ---------- ------------ ----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains from investment transactions... 3,471,622 3,471,622
Net change in unrealized depreciation from
investments...................................... (718,024) (718,024)
---------- ---------- ------------ ----------
Net realized/unrealized gains on investments...... 2,753,598 0 0 2,753,598
---------- ---------- ------------ ----------
Change in net assets resulting from operations.... $2,500,561 $ 0 $ 0 $2,500,561
---------- ---------- ------------ ----------
---------- ---------- ------------ ----------
</TABLE>
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
90
<PAGE>
- --------------------------------------------------------------------------------
PARAGON TREASURY MONEY MARKET FUND
THE ONE GROUP U.S. TREASURY SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT AMORTIZED COST
- ------------------------------------- -------------------------------------
TREASURY U.S. TREASURY TREASURY U.S. TREASURY
MONEY SECURITIES PRO FORMA MONEY SECURITIES PRO FORMA
MARKET MONEY MARKET COMBINED MARKET MONEY MARKET COMBINED
FUND FUND (NOTE 1) SECURITY DESCRIPTION FUND FUND (NOTE 1)
- --------- ------------- ----------- ------------------------------------------------------ --------- ------------- -----------
<C> <C> <C> <S> <C> <C> <C>
U.S. TREASURY BILLS (26.4%):
40,000 40,000 6.06%, 7/6/95....................................... $ $ 39,966 $ 39,966
30,000 30,000 6.13%, 8/17/95...................................... 29,760 29,760
30,000 30,000 6.20%, 8/24/95...................................... 29,721 29,721
30,000 30,000 6.20%, 10/19/95..................................... 29,432 29,432
50,000 50,000 5.18%, 11/2/95...................................... 49,108 49,108
30,000 30,000 6.21%, 11/16/95..................................... 29,286 29,286
10,000 10,000 5.21%, 11/30/95..................................... 9,780 9,780
10,000 50,000 60,000 5.21%, 12/7/95...................................... 9,762 48,850 58,612
45,000 50,000 95,000 5.38%, 12/21/95..................................... 43,834 48,708 92,542
50,000 50,000 5.37%, 1/11/96...................................... 48,554 48,554
--------- ------------- -----------
Total U.S. Treasury Bills 63,376 353,385 416,761
--------- ------------- -----------
Total Investments, at value 63,376 353,385 416,761
--------- ------------- -----------
REPURCHASE AGREEMENTS (70.4%):
10,000 10,000 Banker's Trust, 6.02%, due 7/5/95, dated 6/21/95
(Collateralized by U.S. Treasury Notes, 6.50%,
5/17/97, market value--$10,000)..................... 10,000 10,000
13,000 13,000 Barclays Bank, 6.10%, due 7/3/95, dated 6/30/95
(Collateralized by U.S. Treasury Notes, 5.63%,
6/30/97, market value--$13,260)..................... 13,000 13,000
60,000 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 60,000
13,000 13,000 Deutsche Bank, 6.13%, due 7/3/95, dated 6/30/95
(Collateralized by U.S. Treasury Notes, 7.75%,
3/31/96, market value--$13,000)..................... 13,000 13,000
250,000 250,000 Deutsche Bank, 6.20%, due 7/3/95, dated 6/30/95*...... 250,000 250,000
60,000 60,000 Deutsche Bank, 6.05%, due 7/5/95, dated 6/30/95*...... 60,000 60,000
13,000 13,000 First Boston, 6.10%, due 7/5/95, dated 6/30/95
(Collateralized by U.S. Treasury Notes, 0.00%***,
12/14/95, market value--$13,326).................... 13,000 13,000
106,900 106,900 Goldman Sachs & Co., 6.13%, due 7/3/95, dated
6/30/95............................................. 106,900 106,900
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
10,000 10,000 Lehman Brothers Holdings, Inc., 6.03%, due 7/5/95,
dated 6/21/95 (Collateralized by U.S. Treasury
Notes, 6.50%, 5/15/97, market value-- $10,000)...... 10,000 10,000
</TABLE>
CONTINUED
91
<PAGE>
- --------------------------------------------------------------------------------
PARAGON TREASURY MONEY MARKET FUND
THE ONE GROUP U.S. TREASURY SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT AMORTIZED COST
- ------------------------------------- -------------------------------------
TREASURY U.S. TREASURY TREASURY U.S. TREASURY
MONEY SECURITIES PRO FORMA MONEY SECURITIES PRO FORMA
MARKET MONEY MARKET COMBINED MARKET MONEY MARKET COMBINED
FUND FUND (NOTE 1) SECURITY DESCRIPTION FUND FUND (NOTE 1)
- --------- ------------- ----------- ------------------------------------------------------ --------- ------------- -----------
REPURCHASE AGREEMENTS, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
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 $ 60,000
178,810 178,810 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)............................. 178,810 178,810
15,000 15,000 Merrill Lynch, 5.95%, due 7/27/95, dated 5/12/95...... 15,000 15,000
10,000 10,000 Morgan Stanley, 5.95%, due 8/16/95, dated 5/17/95
(Collateralized by U.S. Treasury Notes, 4.75%,
8/31/98, market value--$10,000)..................... 10,000 10,000
60,000 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
13,000 13,000 Nikko, 6.10%, due 7/3/95, dated 6/30/95
(Collateralized by U.S. Treasury Bills, 7.50%,
7/3/96, market value--$13,000)...................... 13,000 13,000
60,000 60,000 Nomura Securities International, 6.05%, due 7/5/95,
dated 6/30/95** 60,000 60,000
140,000 140,000 Nomura Securities International, 6.18%, due 7/3/95,
dated 6/30/95** 140,000 140,000
10,000 10,000 Smith Barney, 6.02%, due 7/5/95, dated 6/23/95
(Collateralized by U.S. Treasury Notes, 7.00%,
9/30/96, market value--$9,885)...................... 10,000 10,000
10,000 10,000 Swiss Bank, 5.96%, due 8/3/95, dated 5/5/95
(Collateralized by U.S. Treasury Notes, 7.50%,
12/31/96, market value--$10,000).................... 10,000 10,000
13,000 13,000 UBS Securities, 6.05%, due 7/5/95, dated 6/30/95
(Collateralized by U.S. Treasury Notes, 6.50%,
4/30/99, market value--$13,000)..................... 13,000 13,000
--------- ------------- -----------
Total Repurchase Agreements 236,900 928,810 1,165,710
--------- ------------- -----------
Total (Cost--$300,276, $1,282,195 and $1,582,471
respectively) (a) $ 300,276 $ 1,282,195 $ 1,582,471
--------- ------------- -----------
--------- ------------- -----------
</TABLE>
- ----------
Percentages indicated are based on proforma combined net assets of $1,576.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* These repurchase agreements are cross 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 cross collateralized by $188,404 various
government securities, 0.00%-12.00%, 12/28/95-2/15/15, market
value--$204,000.
*** Variable Rate Securities.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
92
<PAGE>
- --------------------------------------------------------------------------------
PARAGON SHORT-TERM GOVERNMENT FUND
THE ONE GROUP LIMITED VOLATILITY BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------- ----------------------------------
SHORT-TERM LIMITED PRO FORMA SHORT-TERM LIMITED PRO FORMA
GOVERNMENT VOLATILITY COMBINED GOVERNMENT VOLATILITY COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ---------- ---------- ---------- -------------------------------------------------- ---------- ---------- ----------
<C> <C> <C> <S> <C> <C> <C>
ASSET BACKED SECURITIES (10.7%):
4,620 4,620 CIT Group Securitization Corp., Class A1 7.70%,
8/15/20......................................... $ $ 4,728 $ 4,728
5,000 5,000 Green Tree Home Improvement Loan Trust 6.20%,
7/15/20......................................... 4,987 4,987
2,665 2,665 Merrill Lynch Corp., Pool #1992-A A 5.50%,
5/15/98......................................... 2,654 2,654
5,000 5,000 National Premier Funding 7.00%, 6/1/99............ 5,026 5,026
700 700 Premier Auto Trust, Pool #1992-2A 6.38%,
9/15/97......................................... 702 702
959 959 Premier Auto Trust, Pool #1992-3A 5.90%,
11/15/97........................................ 955 955
533 533 Shawmut National Granto Trust, Pool #1992-A A,
5.55%, 11/15/97................................. 533 533
7,000 7,000 Standard Credit Card, Class A 8.63%, 1/7/02....... 7,303 7,303
10,000 10,000 Standard Credit Card Master Trust, Pool #1991-1A,
8.50%, 6/7/96................................... 10,226 10,226
5,712 5,712 UCFC, 1995-A, Tranche A-1 7.55%, 7/10/04.......... 5,770 5,770
7,000 7,000 UCFC Home Equity Loan 8.38%, 3/10/07.............. 7,210 7,210
5,466 5,466 Union Federal, 4.88%, 2/15/00..................... 5,331 5,331
785 785 Union Federal Savings Bank, Grantor Trust, Pool
#1992-A A, 6.70%, 11/15/97...................... 785 785
3,638 3,638 Union Federal Savings Bank, Grantor Trust, Pool
#1993-A, 4.53%, 5/15/99......................... 3,554 3,554
---------- ---------- ----------
Total Asset Backed Securities 59,764 59,764
---------- ---------- ----------
CORPORATE BONDS (12.9%):
Automotive (0.6%):
3,179 3,179 Chrysler Corp., 10.40%, 8/1/99.................... 3,394 3,394
---------- ---------- ----------
Finance (6.1%):
7,000 7,000 Ford Motor Credit, 1/15/00 7,481 7,481
5,000 5,000 GMAC Financial, 7.00%, 3/1/00..................... 5,050 5,050
5,200 5,200 International Lease Finance, 6.63%, 6/1/96........ 5,227 5,227
10,000 10,000 International Lease Finance, 5.54%, 5/5/97........ 9,888 9,888
6,000 6,000 Paccar Financial, 6.45%, 3/25/96.................. 6,018 6,018
---------- ---------- ----------
33,664 33,664
---------- ---------- ----------
Foreign (1.4%):
10,000 10,000 Westpac Banking Floater Perpetual Note A2/A-,
5.84%........................................... 8,100 8,100
---------- ---------- ----------
Pharmaceutical (0.9%):
5,000 5,000 American Home Products 7.70%, 2/15/00............. 5,225 5,225
---------- ---------- ----------
Retail (0.3%):
1,500 1,500 Dayton Hudson Corp., 6.06%, 12/15/96.............. 1,500 1,500
---------- ---------- ----------
</TABLE>
CONTINUED
93
<PAGE>
- --------------------------------------------------------------------------------
PARAGON SHORT-TERM GOVERNMENT FUND
THE ONE GROUP LIMITED VOLATILITY BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------- ----------------------------------
SHORT-TERM LIMITED PRO FORMA SHORT-TERM LIMITED PRO FORMA
GOVERNMENT VOLATILITY COMBINED GOVERNMENT VOLATILITY COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ---------- ---------- ---------- -------------------------------------------------- ---------- ---------- ----------
CORPORATE BONDS, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
Securities Broker (3.6%):
7,000 7,000 Lehman Brothers, 7.00%, 5/15/97................... $ $ 7,053 $ 7,053
3,000 3,000 Lehman Brothers, 10.00%, 5/15/99.................. 3,285 3,285
4,500 4,500 Lehman Brothers Holding, 8.88%, 11/1/98........... 4,748 4,748
5,000 5,000 Smith Barney, 6.00%, 3/15/97...................... 4,969 4,969
---------- ---------- ----------
20,055 20,055
---------- ---------- ----------
Total Corporate Bonds 71,938 71,938
---------- ---------- ----------
U.S. GOVERNMENT & AGENCY OBLIGATIONS (27.6%):
Federal Farm Credit Bank
1,735 1,735 5.31%, 5/26/98.................................. 1,697 1,697
Federal Home Loan Bank:
2,100 2,100 5.38%, 11/27/95................................. 2,099 2,099
7,500 7,500 6.55%, 4/17/96.................................. 7,515 7,515
2,000 2,000 6.85%, 2/25/97.................................. 2,023 2,023
4,000 4,000 6.60%, 4/13/99.................................. 4,031 4,031
5,000 5,000 7.35%, 5/24/00.................................. 5,009 5,009
10,000 10,000 7.78%, 10/19/01................................. 10,724 10,724
Federal Home Loan Mortgage Corp.:
636 636 9.00%, 1/1/05, Pool #E00012..................... 663 663
626 626 9.00%, 12/1/05, Pool #E00005.................... 653 653
1,155 1,155 8.00%, 10/1/06, Pool #E00052.................... 1,187 1,187
3,318 3,318 7.00%, 3/1/07, Pool #E34594, Gold............... 3,326 3,326
3,024 3,024 7.00%, 4/1/07, Pool #E00087, Gold............... 3,032 3,032
4,234 4,234 7.50%, 4/1/07, Pool #E00084..................... 4,304 4,304
5,087 5,087 7.50%, 11/1/07, Pool #E00165.................... 5,172 5,172
9,169 9,169 8.50%, 2/1/08, Pool #G10133, Gold............... 9,495 9,495
4,890 4,890 8.00%, 1/1/10, Pool #E00355..................... 5,026 5,026
12,735 12,735 8.00%, 2/1/10, Pool #G10382..................... 13,089 13,089
7,550 7,550 5.50%, 10/15/13, Class C, REMIC #1546-C......... 7,384 7,384
10,000 10,000 5.25%, 9/15/15, REMIC #1638 BC.................. 9,641 9,641
10,000 10,000 8.25%, 12/15/16, REMIC #1770 PD................. 10,459 10,459
10,000 10,000 7.25%, 4/15/18, REMIC #1254 F................... 10,036 10,036
Federal National Mortgage Assoc.:
3,000 3,000 5.35%, 10/10/97................................. 2,942 2,942
5,000 5,000 8.45%, 10/21/96................................. 5,151 5,151
3,000 3,000 8.20%, 3/10/98.................................. 3,151 3,151
2,000 2,000 5.30%, 3/11/98.................................. 1,949 1,949
4,000 4,000 5.35%, 4/1/98................................... 3,909 3,909
3,600 3,600 6.90%, 3/27/98.................................. 3,672 3,672
373 373 9.00%, 9/1/05, Pool #50340...................... 389 389
420 420 9.00%, 11/1/05, Pool #50361..................... 438 438
421 421 8.50%, 4/1/06, Pool #116875..................... 436 436
6,000 6,000 7.00%, 6/1/10, Pool #315928..................... 6,011 6,011
1,679 1,679 6.00%, 9/25/18, Pool # 1989-94E, REMIC.......... 1,666 1,666
</TABLE>
CONTINUED
94
<PAGE>
- --------------------------------------------------------------------------------
PARAGON SHORT-TERM GOVERNMENT FUND
THE ONE GROUP LIMITED VOLATILITY BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------- ----------------------------------
SHORT-TERM LIMITED PRO FORMA SHORT-TERM LIMITED PRO FORMA
GOVERNMENT VOLATILITY COMBINED GOVERNMENT VOLATILITY COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ---------- ---------- ---------- -------------------------------------------------- ---------- ---------- ----------
U.S. GOVERNMENT & AGENCY OBLIGATIONS, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
Government National Mortgage Assoc.:
6 6 8.00%, 2/15/02, Pool #192917.................... $ $ 2 $ 2
43 43 8.00%, 3/15/02, Pool #209172.................... 44 44
16 16 9.00%, 6/15/02, Pool #229311.................... 17 17
127 127 9.00%, 10/15/02, Pool #229569................... 133 133
29 29 8.00%, 6/15/05, Pool #288827.................... 30 30
17 17 9.00%, 9/15/05, Pool #292569.................... 18 18
129 129 9.00%, 10/15/05, Pool #292589................... 135 135
39 39 8.00%, 5/15/06, Pool #303851.................... 41 41
11 11 8.00%, 7/15/06, Pool #307231.................... 11 11
59 59 8.00%, 8/15/06, Pool #311166.................... 61 61
415 415 8.00%, 10/15/06, Pool #316915................... 429 429
76 76 8.00%, 11/15/06, Pool #311131................... 79 79
766 766 8.00%, 11/15/06, Pool #312210................... 791 791
440 440 8.00%, 11/15/06, Pool #313528................... 454 454
196 196 8.00%, 11/15/06, Pool #315078................... 202 202
204 204 8.00%, 11/15/06, Pool #316671................... 210 210
58 58 8.00%, 12/15/06, Pool #311301................... 60 60
382 382 8.00%, 12/15/06, Pool #311384................... 394 394
314 314 8.00%, 1/15/07, Pool #317663.................... 324 324
669 669 8.00%, 2/15/07, Pool #316086.................... 691 691
291 291 8.00%, 3/15/07, Pool #318825.................... 301 301
122 122 8.00%, 3/15/07, Pool #178684.................... 126 126
254 254 8.00%, 4/15/07, Pool #316441.................... 262 262
U.S. Government Backed Bonds:
552 552 Resolution Trust Corporation, Series 1992 5.90%,
7/25/23......................................... 550 550
2,018 2,018 U.S. Government Guaranteed Overseas Private
Investment Corp.: 5.55%, 1/13/97................ 2,005 2,005
---------- ---------- ----------
Total U.S. Government & Agency Obligations 27,473 126,176 153,649
---------- ---------- ----------
U.S. TREASURY NOTES (44.4%):
3,000 3,000 5.13%, 11/15/95................................. 6,986 6,986
5,000 5,000 7.50%, 1/31/96.................................. 5,050 5,050
10,000 10,000 6.25%, 8/31/96.................................. 10,047 10,047
15,000 15,000 7.25%, 8/31/96.................................. 15,238 15,238
15,000 15,000 6.88%, 10/31/96................................. 15,200 15,200
10,000 10,000 6.50%, 11/30/96................................. 10,091 10,091
5,500 5,500 6.25%, 1/31/97.................................. 5,533 5,533
6,000 6,000 6.88%, 4/30/97.................................. 6,103 6,103
20,000 20,000 6.50%, 5/15/97.................................. 20,225 20,225
4,000 4,000 6.75%, 5/31/97.................................. 4,063 4,063
3,000 3,000 6.38%, 6/30/97.................................. 3,032 3,032
</TABLE>
CONTINUED
95
<PAGE>
- --------------------------------------------------------------------------------
PARAGON SHORT-TERM GOVERNMENT FUND
THE ONE GROUP LIMITED VOLATILITY BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------- ----------------------------------
SHORT-TERM LIMITED PRO FORMA SHORT-TERM LIMITED PRO FORMA
GOVERNMENT VOLATILITY COMBINED GOVERNMENT VOLATILITY COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ---------- ---------- ---------- -------------------------------------------------- ---------- ---------- ----------
U.S. TREASURY NOTES, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
10,000 10,000 5.75%, 10/31/97................................. $ 9,973 $ $ 9,973
3,000 3,000 7.38%, 11/15/97................................. 3,098 3,098
9,000 9,000 6.00%, 11/30/97................................. 9,023 9,023
5,000 5,000 5.13%, 3/31/98.................................. 4,904 4,904
1,500 1,500 5.13%, 4/30/98.................................. 1,470 1,470
10,000 10,000 6.13%, 5/15/98.................................. 10,063 10,063
9,000 9,000 5.13%, 6/30/98.................................. 8,806 8,806
10,000 10,000 8.25%, 7/15/98.................................. 10,635 10,635
7,000 7,000 7.13%, 10/15/98................................. 7,245 7,245
5,000 5,000 6.38%, 1/15/99.................................. 5,067 5,067
10,000 10,000 6.33%, 7/15/99.................................. 10,133 10,133
10,000 10,000 6.38%, 7/15/99.................................. 10,133 10,133
5,000 5,000 7.75%, 11/30/99................................. 5,331 5,331
1,000 1,000 8.88%, 5/15/00.................................. 1,121 1,121
21,000 21,000 6.25%, 5/31/00.................................. 21,206 21,206
3,000 3,000 8.50%, 11/15/00................................. 3,336 3,336
6,000 6,000 7.50%, 11/15/01................................. 6,440 6,440
10,000 10,000 7.50%, 5/15/02.................................. 10,774 10,774
7,000 7,000 6.25%, 2/15/03.................................. 7,020 7,020
---------- ---------- ----------
Total U.S. Treasury Notes 95,264 152,082 247,346
---------- ---------- ----------
Total Investments, at value 122,737 409,960 532,697
REPURCHASE AGREEMENTS (4.0%):
15,252 15,252 Lehman Brothers, 6.15%, dated 6/30/65, due 7/3/95
(Collateralized by 15,030 U.S. Treasury Notes,
6.75%, 2/28/97, market value--$15,570).......... 15,252 15,252
7,245 7,245 State Street Bank & Trust Co., 5.50%, dated
6/30/95, due 7/3/95............................. 7,245 7,245
---------- ---------- ----------
Total Repurchase Agreements 7,245 15,252 22,497
---------- ---------- ----------
Total (Cost $131,078, $418,850 and $549,928
respectively)(a) $ 129,982 $ 425,212 $ 555,194
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
- ----------
Percentages indicated are based on proforma net assets of $556,831.
(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........................................... $ 7,758
Unrealized depreciation........................................... (2,493)
---------
Net unrealized appreciation....................................... $ 5,265
---------
---------
</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.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
96
<PAGE>
- --------------------------------------------------------------------------------
PARAGON INTERMEDIATE-TERM BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------------ ------------------------------------
INTERMEDIATE PRO FORMA INTERMEDIATE PRO FORMA
TERM BOND GOVERNMENT COMBINED TERM BOND GOVERNMENT COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ------------ ---------- ---------- -------------------------------------------------- ------------ ---------- ----------
<C> <C> <C> <S> <C> <C> <C>
CORPORATE BONDS (10.4%):
Basic Materials & Natural Resources (0.4%):
3,000 3,000 Monsanto Co., 6.00%, 7/1/00....................... $ 2,950 $ $ 2,950
------------ ---------- ----------
Beverages (0.3%):
2,000 2,000 Coca Cola Enterprises, Inc., 7.00%, 11/15/99...... 2,032 2,032
------------ ---------- ----------
Medical Supplies (0.3%):
2,000 2,000 Baxter International, Inc., 7.25%, 2/15/08........ 2,036 2,036
------------ ---------- ----------
Finance (5.4%):
1,900 1,900 Amsouth Bancorporation, 9.38%, 5/1/99............. 2,067 2,067
2,000 2,000 AON Corp., 6.70%, 6/15/03......................... 1,979 1,979
1,000 1,000 Banc One Corp., 8.74%, 9/15/03.................... 1,114 1,114
5,000 5,000 Boatmens Bancshares, Inc., 7.63%, 10/1/04 5,226 5,226
2,000 2,000 Capital Holding Corp., 8.90%, 10/20/99............ 2,162 2,162
1,000 1,000 Capital Holding Corp., 8.98%, 9/23/03............. 1,104 1,104
2,850 2,850 Capital Holding Corp., 7.82%, 6/23/04............. 2,956 2,956
2,990 2,990 Comerica, Inc., 7.25%, 10/15/02................... 3,101 3,101
2,000 2,000 Ford Motor Credit Corp., 9.38%, 12/15/97.......... 2,141 2,141
2,000 2,000 General Electric Capital Corp., 8.65%*, 5/1/18.... 2,042 2,042
1,000 1,000 Harris Bancorp, Inc., 9.38%, 6/1/01............... 1,139 1,139
3,000 3,000 International Lease Finance Corp., 6.50%,
8/15/99.......................................... 2,994 2,994
400 400 International Bank for Reconstruction and De-
velopment, Medium Term Note COLTS, 7.65%,
2/28/97.......................................... 409 409
3,000 3,000 NCNB Texas National Bank, 9.50%, 6/1/04........... 3,503 3,503
1,500 1,500 Sovran Financial Corp., 9.25%, 6/15/06............ 1,766 1,766
2,000 2,000 Suntrust Banks, Inc., 8.88%, 2/1/98............... 2,130 2,130
400 400 Transamerica Financial Corp., 7.88%, 2/15/97...... 412 412
2,000 2,000 Wachovia Corp., 6.38%, 4/15/03.................... 1,968 1,968
------------ ---------- ----------
37,392 821 38,213
------------ ---------- ----------
Pharmaceuticals (0.1%):
350 350 Becton Dickinson & Co., 8.38%, 6/1/96............. 357 357
------------ ---------- ----------
Retail Stores (1.1%):
1,250 1,250 Dayton Hudson Corp., 7.25%, 9/1/04................ 1,285 1,285
2,000 2,000 Dillard Department Stores, Inc., 8.75%, 6/15/98... 2,120 2,120
4,000 4,000 Wal Mart Stores, Inc., 7.50%, 5/15/04............. 4,223 4,223
------------ ---------- ----------
7,628 7,628
------------ ---------- ----------
Securities Brokers & Dealers (1.7%):
5,000 5,000 Bear Stearns Cos., Inc., 8.25%, 2/1/02............ 5,323 5,323
3,000 3,000 Merrill Lynch & Co., Inc., 8.00%, 2/1/02.......... 3,171 3,171
1,000 1,000 Merrill Lynch & Co., Inc., 8.23%*, 4/30/02........ 1,068 1,068
2,000 2,000 Morgan Stanley Group, Inc., 9.38%, 6/15/01........ 2,233
------------ ---------- ----------
11,795 11,795
------------ ---------- ----------
Technology (0.3%):
2,000 2,000 Motorola, Inc., 6.50%, 3/1/08..................... 1,933 1,933
------------ ---------- ----------
</TABLE>
CONTINUED
97
<PAGE>
- --------------------------------------------------------------------------------
PARAGON INTERMEDIATE-TERM BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------------ ------------------------------------
INTERMEDIATE PRO FORMA INTERMEDIATE PRO FORMA
TERM BOND GOVERNMENT COMBINED TERM BOND GOVERNMENT COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ------------ ---------- ---------- -------------------------------------------------- ------------ ---------- ----------
CORPORATE BONDS, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
Tobacco (0.4%):
1,000 1,000 Philip Morris Cos., Inc., 9.00%, 1/1/01........... $ 1,105 $ $ 1,105
2,000 2,000 Philip Morris Cos., Inc., 7.13%, 8/15/02.......... 2,032 2,032
------------ ---------- ----------
3,137 3,137
------------ ---------- ----------
Utilities (0.5%):
3,000 3,000 Alltell Corp., 7.25%, 4/1/04...................... 3,060 3,060
300 300 Southern Railway Co., 8.25%, 6/1/96............... 304 304
------------ ---------- ----------
3,060 304 3,364
------------ ---------- ----------
Total Corporate Bonds 71,963 1,482 73,445
------------ ---------- ----------
U.S. GOVERNMENT AGENCIES (58.8%):
Federal Farm Credit Bank:
5,000 5,000 6.88%, 5/1/00................................... 5,063 5,063
2,000 2,000 7.95%, 4/1/02................................... 2,095 2,095
Federal Home Loan Bank:
5,000 5,000 0.00%*, 3/18/96, Accrual Note................... 4,789 4,789
7,000 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 7,014
550 550 8.25%, 6/25/96.................................. 560 560
3,923 3,923 6.05%, 6/24/97 IAN.............................. 3,923 3,923
2,000 2,000 9.25%, 11/25/98................................. 2,171 2,171
2,000 2,000 9.30%, 1/25/99.................................. 2,199 2,199
3,000 3,000 8.60%, 6/25/99.................................. 3,255 3,255
5,000 5,000 6.27%, 1/14/04.................................. 4,799 4,799
Federal Home Loan Mortgage Corp.:
5,000 5,000 7.35%, 3/9/98................................... 5,027 5,027
2,000 2,000 6.44%, 1/28/00.................................. 2,015 2,015
3,000 3,000 7.88%, 4/28/04.................................. 3,076 3,076
5,000 5,000 7.89%, 5/12/04.................................. 5,124 5,124
2,018 2,018 7.00%, 1/15/08.................................. 1,963 1,963
7,756 7,756 7.50%, 4/1/09................................... 7,885 7,885
7,729 7,729 8.50%, 12/1/09.................................. 8,004 8,004
492 492 9.00%, 10/1/17.................................. 514 514
370 370 9.00%, 4/1/18................................... 386 386
8,000 8,000 7.25%, 4/15/18, REMIC........................... 8,029 8,029
175 175 9.00%, 6/1/20................................... 182 182
67 67 9.00%, 8/1/20................................... 70 70
95 95 9.00%, 10/1/20.................................. 99 99
102 102 9.00%, 1/1/21................................... 107 107
10,000 10,000 7.00%, 3/15/21, REMIC, CMO...................... 9,708 9,708
93 93 9.00%, 4/1/21................................... 97 97
190 190 9.00%, 7/1/21................................... 198 198
268 268 9.00%, 9/1/21................................... 280 280
179 179 9.00%, 11/1/21.................................. 186 186
54 54 9.00%, 11/1/21.................................. 56 56
</TABLE>
CONTINUED
98
<PAGE>
- --------------------------------------------------------------------------------
PARAGON INTERMEDIATE-TERM BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------------ ------------------------------------
INTERMEDIATE PRO FORMA INTERMEDIATE PRO FORMA
TERM BOND GOVERNMENT COMBINED TERM BOND GOVERNMENT COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ------------ ---------- ---------- -------------------------------------------------- ------------ ---------- ----------
U.S. GOVERNMENT AGENCIES, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
Federal Home Loan Mortgage Corp., continued:
167 167 9.00%, 11/1/21.................................. $ $ 175 $ 175
251 251 9.00%, 5/1/22................................... 262 262
319 319 9.00%, 5/1/22................................... 333 333
10,000 10,000 7.50%, 9/15/22, CMO............................. 10,186 10,186
8,012 8,012 10.00%, 10/15/23, REMIC......................... 8,973 8,973
7,089 7,089 8.50%, 5/1/24................................... 7,319 7,319
6,705 6,705 8.50%, 7/1/24................................... 6,923 6,923
9,833 9,833 7.50%, 9/1/24................................... 9,873 9,873
9,933 9,933 8.00%, 11/1/24.................................. 10,128 10,128
3,405 3,405 7.50%, 5/1/25................................... 3,419 3,419
6,595 6,595 7.50%, 6/1/25................................... 6,622 6,622
10,000 10,000 8.00%, 6/1/25................................... 10,197 10,197
Federal National Mortgage Assoc.:
1,000 1,000 9.35%, 2/12/96.................................. 1,021 1,021
4,500 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 4,484
2,000 2,000 9.20%, 6/10/97.................................. 2,111 2,111
2,000 2,000 8.80%, 7/25/97.................................. 2,105 2,105
5,000 5,000 4.85%, 6/23/98.................................. 4,931 4,931
4,000 4,000 8.70%, 6/10/99.................................. 4,337 4,337
3,000 3,000 8.90%, 6/12/00.................................. 3,336 3,336
3,000 3,000 8.70%, 6/11/01.................................. 3,069 3,069
2,000 2,000 7.90%, 4/10/02.................................. 2,046 2,046
3,000 3,000 6.20%, 11/12/03................................. 2,861 2,861
2,820 2,820 8.05%, 5/20/04.................................. 2,895 2,895
15,000 15,000 7.16%, 5/11/05.................................. 15,570 15,570
5,821 5,821 7.00%, 4/1/08................................... 5,832 5,832
7,875 7,875 REMIC Trust 1993-175, Class PG, 6.50%, 9/25/08,
CMO............................................. 7,550 7,550
8,000 8,000 6.00%, 6/25/09, REMIC........................... 7,347 7,347
4,900 4,900 7.00%, 6/1/10................................... 4,814 4,814
10,000 10,000 6.25%, 2/25/13, REMIC........................... 9,891 9,891
3,596 3,596 REMIC Trust 1993-225, Class VG, 6.35%, 8/25/13,
CMO............................................. 3,423 3,423
5,430 5,430 7.50%, 6/1/14................................... 5,452 5,452
4,244 4,244 7.50%, 7/1/14................................... 4,261 4,261
249 249 10.00%, 10/1/16................................. 270 270
771 771 10.00%, 10/1/19................................. 836 836
10,000 10,000 7.00%, 5/25/20, REMIC........................... 9,937 9,937
436 436 10.00%, 7/1/20.................................. 473 473
6,901 6,901 REMIC Trust 1993-56, Class PT, 6.60%, 2/25/21,
CMO............................................. 6,696 6,696
5,584 5,584 REMIC Trust 1992-205, Class K, 6.50%, 5/25/21,
CMO............................................. 5,363 5,363
3,597 3,597 REMIC Trust 19-87, Class H, 6.50%, 10/25/21,
CMO............................................. 3,465 3,465
</TABLE>
CONTINUED
99
<PAGE>
- --------------------------------------------------------------------------------
PARAGON INTERMEDIATE-TERM BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------------ ------------------------------------
INTERMEDIATE PRO FORMA INTERMEDIATE PRO FORMA
TERM BOND GOVERNMENT COMBINED TERM BOND GOVERNMENT COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ------------ ---------- ---------- -------------------------------------------------- ------------ ---------- ----------
U.S. GOVERNMENT AGENCIES, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
Federal National Mortgage Assoc., continued:
1,043 1,043 10.00%, 11/1/21................................. $ $ 1,132 $ 1,132
852 852 10.00%, 11/1/21................................. 925 925
5,000 5,000 6.55%, 12/25/21................................. 4,874 4,874
5,000 5,000 REMIC Trust 1993-183, Class H, 6.50%, 3/25/22,
CMO............................................. 4,813 4,813
5,000 5,000 REMIC Trust 1993-110, Class H, 6.50%, 5/25/23,
CMO............................................. 4,816 4,816
9,094 9,094 6.35%, 12/25/23, REMIC.......................... 8,546 8,546
5,042 5,042 7.00%, 1/25/24, REMIC........................... 5,024 5,024
9,870 9,870 7.00%, 2/1/24................................... 9,713 9,713
6,343 6,343 7.84%*, 2/25/24, REMIC.......................... 5,455 5,455
4,931 4,931 7.50%, 5/1/25................................... 4,951 4,951
4,900 4,900 7.50%, 6/1/25................................... 4,920 4,920
4,900 4,900 7.50%, 6/1/25................................... 4,920 4,920
Government National Mortgage Assoc.:
17 17 10.50%, 4/15/98................................. 18 18
55 55 10.00%, 9/15/00................................. 58 58
13 13 10.00%, 12/15/00................................ 14 14
20 20 10.00%, 1/15/01................................. 21 21
135 135 8.50%, 6/15/01.................................. 141 141
10 10 8.50%, 7/15/01.................................. 11 11
135 135 9.00%, 9/15/01.................................. 141 141
14 14 9.00%, 9/15/01.................................. 14 14
111 111 9.50%, 9/15/01.................................. 116 116
116 116 8.50%, 11/15/01................................. 121 121
86 86 9.50%, 11/15/01................................. 91 91
159 159 9.00%, 12/15/01................................. 166 166
107 107 8.50%, 12/15/01................................. 112 112
142 142 8.00%, 3/15/02.................................. 147 147
302 302 9.00%, 5/15/03.................................. 316 316
257 257 9.00%, 6/15/05.................................. 269 269
97 97 9.00%, 8/15/05.................................. 101 101
102 102 9.00%, 9/15/05.................................. 107 107
53 53 9.00%, 9/15/05.................................. 56 56
99 99 8.00%, 7/15/06.................................. 102 102
47 47 7.50%, 7/15/07.................................. 48 48
125 125 8.00%, 8/15/07.................................. 128 128
116 116 8.00%, 8/15/07.................................. 119 119
489 489 7.50%, 12/15/07................................. 499 499
74 74 9.00%, 11/15/08................................. 78 78
127 127 9.00%, 4/15/09.................................. 133 133
32 32 9.00%, 5/15/09.................................. 34 34
16 16 9.50%, 7/15/09.................................. 17 17
199 199 9.50%, 9/15/09.................................. 211 211
</TABLE>
CONTINUED
100
<PAGE>
- --------------------------------------------------------------------------------
PARAGON INTERMEDIATE-TERM BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------------ ------------------------------------
INTERMEDIATE PRO FORMA INTERMEDIATE PRO FORMA
TERM BOND GOVERNMENT COMBINED TERM BOND GOVERNMENT COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ------------ ---------- ---------- -------------------------------------------------- ------------ ---------- ----------
U.S. GOVERNMENT AGENCIES, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
Government National Mortgage Assoc., continued:
54 54 9.50%, 10/15/09................................. $ $ 57 $ 57
51 51 11.00%, 11/15/09................................ 57 57
24 24 12.00%, 8/15/13................................. 28 28
2 2 12.00%, 4/15/15................................. 2 2
13 13 11.00%, 6/15/15................................. 15 15
113 113 9.00%, 5/15/16.................................. 118 118
171 171 9.00%, 6/15/16.................................. 180 180
19 19 9.50%, 7/15/16.................................. 20 20
149 149 9.00%, 7/15/16.................................. 157 157
103 103 9.50%, 8/15/16.................................. 109 109
192 192 9.00%, 9/15/16.................................. 201 201
37 37 9.50%, 1/15/17.................................. 39 39
357 357 9.00%, 2/15/17.................................. 376 376
313 313 9.00%, 6/15/17.................................. 329 329
84 84 9.50%, 8/15/17.................................. 89 89
33 33 9.00%, 8/15/17.................................. 34 34
47 47 9.50%, 8/15/17.................................. 50 50
121 121 9.00%, 6/15/18.................................. 127 127
126 126 9.50%, 8/15/18.................................. 134 134
34 34 9.00%, 10/15/18................................. 36 36
242 242 9.50%, 12/15/18................................. 257 257
6 6 9.00%, 10/15/19................................. 6 6
76 76 9.00%, 11/15/19................................. 80 80
87 87 9.00%, 1/15/20.................................. 92 92
105 105 9.00%, 2/15/20.................................. 111 111
127 127 9.00%, 3/15/20.................................. 134 134
124 124 9.50%, 9/15/20.................................. 131 131
122 122 9.50%, 12/15/20................................. 130 130
416 416 9.00%, 6/15/21.................................. 437 437
45 45 7.50%, 2/15/22.................................. 45 45
752 752 8.00%, 7/15/22.................................. 770 770
838 838 7.50%, 8/15/22.................................. 844 844
47 47 7.00%, 10/15/22................................. 47 47
253 253 7.00%, 11/15/22................................. 249 249
48 48 7.00%, 12/15/22................................. 47 47
45 45 7.00%, 1/15/23.................................. 44 44
566 566 7.00%, 1/15/23.................................. 558 558
428 428 7.00%, 1/15/23.................................. 422 422
599 599 7.00%, 1/15/23.................................. 590 590
273 273 7.00%, 1/15/23.................................. 269 269
55 55 7.00%, 3/15/23.................................. 54 54
730 730 7.00%, 5/15/23.................................. 719 719
70 70 7.00%, 5/15/23.................................. 69 69
922 922 7.00%, 5/15/23.................................. 909 909
374 374 6.50%, 5/15/23.................................. 360 360
942 942 7.00%, 5/15/23.................................. 928 928
</TABLE>
CONTINUED
101
<PAGE>
- --------------------------------------------------------------------------------
PARAGON INTERMEDIATE-TERM BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------------ ------------------------------------
INTERMEDIATE PRO FORMA INTERMEDIATE PRO FORMA
TERM BOND GOVERNMENT COMBINED TERM BOND GOVERNMENT COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ------------ ---------- ---------- -------------------------------------------------- ------------ ---------- ----------
U.S. GOVERNMENT AGENCIES, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
Government National Mortgage Assoc., continued:
857 857 7.00%, 5/15/23.................................. $ $ 844 $ 844
101 101 6.50%, 6/15/23.................................. 97 97
498 498 6.50%, 6/15/23.................................. 479 479
64 64 6.50%, 6/15/23.................................. 61 61
69 69 6.50%, 6/15/23.................................. 66 66
276 276 6.50%, 7/15/23.................................. 266 266
293 293 7.00%, 7/15/23.................................. 288 288
954 954 7.00%, 7/15/23.................................. 940 940
28 28 7.00%, 7/15/23.................................. 28 28
373 373 7.00%, 7/15/23.................................. 367 367
42 42 7.00%, 7/15/23.................................. 41 41
250 250 7.00%, 7/15/23.................................. 246 246
564 564 7.00%, 7/15/23.................................. 556 556
691 691 7.00%, 7/15/23.................................. 681 681
591 591 7.00%, 7/15/23.................................. 582 582
921 921 7.00%, 7/15/23.................................. 907 907
348 348 6.50%, 8/15/23.................................. 334 334
500 500 6.50%, 8/15/23.................................. 481 481
731 731 6.50%, 8/15/23.................................. 703 703
263 263 6.50%, 8/15/23.................................. 253 253
187 187 6.50%, 8/15/23.................................. 180 180
323 323 6.50%, 8/15/23.................................. 311 311
65 65 6.50%, 9/15/23.................................. 62 62
809 809 6.50%, 9/15/23.................................. 778 778
239 239 6.50%, 10/15/23................................. 230 230
452 452 6.00%, 10/15/23................................. 424 424
35 35 6.00%, 10/15/23................................. 33 33
472 472 6.00%, 10/15/23................................. 443 443
5,054 5,054 8.00%, 10/15/23................................. 5,178 5,178
739 739 6.50%, 11/15/23................................. 711 711
24 24 6.50%, 11/15/23................................. 23 23
158 158 6.50%, 12/15/23................................. 152 152
1,003 1,003 6.50%, 12/15/23................................. 965 965
162 162 6.50%, 12/15/23................................. 156 156
753 753 6.50%, 12/15/23................................. 724 724
39 39 6.50%, 12/15/23................................. 37 37
942 942 6.50%, 1/15/24.................................. 906 906
415 415 6.50%, 2/15/24.................................. 399 399
192 192 6.50%, 2/15/24.................................. 184 184
1,331 1,331 6.50%, 2/15/24.................................. 1,281 1,281
361 361 6.50%, 2/15/24.................................. 347 347
419 419 6.50%, 2/15/24.................................. 403 403
891 891 7.50%, 6/15/24.................................. 897 897
106 106 7.50%, 6/15/24.................................. 106 106
1,103 1,103 8.50%, 8/15/24.................................. 1,146 1,146
5,364 5,364 8.50%, 8/15/24.................................. 5,574 5,574
</TABLE>
CONTINUED
102
<PAGE>
- --------------------------------------------------------------------------------
PARAGON INTERMEDIATE-TERM BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------------ ------------------------------------
INTERMEDIATE PRO FORMA INTERMEDIATE PRO FORMA
TERM BOND GOVERNMENT COMBINED TERM BOND GOVERNMENT COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ------------ ---------- ---------- -------------------------------------------------- ------------ ---------- ----------
U.S. GOVERNMENT AGENCIES, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
Government National Mortgage Assoc., continued:
1,186 1,186 8.50%, 8/15/24.................................. $ $ 1,233 $ 1,233
4,946 4,946 8.00%, 9/15/24.................................. 5,068 5,068
487 487 8.00%, 9/15/24.................................. 499 499
2,002 2,002 8.50%, 11/15/24................................. 2,080 2,080
10,000 10,000 8.50%, 4/15/25.................................. 10,391 10,391
Student Loan Marketing Assoc.:
2,000 2,000 8.27%, 12/15/99................................. 2,129 2,129
25,000 25,000 5.65%, 12/1/00.................................. 2,425 2,425
------------ ---------- ----------
Total U.S. Government Agencies 146,941 268,352 415,293
------------ ---------- ----------
U.S. TREASURY BONDS (15.4%):
500 500 9.25%, 1/15/96.................................. 509 509
4,000 4,000 8.88%, 2/15/96.................................. 4,074 4,074
5,000 5,000 6.00%, 12/31/97................................. 5,014 5,014
10,000 10,000 9.00%, 5/15/98.................................. 10,803 10,803
1,000 1,000 8.88%, 11/15/98................................. 1,088 1,088
3,400 3,400 8.88%, 2/15/99.................................. 3,719 3,719
4,000 4,000 9.13%, 5/15/99.................................. 4,427 4,427
2,600 2,600 6.38%, 7/15/99.................................. 2,635 2,635
3,000 3,000 5.50%, 4/15/00.................................. 2,940 2,940
6,000 6,000 8.38%, 8/15/00.................................. 6,016 6,016
15,000 15,000 6.25%, 2/15/03.................................. 15,043 15,043
8,000 8,000 8.25%, 5/15/05.................................. 8,684 8,684
10,000 10,000 8.38%, 8/15/08.................................. 11,288 11,288
5,000 5,000 7.25%, 5/15/16.................................. 5,309 5,309
1,500 1,500 8.88%, 8/15/17.................................. 1,868 1,868
15,000 15,000 8.13%, 8/15/19.................................. 17,468 17,468
700 700 7.88%, 2/15/21.................................. 796 796
7,500 7,500 6.25%, 8/15/23.................................. 7,088 7,088
------------ ---------- ----------
Total U.S. Treasury Bonds 76,240 32,529 108,769
------------ ---------- ----------
U.S. TREASURY NOTES (9.7%):
1,800 1,800 8.88%, 11/15/94................................. 1,958 1,958
7,000 7,000 6.00%, 11/30/97................................. 7,018 7,018
8,000 8,000 8.25%, 7/15/98.................................. 8,508 8,508
2,200 2,200 8.88%, 2/15/99.................................. 2,406 2,406
3,000 3,000 6.38%, 7/15/99.................................. 3,040 3,040
5,000 5,000 7.50%, 10/31/99................................. 5,279 5,279
2,000 2,000 7.88%, 11/15/99................................. 2,141 2,141
2,000 2,000 5.50%, 4/15/00.................................. 1,960 1,960
5,500 5,500 7.50%, 11/15/01................................. 5,903 5,903
14,500 14,500 7.50%, 5/15/02.................................. 15,623 15,623
1,000 1,000 6.38%, 8/15/02.................................. 1,012 1,012
</TABLE>
CONTINUED
103
<PAGE>
- --------------------------------------------------------------------------------
PARAGON INTERMEDIATE-TERM BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------------ ------------------------------------
INTERMEDIATE PRO FORMA INTERMEDIATE PRO FORMA
TERM BOND GOVERNMENT COMBINED TERM BOND GOVERNMENT COMBINED
FUND BOND FUND (NOTE 1) SECURITY DESCRIPTION FUND BOND FUND (NOTE 1)
- ------------ ---------- ---------- -------------------------------------------------- ------------ ---------- ----------
U.S. TREASURY NOTES, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
5,600 5,600 6.25%, 2/15/03.................................. $ $ 5,616 $ 5,616
8,500 8,500 5.88%, 2/15/04.................................. 8,295 8,295
------------ ---------- ----------
Total U.S. Treasury Notes 68,759 68,759
------------ ---------- ----------
Total Investments, at value 295,144 371,122 666,266
------------ ---------- ----------
REPURCHASE AGREEMENTS (5.0%):
16,852 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 16,852
18,205 18,205 State Street Bank & Trust Co., 5.50%, dated
6/30/95, due 7/3/95.............................. 18,205 18,205
------------ ---------- ----------
Total Repurchase Agreements 18,205 16,852 35,057
------------ ---------- ----------
Total (Cost--$309,025, $380,326 and $689,351
respectively) (a) $ 313,349 $ 387,974 $ 701,323
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
- ---------
Percentages indicated are based on pro forma combined net assets of $706,008.
(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.................................... $ 18,942
Unrealized depreciation.................................... (6,969)
---------
Net unrealized appreciation................................ $ 11,973
---------
---------
</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 PRO FORMA FINANCIAL STATEMENTS.
104
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE EQUITY INCOME FUND
THE ONE GROUP INCOME EQUITY FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amounts) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------- -----------------------------
VALUE VALUE
EQUITY INCOME PRO FORMA EQUITY INCOME PRO FORMA
INCOME EQUITY COMBINED INCOME EQUITY COMBINED
FUND FUND (NOTE 1) SECURITY DESCRIPTION FUND FUND (NOTE 1)
- --------- --------- --------------------------------------------------------------------- -------- -------- ---------
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS (87.3%):
Aircraft (2.8%):
70,000 70,000 Boeing Co. ................................................. $ $ 4,384 $ 4,384
68,600 68,600 Lockheed Martin Corp. ...................................... 4,330 4,330
-------- -------- ---------
4,330 4,384 8,714
-------- -------- ---------
Banks (2.5%):
76,754 76,754 BankAmerica Corp. .......................................... 4,039 4,039
53,000 53,000 J.P. Morgan & Co., Inc. .................................... 3,717 3,717
-------- -------- ---------
7,756 7,756
-------- -------- ---------
Beverages (1.3%):
65,000 65,000 Coca Cola Co. .............................................. 4,144 4,144
-------- -------- ---------
Building & Construction (0.5%):
30,000 30,000 Corning Delaware............................................ 1,534 1,534
-------- -------- ---------
Business Equipment & Services (3.3%):
55,000 55,000 Browning Ferris Industries, Inc. ........................... 1,987 1,987
90,000 90,000 Dun & Bradstreet Corp. ..................................... 4,725 4,725
115,000 115,000 National Service Industries, Inc. .......................... 3,320 3,320
-------- -------- ---------
10,032 10,032
-------- -------- ---------
Chemicals--Petroleum & Inorganic (6.2%):
65,000 65,000 ARCO Chemical Co. .......................................... 2,949 2,949
50,000 68,000 118,000 Dow Chemical Co. ........................................... 3,594 4,887 8,481
53,000 53,000 DuPont (E.I.) de Nemours & Co. ............................. 3,644 3,644
65,000 65,000 Grace W. R. & Co. .......................................... 3,989 3,989
-------- -------- ---------
7,238 11,825 19,063
-------- -------- ---------
Chemicals--Specialty (1.5%):
125,000 125,000 Nalco Chemical Co. ......................................... 4,547 4,547
-------- -------- ---------
Computers--Main/Mini (3.5%):
30,000 30,000 International Business Machines............................. 2,880 2,880
25,000 25,000 Salomon, Inc. .............................................. 2,400 2,400
15,000 32,000 47,000 Xerox Corp. ................................................ 1,759 3,752 5,511
-------- -------- ---------
4,639 6,152 10,791
-------- -------- ---------
Computers--Micro (0.3%):
23,000 23,000 Compaq Computer Corp. (b)................................... 1,044 1,044
-------- -------- ---------
Cosmetics/Toiletry (1.3%):
80,000 80,000 International Flavors & Fragrances Inc. .................... 3,980 3,980
-------- -------- ---------
Defense (1.3%):
25,000 25,000 Loral Corp. ................................................ 1,294 1,294
33,600 33,600 Raytheon Co. ............................................... 2,608 2,608
-------- -------- ---------
3,902 3,902
-------- -------- ---------
</TABLE>
CONTINUED
105
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE EQUITY INCOME FUND
THE ONE GROUP INCOME EQUITY FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amounts) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------- -----------------------------
VALUE VALUE
EQUITY INCOME PRO FORMA EQUITY INCOME PRO FORMA
INCOME EQUITY COMBINED INCOME EQUITY COMBINED
FUND FUND (NOTE 1) SECURITY DESCRIPTION FUND FUND (NOTE 1)
- --------- --------- --------------------------------------------------------------------- -------- -------- ---------
COMMON STOCKS, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
Electrical Equipment (0.4%):
21,000 21,000 Johnson Controls, Inc. ..................................... $ 1,186 $ $ 1,186
-------- -------- ---------
Electronic Components (2.1%):
50,000 50,000 Avnet, Inc. ................................................ 2,419 2,419
40,000 40,000 Intel Corp. ................................................ 2,532 2,532
11,700 11,700 Texas Instruments Corp. .................................... 1,566 1,566
-------- -------- ---------
6,517 6,517
-------- -------- ---------
Farm Machinery (0.6%):
20,000 20,000 Deere & Co. ................................................ 1,713 1,713
-------- -------- ---------
Finance (2.4%):
19,100 19,100 Federal National Mortgage Assoc. ........................... 1,803 1,803
60,000 60,000 First Tennessee National Corp. ............................. 2,782 2,782
71,000 71,000 Reliastar Financial Corp. .................................. 2,716 2,716
-------- -------- ---------
7,301 7,301
-------- -------- ---------
Food & Related (4.0%):
90,000 90,000 Campbell Soup Co. .......................................... 4,410 4,410
45,000 65,000 110,000 ConAgra, Inc. .............................................. 1,569 2,267 3,836
93,000 93,000 IBP, Inc. .................................................. 4,045 4,045
-------- -------- ---------
5,614 6,677 12,291
-------- -------- ---------
Forest/Paper Products (0.7%):
25,000 25,000 International Paper Co. .................................... 2,144 2,144
-------- -------- ---------
Furniture/Furnishings (0.4%):
50,000 50,000 Masco Corp. ................................................ 1,350 1,350
-------- -------- ---------
Health Care--Drugs (3.6%):
85,000 136,000 221,000 Baxter International, Inc. ................................. 3,092 4,947 8,039
72,000 72,000 Schering Plough Corp. ...................................... 3,177 3,177
-------- -------- ---------
6,269 4,947 11,216
-------- -------- ---------
Health Care--General (5.8%):
60,000 60,000 American Home Products...................................... 4,642 4,642
25,000 73,000 98,000 Bristol-Myers Squibb Co. ................................... 1,703 4,973 6,676
35,000 35,000 Columbia/HCA Healthcare..................................... 1,514 1,514
60,000 60,000 Warner - Lambert Co. ....................................... 5,183 5,183
-------- -------- ---------
3,217 14,798 18,015
-------- -------- ---------
Home Building/Mobil Homes (0.5%):
70,000 70,000 Fleetwood Enterprises, Inc. ................................ 1,383 1,383
-------- -------- ---------
</TABLE>
CONTINUED
106
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE EQUITY INCOME FUND
THE ONE GROUP INCOME EQUITY FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amounts) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------- -----------------------------
VALUE VALUE
EQUITY INCOME PRO FORMA EQUITY INCOME PRO FORMA
INCOME EQUITY COMBINED INCOME EQUITY COMBINED
FUND FUND (NOTE 1) SECURITY DESCRIPTION FUND FUND (NOTE 1)
- --------- --------- --------------------------------------------------------------------- -------- -------- ---------
COMMON STOCKS, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
Household--General Products (2.0%):
125,000 125,000 Jostens..................................................... $ $ 2,656 $ 2,656
70,000 70,000 Premark International, Inc. ................................ 3,631 3,631
-------- -------- ---------
3,631 2,656 6,287
-------- -------- ---------
Household--Major Appliances (1.1%):
100,000 100,000 Briggs & Stratton Corp. .................................... 3,450 3,450
-------- -------- ---------
Industrial Equipment (0.3%):
20,000 20,000 PACCAR, Inc. ............................................... 935 935
-------- -------- ---------
Insurance--Life (1.5%):
80,000 80,000 Transamerica Corp. ......................................... 4,660 4,660
-------- -------- ---------
Insurance--Property/Casualty (1.7%):
120,000 120,000 Lincoln National Corp. ..................................... 5,250 5,250
-------- -------- ---------
Motor Vehicles (0.7%):
45,000 45,000 Chrysler Corp. ............................................. 2,154 2,154
-------- -------- ---------
Multiple Industry (1.7%):
80,000 80,000 Corning, Inc. .............................................. 2,620 2,620
22,000 22,000 ITT Corp. .................................................. 2,585 2,585
-------- -------- ---------
2,585 2,620 5,205
-------- -------- ---------
Petroleum--Domestic (2.9%):
70,000 70,000 Amoco Corp. ................................................ 4,664 4,664
40,000 40,000 Atlantic Richfield Co. ..................................... 4,390 4,390
-------- -------- ---------
9,054 9,054
-------- -------- ---------
Petroleum--International (7.0%):
24,000 24,000 Chevron Corp. .............................................. 1,119 1,119
15,000 70,000 85,000 Exxon Corp. ................................................ 1,059 4,944 6,003
44,000 45,000 89,000 Mobil Corp. ................................................ 4,224 4,320 8,544
15,000 35,000 50,000 Royal Dutch Petroleum....................................... 1,828 4,266 6,094
-------- -------- ---------
8,230 13,530 21,760
-------- -------- ---------
Petroleum Services (1.0%):
85,000 85,000 Halliburton Co. ............................................ 3,039 3,039
-------- -------- ---------
Photography Equipment (1.5%):
75,000 75,000 Eastman Kodak Co. .......................................... 4,547 4,547
-------- -------- ---------
Publishing (1.6%):
65,000 65,000 McGraw-Hill Cos., Inc. ..................................... 4,932 4,932
-------- -------- ---------
</TABLE>
CONTINUED
107
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE EQUITY INCOME FUND
THE ONE GROUP INCOME EQUITY FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amounts) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------- -----------------------------
VALUE VALUE
EQUITY INCOME PRO FORMA EQUITY INCOME PRO FORMA
INCOME EQUITY COMBINED INCOME EQUITY COMBINED
FUND FUND (NOTE 1) SECURITY DESCRIPTION FUND FUND (NOTE 1)
- --------- --------- --------------------------------------------------------------------- -------- -------- ---------
COMMON STOCKS, CONTINUED:
<C> <C> <C> <S> <C> <C> <C>
Retail--General Merchandise (4.2%):
60,600 60,600 J.C. Penney, Inc. .......................................... $ 2,909 $ $ 2,909
46,000 46,000 Reebok International, Inc. ................................. 1,564 1,564
20,000 90,000 110,000 Sears Roebuck & Co. ........................................ 1,198 5,389 6,587
35,000 35,000 V.F. Corp. ................................................. 1,881 1,881
-------- -------- ---------
7,552 5,389 12,941
-------- -------- ---------
Securities & Commercial Broker (1.9%):
125,000 125,000 American Express Co. ....................................... 4,391 4,391
30,000 30,000 Merrill Lynch & Co., Inc. .................................. 1,575 1,575
-------- -------- ---------
1,575 4,391 5,966
-------- -------- ---------
Steel (0.4%):
60,000 60,000 Birmingham Steel Corp. ..................................... 1,110 1,110
-------- -------- ---------
Tobacco (3.0%):
50,000 73,000 123,000 Philip Morris Cos., Inc. ................................... 3,719 5,429 9,148
-------- -------- ---------
Transportation (0.8%):
25,000 25,000 British Airways ADR......................................... 1,681 1,681
40,000 40,000 Consolidated Freightways.................................... 885 885
-------- -------- ---------
2,566 2,566
-------- -------- ---------
Utilities--Electric (2.8%):
133,000 133,000 Central & South West Corp. ................................. 3,491 3,491
60,000 60,000 Duke Power Co. ............................................. 2,490 2,490
90,000 90,000 WPS Resources............................................... 2,632 2,632
-------- -------- ---------
8,613 8,613
-------- -------- ---------
Utilities--Telephone (6.2%):
90,000 90,000 AT&T........................................................ 4,781 4,781
37,000 37,000 Bellsouth Corp. ............................................ 2,349 2,349
45,000 45,000 Entergy Corp. .............................................. 1,086 1,086
70,000 70,000 GTE Corp. .................................................. 2,389 2,389
90,000 90,000 Peco Energy Co. ............................................ 2,486 2,486
100,000 100,000 SBC Communications, Inc. ................................... 4,763 4,763
42,000 42,000 Sprint Corp. ............................................... 1,412 1,412
-------- -------- ---------
9,722 9,544 19,266
-------- -------- ---------
Total Common Stocks 100,276 169,230 269,506
-------- -------- ---------
</TABLE>
CONTINUED
108
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE EQUITY INCOME FUND
THE ONE GROUP INCOME EQUITY FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1995
(Amounts in Thousands, except Shares or Principal Amounts) (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
- ------------------------------- -----------------------------
VALUE VALUE
EQUITY INCOME PRO FORMA EQUITY INCOME PRO FORMA
INCOME EQUITY COMBINED INCOME EQUITY COMBINED
FUND FUND (NOTE 1) SECURITY DESCRIPTION FUND FUND (NOTE 1)
- --------- --------- --------------------------------------------------------------------- -------- -------- ---------
CORPORATE BONDS (3.9%):
<C> <C> <C> <S> <C> <C> <C>
1,050,000 1,050,000 Avnet, Inc., 6.00%, 4/15/12................................. $ 1,214 $ $ 1,214
2,500,000 2,500,000 Browning Ferris Industries, Inc., 6.25%, 8/15/12............ 2,513 2,513
1,000,000 1,000,000 Healthsouth Rehabilitaion, 5.00%, 4/1/01.................... 1,095 1,095
2,500,000 2,500,000 Hechinger Co., 5.50%, 4/1/12................................ 1,587 1,587
2,500,000 2,500,000 Masco Corp., 5.25%, 2/15/12................................. 2,187 2,187
2,250,000 2,250,000 Pennzoil Co., 6.50%, 1/15/03................................ 2,678 2,678
980,000 980,000 Sports & Recreation, Inc., 4.25%, 11/1/00................... 745 745
-------- -------- ---------
Total Corporate Bonds 7,319 4,700 12,019
-------- -------- ---------
PREFERRED STOCK (CONVERTIBLE) (7.6%):
15,000 15,000 Burlington Northern, Inc. .................................. 1,012 1,012
26,000 26,000 Citicorp.................................................... 4,115 4,115
80,000 80,000 ConAgra, Inc., Class E...................................... 2,830 2,830
35,600 35,600 Ford Motor Co. ............................................. 3,458 3,458
35,500 70,000 105,500 General Motors Corp. ....................................... 2,236 4,410 6,646
80,000 80,000 Sonoco Products............................................. 4,440 4,440
70,000 70,000 Westinghouse Electric....................................... 1,024 1,024
-------- -------- ---------
Total Preferred Stock 10,821 12,704 23,525
-------- -------- ---------
Total Investments, at value 118,416 186,634 305,050
-------- -------- ---------
REPURCHASE AGREEMENTS (1.0%):
1,416,000 1,416,000 Lehman Brothers, 6.15%, dated 6/30/95, due 7/3/95
(Collateralized by 1,400,000 U.S. Treasury Notes, 6.75%,
2/28/97, market value-$1,450)............................. 1,416 1,416
1,675,000 1,675,000 State Street Bank & Trust Co., 5.50%, dated 6/30/95, due
7/3/95.................................................... 1,675 1,675
-------- -------- ---------
Total Repurchase Agreements 1,675 1,416 3,091
-------- -------- ---------
Total (Cost--$97,622, $147,891 and $245,513,
respectively)(a) $120,091 $188,050 $308,141
-------- -------- ---------
-------- -------- ---------
</TABLE>
- ----------
Percentages indicated are based on proforma combined net assets of $308,883.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses reconized 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........................................... $ 65,698
Unrealized depreciation........................................... (3,077)
---------
Net unrealized appreciation....................................... $ 62,621
---------
---------
</TABLE>
(b) Represents non-income producing security.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
109
<PAGE>
- --------------------------------------------------------------------------------
PARAGON LOUISIANA TAX-FREE FUND
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ---------- ------- ---------------------------------------- ------------
<C> <C> <S> <C>
LOUISIANA MUNICIPAL BOND OBLIGATIONS (97.0%)
General Obligations (31.0%)
Caddo Parish (MBIA)
$200,000 7.10% 02/01/00................................ $ 214,456
550,000 7.20 02/01/01................................ 589,672
300,000 7.20 02/01/02................................ 321,123
1,415,000 5.25 02/01/06................................ 1,410,217
Caddo Parish School District (MBIA)
750,000 5.00 03/01/03................................ 745,215
Calcasieu Parish School District (BIG)
500,000 7.10 02/01/01................................ 532,705
De Soto Parish School District
120,000 8.00 08/01/05................................ 133,928
1,070,000 5.30 10/01/05................................ 1,040,404
1,245,000 5.60 10/01/06................................ 1,208,796
Jefferson Parish (FGIC)
500,000 7.10 09/01/97................................ 525,540
500,000 7.40 09/01/99................................ 528,145
250,000 7.70 09/01/02................................ 264,825
Jefferson Parish Construction Waterworks District #2
400,000 7.25 01/15/00................................ 401,032
LA State
6,160,000 7.00 08/01/02................................ 6,543,090
675,000 7.00 08/01/03................................ 714,555
LA State (FSA)
2,750,000 7.10 09/01/03................................ 3,064,545
LA State (MBIA)
6,290,000 6.00 05/15/99................................ 6,585,253
Lafayette Parish (FGIC)
1,000,000 7.80 03/01/01................................ 1,089,140
Lafourche Parish Water District #3
650,000 5.63 01/01/01................................ 668,369
Lincoln Parish School District (MBIA)
500,000 6.20 03/01/03................................ 525,490
1,465,000 6.40 03/01/05................................ 1,539,217
Monroe Parish School District (FGIC)
1,230,000 5.35 03/01/05................................ 1,230,517
1,320,000 5.35 03/01/06................................ 1,315,512
Monroe Parish School District (MBIA)
1,220,000 8.00 03/01/01................................ 1,393,374
1,300,000 7.00 03/01/02................................ 1,435,109
1,390,000 7.00 03/01/03................................ 1,547,765
Ouachita Parish West School District Refunding Series A (FSA)
2,000,000 6.50 03/01/03................................ 2,154,140
1,000,000 6.60 03/01/04................................ 1,079,380
2,695,000 6.65 03/01/05................................ 2,901,599
1,655,000 6.70 03/01/06................................ 1,777,387
Plaquemines Parish (AMBAC)
1,440,000 6.40 08/01/04................................ 1,546,445
Rapides Parish (MBIA)
500,000 7.25 04/01/00................................ 540,220
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ---------- ------- ---------------------------------------- ------------
<C> <C> <S> <C>
LOUISIANA MUNICIPAL BOND OBLIGATIONS, CONTINUED:
General Obligations, continued:
Rapides Parish School District #11 (FGIC)
$670,000 6.90% 02/01/01................................ $ 718,776
1,475,000 6.95 02/01/02................................ 1,582,247
Shreveport
880,000 4.25 12/01/03................................ 825,009
930,000 4.25 12/01/04................................ 862,017
480,000 5.90 02/01/07................................ 493,934
Shreveport (AMBAC)
480,000 6.20 03/01/02................................ 504,470
500,000 6.70 02/01/03................................ 531,240
St. Charles School District #1 (AMBAC)
1,000,000 6.25 03/01/04................................ 1,058,740
2,350,000 6.45 03/01/06................................ 2,473,493
St. John Baptist Parish School District
605,000 4.90 03/01/06................................ 566,649
500,000 5.10 03/01/08................................ 478,980
St. John Baptist Parish School District #1
870,000 6.25 03/01/05................................ 910,107
695,000 5.20 03/01/09................................ 649,081
St. Landry Parish School District #1 (MBIA)
1,000,000 8.00 05/01/98................................ 1,082,500
750,000 6.10 05/01/07................................ 770,108
St. Tammany Parish (FGIC)
300,000 7.40 03/01/98................................ 318,855
620,000 6.70 04/01/98................................ 660,548
------------
Total General Obligations 60,053,919
------------
Health Care Revenue (14.3%)
LA Public Facilities Authority Alton Ochsner Medical
Foundation 92-A (MBIA)
2,280,000 6.30 05/15/04................................ 2,460,439
LA Public Facilities Authority General Health (MBIA)
2,820,000 5.55 11/01/04................................ 2,905,897
LA Public Facilities Authority Health and Education
1,765,000 7.30(a) 12/01/15................................ 1,848,873
LA Public Facilities Authority Health and Education Series B
$3,825,000 7.30(a) 12/01/15................................ 3,941,050
LA Public Facilities Authority Lafayette Medical Center (FSA)
1,000,000 6.05 10/01/04................................ 1,068,420
LA Public Facilities Authority Mary Bird Perkins Cancer Center
(FSA)
1,135,000 5.50 01/01/04................................ 1,160,765
LA Public Facilities Authority Our Lady of Lake Hospital
(MBIA)
500,000 5.70 12/01/04................................ 521,570
</TABLE>
CONTINUED
110
<PAGE>
- --------------------------------------------------------------------------------
PARAGON LOUISIANA TAX-FREE FUND
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ---------- ------- ---------------------------------------- ------------
<C> <C> <S> <C>
LOUISIANA MUNICIPAL BOND OBLIGATIONS, CONTINUED:
Health Care Revenue, continued:
LA Public Facilities Authority St. Francis Medical Center
(FSA)
1,385,000 4.80 07/01/04................................ 1,341,622
870,000 4.90 07/01/05................................ 845,301
LA Public Facilities Authority Woman's Hospital
$1,235,000 6.85% 10/01/05................................ $ 1,291,724
LA Public Facilities Authority Woman's Hospital (FGIC)
500,000 7.20 10/01/97................................ 531,035
730,000 5.40 10/01/05................................ 742,906
1,715,000 5.50 10/01/06................................ 1,747,482
Lafourche Parish Hospital District #3
525,000 5.50 10/01/04................................ 504,452
Ouachita Parish Glenwood Hospital
2,525,000 7.50 07/01/06................................ 2,809,239
St. Tammany Hospital District #1 (FGIC)
1,815,000 6.30 07/01/07................................ 1,890,903
Terrebonne Parish Hospital Service #1 (BIG)
1,285,000 7.40 04/01/03................................ 1,396,178
Vermillion Parish Hospital (MBIA)
555,000 6.35 05/01/00................................ 595,193
------------
Total Health Care Revenue 27,603,049
------------
Higher Education--5.3%
LA Public Facilities Authority Loyola University
500,000 9.00 10/01/95................................ 507,420
500,000 7.20 10/01/00................................ 552,925
1,960,000 6.60 04/01/05................................ 2,131,245
LA Public Facilities Authority Tulane University
300,000 7.50 05/15/00................................ 327,594
2,940,000 6.25 07/15/06................................ 3,112,549
1,000,000 6.40 11/15/07................................ 1,070,640
LA Public Facilities Authority Tulane University (FGIC)
450,000 5.80 02/15/04................................ 471,929
LA Public Facilities Authority Tulane University Series B
700,000 7.00 08/15/97................................ 735,581
200,000 7.20 08/15/98................................ 213,966
LA Public Facilities Authority Tulane University Series C
750,000 7.00 08/15/97................................ 788,123
300,000 7.20 08/15/98................................ 320,949
------------
Total Higher Education 10,232,921
------------
Sales Tax Revenue (37.6%)
Alexandria Public Improvements (MBIA)
300,000 7.35 08/01/97................................ 318,573
Baton Rouge Public Improvements (AMBAC)
700,000 6.85 08/01/00................................ 772,632
800,000 6.90 08/01/01................................ 879,696
Baton Rouge Public Improvements (FSA)
2,000,000 6.00 08/01/04................................ 2,109,000
1,000,000 6.00 06/01/06................................ 1,043,720
765,000 6.38 08/01/09................................ 796,136
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ---------- ------- ---------------------------------------- ------------
<C> <C> <S> <C>
LOUISIANA MUNICIPAL BOND OBLIGATIONS, CONTINUED:
Sales Tax Revenue, continued:
Bossier City Public Improvements (AMBAC)
805,000 6.20 11/01/07................................ 856,472
Bossier City Public Improvements (FGIC)
$400,000 6.88% 11/01/06................................ $ 433,100
400,000 6.88 11/01/07................................ 433,100
East Baton Rouge Parish (FGIC)
2,280,000 8.00 02/01/02................................ 2,682,420
2,490,000 4.65 02/01/04................................ 2,337,662
East Baton Rouge Parish (MBIA)
500,000 7.10 02/01/99................................ 540,995
500,000 7.10 02/01/00................................ 546,005
East Baton Rouge Parish Public Improvements
1,085,000 5.15 02/01/05................................ 1,028,330
1,145,000 5.15 02/01/06................................ 1,072,258
General Baton Parking Authority
1,390,000 6.38 07/01/03................................ 1,392,821
Utility Revenue (3.2%)
Bossier City Public Improvements (FGIC)
550,000 6.88 11/01/08................................ 591,222
Houma (FGIC)
1,560,000 6.13 01/01/07................................ 1,657,859
Shreveport Water & Sewer
500,000 6.25 12/01/03................................ 542,670
Shreveport Water & Sewer (FGIC)
930,000 7.75 12/01/02................................ 1,091,299
Terrebone Parish Waterworks (FGIC)
690,000 5.70 11/01/06................................ 710,693
Ville Platte Parish
1,555,000 5.50 05/01/09................................ 1,500,217
------------
Total Utility Revenue 6,094,160
------------
Miscellaneous Louisiana Municipal Bonds (5.6%)
Bastrop Pollution Control Industrial Development
(International Paper)
2,500,000 6.90 03/01/07................................ 2,688,925
Caddo Parish Industrial Development Revenue (Wal-Mart Stores,
Inc.)
470,000 5.95 11/01/07................................ 478,192
De Soto Parish Pollution Control
1,000,000 5.05 12/01/02................................ 989,480
East Baton Rouge Mortgage Finance Authority
770,000 4.90 10/01/05................................ 722,175
East Baton Rouge Mortgage Finance Authority (GNMA/FNMA
collateralized)
1,390,000 5.45 10/01/03................................ 1,411,503
Iberia Home Mortgage Loan Association
1,575,000 7.38 01/01/11................................ 1,689,723
LA Housing Finance Agency
1,100,000 5.70 06/01/15................................ 1,102,926
LA Public Facilities Authority Multi-Housing Linlake Village
610,000 5.25(a) 06/01/07................................ 615,813
</TABLE>
CONTINUED
111
<PAGE>
- --------------------------------------------------------------------------------
PARAGON LOUISIANA TAX-FREE FUND
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ---------- ------- ---------------------------------------- ------------
<C> <C> <S> <C>
LOUISIANA MUNICIPAL BOND OBLIGATIONS, CONTINUED:
Miscellaneous Louisiana Municipal Bonds, continued:
LA Public Facilities Authority Shreveport Single Family
Mortgage
$1,018,790 8.45% 12/01/12................................ 1,091,410
------------
Total Miscellaneous Louisiana Municipal Bonds 10,790,147
------------
Total Louisiana Municipal Bond Obligations
(cost--$184,261,635) 187,531,927
------------
SHORT-TERM OBLIGATIONS (2.4%)
Burke County Georgia Pollution Control
1,500,000 4.02(a) 07/01/24................................ 1,500,000
LA State Recovery District Tax
2,000,000 4.55(a) 07/07/97................................ 2,000,000
400,000 2.93(a) 07/01/96................................ 400,000
North Alabama Environmental Pollution Center
800,000 4.33(a) 12/01/00................................ 800,000
------------
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ---------- ------- ---------------------------------------- ------------
<C> <C> <S> <C>
SHORT-TERM OBLIGATIONS, CONTINUED:
Total Short-Term Obligations
(cost--$4,700,000) $ 4,700,000
------------
------------
Total Investments
(cost--$188,961,635(b)) 192,231,927
------------
------------
Federal Income Tax Information:
Gross unrealized gain for investments in which value exceeds
cost...................................................... 4,648,835
Gross unrealized loss for investments in which cost exceeds
value..................................................... (1,378,543)
------------
Net unrealized gain $ 3,270,292
------------
------------
</TABLE>
- ------------
(a) Variable rate security. Coupon rate disclosed is that which is in effect at
May 31, 1995.
(b) The cost stated also represents aggregate cost for federal income tax
purposes.
<TABLE>
<S> <C> <C>
AMBAC -- Insured by American Municipal Bond Assurance Corporation.
BIG -- Insured by Bond Investors Guaranty Insurance Company.
FGIC -- Insured by Financial Guaranty Insurance Corporation.
FSA -- Insured by Financial Security Assurance, Inc.
MBIA -- Insured by Municipal Bond Investors Assurance Corporation.
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
112
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE GROWTH FUND
THE ONE GROUP VALUE GROWTH FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- ----------- -------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS (84.5%)
Basic Materials & Natural Resources (8.0%)
90,000 Dow Chemical Co. ..................... $ 6,603,750
75,000 Du Pont (E.I.) De Nemours & Co. ...... 5,090,625
80,000 Nucor Corp. .......................... 3,820,000
-------------
15,514,375
-------------
Capital Equipment & Services (4.1%)
100,000 Allied Signal , Inc. ................. 4,037,500
70,000 Johnson Controls, Inc. ............... 4,007,500
-------------
8,045,000
-------------
Consumer Cyclical (16.0%)
200,000 Carnival Corp. ....................... 4,650,000
120,000 Chrysler Corp. (b).................... 5,235,000
200,000 Consolidated Stores Corp. (a)......... 3,750,000
150,000 Heillg Meyers Co. .................... 3,581,250
165,000 Home Depot, Inc. ..................... 6,888,125
150,000 Office Depot, Inc. (a)................ 3,600,000
140,000 Wal-Mart Stores, Inc. ................ 3,500,000
-------------
31,184,375
-------------
Consumer Noncyclical (13.7%)
125,000 Columbia/HCA Healthcare Corp. ........ 5,109,375
65,000 Darden Restaurants, Inc. (a).......... 715,000
100,000 Duracell International, Inc. ......... 4,325,000
135,000 Foundation Health Corp. (a)........... 3,796,875
65,000 General Mills, Inc. .................. 3,371,875
120,000 Healthcare Compare Corp. (a).......... 3,750,000
150,000 United Healthcare Corp. .............. 5,587,500
-------------
26,655,625
-------------
Energy (7.1%)
100,000 Amoco Corp. .......................... 6,837,500
100,000 Murphy Oil Corp. ..................... 4,375,000
80,000 Sun Co., Inc. ........................ 2,520,000
-------------
13,732,500
-------------
Finance (8.2%)
81,000 CCB Financial Corp. (b)............... 3,341,250
50,000 Federal National Mortgage
Association......................... 4,650,000
120,000 First American Corp. of Tennessee..... 4,162,500
175,000 Southtrust Corp. ..................... 3,740,625
-------------
15,894,375
-------------
Technology (15.6%)
130,000 Compaq Computer Corp. (a)............. 5,086,250
100,000 General Instrument Corp. ............. 3,087,500
85,000 Intel Corp. .......................... 9,541,250
65,000 Texas Instruments, Inc. .............. 7,515,625
<CAPTION>
SHARES DESCRIPTION VALUE
- ----------- -------------------------------------- -------------
</TABLE>
COMMON STOCKS, CONTINUED:
Technology, continued:
<TABLE>
<C> <S> <C>
$10,000 Vishay Intertechnology, Inc. (a)...... $ 653,460
40,000 Xerox Corp. .......................... 4,535,000
-------------
30,419,085
-------------
Transportation (1.2%)
100,000 Atlantic Southeast Airlines, Inc. .... 2,412,500
-------------
Utilities (10.6%)
120,000 AT&T Corp. ........................... 6,090,000
41,500 BellSouth Corp. ...................... 2,547,063
150,000 Enron Corp. .......................... 5,475,000
250,000 WorldCom, Inc. (a).................... 6,500,000
-------------
20,612,063
-------------
Total Common Stocks (cost--$128,330,615) 164,459,898
-------------
PREFERRED STOCKS (5.8%)
55,000 Ashland Oil Co., Covertible
Preferred, 3.13%.................... 3,245,000
75,000 Corning Delaware LP, Convertible
Preferred, 6.00%.................... 3,731,250
45,000 Ford Motor Co., Convertible
Preferred, 4.20%.................... 4,297,500
-------------
Total Preferred Stocks (cost--$11,095,795) 11,273,750
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ------------- ------------ --------------------- ---------------
<C> <C> <S> <C>
CORPORATE OBLIGATIONS (2.9%)
Avnet, Inc.
$2,800,000 6.00% 04/15/12 $ 3,097,500
Sports & Recreation, Inc.
3,250,000 4.25 11/01/00 2,474,063
---------------
Total Corporate Obligations
(cost--$6,410,210) 5,571,563
---------------
REPURCHASE AGREEMENTS (7.5%)
State Street Bank & Trust Co., dated 05/31/95,
repurchase price $14,592,229 (U.S. Treasury
Note: $14,540,000, 6.63%, 03/31/97)
14,590,000 5.50% 06/01/95 14,590,000
---------------
Total Repurchase Agreements
(cost--$14,590,000) 14,590,000
---------------
Total Investments (cost--$160,426,620 (c)) 195,905,211
---------------
---------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost ........................... 39,485,811
Gross unrealized loss for investments in which
cost exceeds value ........................... (4,007,220)
---------------
Net unrealized gain ............................ $ 35,478,591
---------------
---------------
</TABLE>
- ------------
(a) Non-income producing security.
(b) There are common stock rights attached to these securities.
(c) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
113
<PAGE>
- --------------------------------------------------------------------------------
PARAGON GULF SOUTH GROWTH FUND
THE ONE GROUP GULF SOUTH GROWTH FUND
- --------------------------------------------------------------------------------
PRO FORMA SCHEDULE OF PORTFOLIO INVESTMENTS MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- --------- ------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS (89.8%)
Basic Materials & Natural Resources (7.9%):
100,000 Albemarle Corp............................ $ 1,537,500
60,000 Georgia Gulf Corp......................... 1,822,500
65,000 Image Industries, Inc.(a)................. 682,500
50,000 Nucor Corp................................ 2,387,500
65,000 Shaw Group Inc............................ 528,125
------------
6,958,125
------------
Capital Equipment & Services (1.9%)
110,000 Union Switch & Signal, Inc. (a)........... 1,711,875
------------
Consumer Cyclical (16.2%)
120,000 Autozone, Inc.(a)......................... 2,790,000
75,000 Cameron Ashley, Inc.(a)................... 843,750
40,000 Dollar General Corp....................... 1,135,000
100,000 Heilig Meyers Co.......................... 2,387,500
50,000 Michaels Stores, Inc.(a).................. 1,131,250
135,000 Office Depot, Inc.(a)..................... 3,240,000
114,000 River Oaks Furniture, Inc.(a)............. 1,425,000
120,000 Sports & Recreation, Inc.(a).............. 1,380,000
------------
14,332,500
------------
Consumer Noncyclical (13.1%)
100,000 Apple South, Inc.......................... 1,737,500
25,000 Coastal Physician Group, Inc.(a).......... 390,625
125,000 Coventry Corp.(a)......................... 2,578,125
75,000 Cracker Barrel Old Country Store.......... 1,828,125
50,000 HeathWise of America, Inc.(a)............. 1,462,500
87,000 Inphynet Medical Management, Inc.(a)...... 1,413,750
800,000 Isolyser Company, Inc.(a)................. 2,120,000
------------
11,530,625
------------
Energy (7.9%)
100,000 Benton Oil & Gas Co.(a)................... 1,312,500
100,000 Input/Output Inc.(a)...................... 3,400,000
95,000 Landmark Graphics Corp.(a)................ 2,244,375
------------
6,956,875
------------
Finance (21.9%)
75,000 American Federal Bank, FSB................ 1,050,000
45,000 Bankers First Corp........................ 1,215,000
55,000 First Financial Management Corp........... 3,905,000
20,000 Leader Financial Corp..................... 540,000
80,000 Medaphis Corp.(a)......................... 4,820,000
120,000 Regional Acceptance Corp.(a).............. 1,890,000
85,000 Stewart Enterprises, Inc.................. 2,550,000
77,000 United Companies Financial Corp........... 3,407,250
------------
19,377,250
------------
<CAPTION>
SHARES DESCRIPTION VALUE
- --------- ------------------------------------------ ------------
</TABLE>
COMMON STOCKS, CONTINUED:
<TABLE>
<C> <S> <C>
Technology (8.0%)
60,000 Acxiom Corp.(a)........................... $ 1,170,000
40,000 DSC Communications Corp.(a)(b)............ 1,480,000
55,000 Mobile Telecommunications Technology
Corp.(a)................................ 1,237,500
100,000 SCI Systems, Inc.(a)...................... 2,075,000
60,000 Scientific-Atlanta, Inc................... 1,117,500
------------
7,080,000
------------
Transportation (4.8%)
120,000 Atlantic Southeast Airlines, Inc.......... 2,895,000
75,000 Miller Industries, Inc.(a)................ 1,378,125
------------
4,273,125
------------
Utilities (8.1%)
100,000 Communications Central, Inc.(a)........... 825,000
100,000 EqualNet Holding Corp.(a)................. 1,637,500
180,000 WorldCom, Inc.(a)......................... 4,680,000
------------
7,142,500
------------
Total Common Stocks
(cost--$61,044,615) 79,362,875
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST
AMOUNT RATE MATURITY DATE
- ----------- ----------- -------------------------
<C> <C> <S> <C>
REPURCHASE AGREEMENTS (9.7%)
State Street Bank & Trust Company, dated 05/31/95,
repurchase price $8,531,303 (U.S. Treasury Note:
$8,505,000, 6.63%, 03/31/97)
8,530,000 5.50% 06/01/95 8,530,000
---------------
Total Repurchase Agreements
(cost--$8,530,000) 8,530,000
---------------
Total Investments
(cost--$69,574,615(c)) 87,892,875
---------------
---------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost............................. 23,435,921
Gross unrealized loss for investments in which
cost exceeds value............................. (5,117,661)
---------------
Net unrealized gain.............................. $ 18,318,260
---------------
---------------
</TABLE>
- ------------
(a) Non-income producing security.
(b) There are common stock rights attached to these securities.
(c) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
114
<PAGE>
PARAGON PORTFOLIO
PARAGON TREASURY MONEY MARKET FUND
PARAGON SHORT-TERM GOVERNMENT FUND
PARAGON INTERMEDIATE-TERM BOND FUND
PARAGON VALUE EQUITY INCOME FUND
PARAGON LOUISIANA TAX-FREE FUND
PARAGON VALUE GROWTH FUND
PARAGON GULF SOUTH GROWTH FUND
THE ONE GROUP
THE ONE GROUP U.S. TREASURY SECURITIES MONEY MARKET FUND
THE ONE GROUP LIMITED VOLATILITY BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
THE ONE GROUP INCOME EQUITY FUND
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND
THE ONE GROUP VALUE GROWTH FUND
THE ONE GROUP GULF SOUTH GROWTH FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
------------------------
1. BASIS OF COMBINATION:
The unaudited Pro Forma Combining Statements of Assets and Liabilities,
Statements of Operations and Schedules of Portfolio Investments and the
Financial Highlights reflect the accounts of Paragon Portfolio: Paragon Treasury
Money Market Fund ("Paragon Money Market"), Paragon Short-Term Government Fund
("Paragon Government"), Paragon Intermediate-Term Bond Fund ("Paragon Bond"),
Paragon Value Equity Income Fund ("Paragon Equity"), Paragon Louisiana Tax-Free
Fund ("Paragon Louisiana"), Paragon Value Growth Fund ("Paragon Growth"), and
Paragon Gulf South Growth Fund ("Paragon Gulf South") (collectively, the
"Paragon Funds") and The One Group: The One Group U.S. Treasury Securities Money
Market Fund ("One Group Money Market"), The One Group Limited Volatility Bond
Fund ("One Group Limited Volatility"), The One Group Government Bond Fund ("One
Group Bond"), The One Group Income Equity Fund ("One Group Equity"), The One
Group Louisiana Municipal Bond Fund ("One Group Louisiana"), The One Group Value
Growth Fund ("One Group Growth") and The One Group Gulf South Growth Fund ("One
Group Gulf South") (collectively, the "One Group Funds") as if the proposed
reorganization occurred as of and for the year ended June 30, 1995 for One Group
Money Market, One Group Limited Volatility, One Group Bond and One Group Equity;
and as of and for the year ended May 31, 1995 for One Group Louisiana, One Group
Growth and One Group Gulf South. As of May 31, 1995, One Group Louisiana, One
Group Growth and One Group Gulf South had not yet commenced operations. These
statements have been derived from books and records utilized in calculating
daily net asset value at June 30, 1995 and May 31, 1995.
CONTINUED
115
<PAGE>
- --------------------------------------------------------------------------------
PARAGON PORTFOLIO
THE ONE GROUP
- --------------------------------------------------------------------------------
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Continued)
(Unaudited)
The pro forma statements give effect to the proposed transfers of the assets and
stated liabilities of each Paragon Fund in exchange for shares of the
corresponding One Group Fund as follows:
<TABLE>
<CAPTION>
SHAREHOLDERS OF WILL RECEIVE SHARES OF
- --------------------------- -----------------------------------------------------------------
<S> <C>
Paragon Money Market One Group Money Market
Paragon Government One Group Limited Volatility
Paragon Bond One Group Bond
Paragon Equity One Group Equity
Paragon Louisiana One Group Louisiana
Paragon Growth One Group Growth
Paragon Gulf South One Group Gulf South
</TABLE>
Following the proposed transfer of assets, shares of each One Group Fund will be
distributed to shareholders of each corresponding Paragon Fund. The Paragon
Funds will then be dissolved and liquidated. As a result of the transactions,
each shareholder of a Paragon Fund will receive on a tax-free basis, a number of
full and fractional shares of the corresponding One Group Fund equal at the date
of the exchange to the value of the net assets of each Paragon Fund attributable
to the shareholder. If the Paragon Fund shareholder of record is a financial
organization authorized to act in a fiduciary, advisory, custodial, agency or
similar capacity, that shareholder will receive One Group Fiduciary Class
Shares. All other Paragon Fund Class A shareholders will receive One Group Class
A Shares. Shareholders of record holding Paragon Fund Class B Shares, other than
Class B shareholders of Paragon Money Market, will receive One Group Class B
shares. Paragon Money Market Class B shareholders will receive One Group Money
Market Class A Shares.
For purposes of determining the Proforma adjusted shares as of June 30, 1995,
the percentages of Paragon Class A shareholders receiving One Group Fiduciary
Class Shares were 11%, 34%, 39%, and 43% for the Money Market, Government, Bond
and Equity Funds, respectively. Those percentages represent the actual
percentages as of December 31, 1995.
Under the pooling method of accounting for business combinations under generally
accepted accounting principles, the basis on the part of the One Group Funds, of
the assets of the Paragon Funds will be the historical cost basis of such assets
on the closing date of the transaction. For accounting purposes, the One Group
Funds are the survivors of this reorganization. The pro forma statements reflect
the combined results of operations of the Paragon Funds and the One Group Funds.
However, should such reorganization be effected, the statements of operations of
the One Group Funds will not be restated for precombination period results of
the corresponding Paragon Funds.
All fees and expenses, including accounting expenses, portfolio transfer taxes
(if any) or any other similar expenses incurred in connection with the
consummation by The One Group and Paragon Portfolio of the transactions
contemplated by the proposed Agreement and Plan of Reorganization will be paid
by the party directly incurring such fees and expenses, except that the costs of
proxy materials and proxy solicitation, including legal expenses, will be borne
by One Group; provided however, that such expenses will in any event be paid by
the party directly incurring such expenses if and to the extent that the payment
by the other party of such expenses would result in the disqualification of an
One Group or Paragon Fund, as the case may be, as a regulated investment company
within the meaning of Section 851 of the Internal Revenue Code.
The Pro Forma Combining Statements of Assets and Liabilities, Statements of
Operations and Schedules of Portfolio Investments and the Financial Highlights
should be read in conjunction with the historical financial statements of the
funds incorporated by reference in the Statement of Additional Information.
The Paragon Funds are portfolios of Paragon Portfolio, an open-end management
investment company consisting of eleven funds. Likewise, the One Group Funds are
portfolios of The One Group, an open-end management investment company
consisting of thirty-two separate funds.
CONTINUED
116
<PAGE>
- --------------------------------------------------------------------------------
PARAGON PORTFOLIO
THE ONE GROUP
- --------------------------------------------------------------------------------
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Continued)
(Unaudited)
EXPENSES
PARAGON FUNDS:
Paragon Government, Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon
Growth, and Paragon Gulf South have entered into Investment Advisory Agreements
with Premier Investment Advisors, L.L.C., ("Premier"), a subsidiary of Premier
Bank N.A. Paragon Money Market has entered into an Investment Advisory Agreement
with Goldman Sachs Asset Management ("GSAM"), a separate operating division of
Goldman, Sachs & Co. ("Goldman Sachs"), and into a Subadvisory Agreement with
Premier and GSAM. Pursuant to the terms of the Investment Advisory Agreements,
Premier and GSAM manage the investments and make investment decisions for each
of the respective funds. For these services, each of the Paragon Funds pays its
investment adviser a monthly fee at the following annual rate of the
corresponding Fund's average daily net assets:
<TABLE>
<S> <C>
Paragon Money Market................................................................ 0.20%
Paragon Government.................................................................. 0.50%
Paragon Bond........................................................................ 0.50%
Paragon Equity...................................................................... 0.65%
Paragon Louisiana................................................................... 0.50%
Paragon Growth...................................................................... 0.65%
Paragon Gulf South.................................................................. 0.65%
</TABLE>
With respect to Paragon Louisiana, Premier has advised Paragon Portfolio that it
has voluntarily agreed to reduce its advisory fee from 0.50% to 0.40% of the
Fund's average daily net assets. For the year ended May 31, 1995, Premier waived
$199,143 of its advisory fee for Paragon Louisiana.
GSAM serves as Paragon Portfolio's administrator pursuant to an Administration
Agreement. Under the Administration Agreement, GSAM administers the business
affairs of Paragon Portfolio. As compensation for services rendered under the
Administration Agreement, each Paragon Fund pays GSAM a fee, computed daily and
payable monthly, at the annual rate of 0.15% of the average daily net assets of
the corresponding Fund. With respect to Paragon Louisiana, GSAM has advised
Paragon Portfolio that, it has voluntarily agreed to reduce its administration
fee from 0.15% to 0.10% of the Fund's average daily net assets. For the year
ended May 31, 1995, GSAM waived $99,571 of its administration fee for Paragon
Louisiana.
Goldman Sachs serves as the Distributor of shares of the Paragon Funds pursuant
to a Distribution Agreement with Paragon Portfolio. Goldman Sachs may receive a
portion of the sales load imposed on the sale of Class A Shares of the variable
net asset portfolios. Paragon Portfolio has also adopted, on behalf of each
Paragon Fund, a Distribution Plan for Class B Shares (the "Class B Plan") in
accordance with Rule 12b-1 under the Investment Company Act of 1940 (the "1940
Act"). Under the Class B Plan, each Paragon Fund pays Goldman Sachs a quarterly
fee for distribution services with respect to the Class B Shares equal to, on an
annual basis, 0.75% of each Paragon Fund's average daily net assets attributable
to the Class B Shares of such Fund.
ONE GROUP FUNDS:
The One Group 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 each One Group Fund's average daily net assets as
follows:
<TABLE>
<S> <C>
One Group Money Market.............................................................. 0.35%
One Group Limited Volatility........................................................ 0.60%
One Group Bond...................................................................... 0.45%
One Group Equity.................................................................... 0.74%
</TABLE>
CONTINUED
117
<PAGE>
- --------------------------------------------------------------------------------
PARAGON PORTFOLIO
THE ONE GROUP
- --------------------------------------------------------------------------------
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Continued)
(Unaudited)
The One Group 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 combined net assets of the Funds of The One Group; 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 One Group. Also effective
April 1, 1995, the Advisor became the Sub-Administrator to The One Group
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 One Group 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 One Group'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 One Group Fund.
The Advisor, Administrator, and Distributor voluntarily agreed to waive a
portion of their fees and to reimburse the One Group 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 One Group Funds (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT
ADVISORY ADMINISTRATION 12B-1 FEES 12B-1 FEES
FEES FEES (CLASS A) (CLASS B)
----------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
One Group Money Market.................................. $ 1,957 $ 122 $ 66 --
One Group Limited Volatility............................ $ 1,393 $ 2 $ 14 $ 6
One Group Bond.......................................... $ 39 $ 15 $ 4 $ 1
One Group Equity........................................ $ 7 -- $ 12 --
</TABLE>
PRO FORMA ADJUSTMENTS AND PRO FORMA COMBINED COLUMNS
The pro forma adjustments and pro forma combined columns of the statements of
operations reflect the adjustments necessary to show expenses at the rates which
would have been in effect if the Paragon Funds were included in the One Group
Funds for the year ended June 30, 1995. Investment advisory, administration and
12b-1 fees in the pro forma combined column are calculated at the rates in
effect for the One Group Funds based upon the combined net assets of the Paragon
Funds and the One Group Funds. All other pro forma combined expenses are based
on the combined net assets of the funds and are, therefore, equal to the sum of
the Paragon Funds' expenses and the One Group Funds' expenses, and no reductions
of expenses other than incremental fee waivers have been included.
CONTINUED
118
<PAGE>
- --------------------------------------------------------------------------------
PARAGON PORTFOLIO
THE ONE GROUP
- --------------------------------------------------------------------------------
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Continued)
(Unaudited)
For the year ended June 30, 1995, a portion of the investment advisory,
administration and 12b-1 fees on a pro forma combined basis for each of the One
Group Funds were waived as follows (ratio of expenses waived to average net
assets):
<TABLE>
<CAPTION>
RATIO OF RATIO OF
RATIO OF EXPENSES WAIVED EXPENSES WAIVED
EXPENSES WAIVED - - -
FIDUCIARY CLASS CLASS A CLASS B
------------------- ---------------- ----------------
<S> <C> <C> <C>
One Group Money Market............................................ 0.18% 0.28% --
One Group Limited Volatility...................................... 0.33% 0.43% 0.58%
One Group Bond.................................................... 0.02% 0.12% 0.12%
One Group Equity.................................................. 0.00% 0.10% 0.01%
</TABLE>
The pro forma schedules of portfolio investments give effect to the proposed
transfer of such assets as if the reorganization had occurred at June 30, 1995
for One Group Money Market, One Group Limited Volatility, One Group Bond and One
Group Equity and at May 31, 1995 for One Group Louisiana, One Group Growth and
One Group Gulf South.
2. PORTFOLIO VALUATION:
ONE GROUP FUNDS:
ONE GROUP MONEY MARKET: Investments of One Group Money Market are valued
utilizing the amortized cost method permitted in accordance with Rule 2a-7 under
the Investment Company Act of 1940. Under the amortized cost method, discount or
premium is amortized on a constant basis to the maturity of the security. In
addition, One Group Money Market may not (a) purchase any instrument with a
remaining maturity greater than thirteen months (except for investments subject
to a demand feature or certain securities with variable rates of interest), or
(b) maintain a dollar weighted average portfolio maturity which exceeds 90 days.
ONE GROUP LIMITED VOLATILITY, ONE GROUP BOND AND ONE GROUP EQUITY: 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. 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, combined with
accrued interest, 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 adviser 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.
PARAGON FUNDS:
PARAGON MONEY MARKET: Portfolio securities of Paragon Money Market are valued
at amortized cost which approximates market value. Under this method, all
investments purchased at a discount or premium are valued by amortizing the
difference between original purchase price and maturity value of the issue over
the period to maturity.
PARAGON GOVERNMENT, PARAGON BOND, PARAGON EQUITY, PARAGON LOUISIANA, PARAGON
GROWTH, AND PARAGON GULF SOUTH: Equity securities traded on a national
securities exchange or the National Association of Securities Dealers
CONTINUED
119
<PAGE>
- --------------------------------------------------------------------------------
PARAGON PORTFOLIO
THE ONE GROUP
- --------------------------------------------------------------------------------
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Continued)
(Unaudited)
Automated Quotation System ("NASDAQ") are valued at their last sale price on the
principal exchange on which they are traded or NASDAQ (if NASDAQ is the
principal market for such securities) on the valuation day or, if no sale
occurs, at the mean between the closing bid and asked prices. Unlisted equity
securities for which market quotations are available are valued at the mean
between the most recent bid and asked prices. Fixed income securities are valued
at prices supplied by an independent pricing service which reflect
broker/dealer-supplied valuations and electronic data processing techniques.
Short-term debt obligations maturing in 60 days or less are valued at amortized
cost. Other assets and assets whose market values, in the investment adviser's
opinion, do not reflect fair value are valued at fair value using methods
determined in good faith by the Board of Trustees of Paragon Portfolio.
3. CAPITAL SHARES:
The pro forma net asset values per share assume the issuance of shares of The
One Group Funds which would have occurred at June 30, 1995 and May 31, 1995 in
connection with the proposed reorganization. The pro forma number of shares
outstanding consists of the following:
<TABLE>
<CAPTION>
SHARES ADDITIONAL SHARES
OUTSTANDING AT ASSUMED IN THE
JUNE 30, 1995 REORGANIZATION PROFORMA SHARES AT
(000) (000) JUNE 30, 1995 (000)
-------------- ------------------ -------------------
<S> <C> <C> <C>
One Group Money Market................................. 1,276,810 299,200 1,576,010
One Group Limited Volatility........................... 40,462 12,412 52,874
One Group Bond......................................... 39,804 32,171 71,975
One Group Equity....................................... 12,439 7,984 20,423
SHARES ADDITIONAL SHARES
OUTSTANDING AT ASSUMED IN THE
MAY 31, 1995 REORGANIZATION PROFORMA SHARES AT
(000) (000) MAY 31, 1995 (000)
-------------- ------------------ -------------------
One Group Louisiana.................................... 0 18,253 18,253
One Group Growth....................................... 0 13,062 13,062
One Group Gulf South................................... 0 5,496 5,496
</TABLE>
CONTINUED
120
<PAGE>
- --------------------------------------------------------------------------------
PARAGON TREASURY MONEY MARKET FUND
THE ONE GROUP U.S. TREASURY SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Unaudited)
<TABLE>
<CAPTION>
TREASURY MONEY MARKET FUND U.S. TREASURY
------------------------------------ SECURITIES MONEY
MARKET FUND
YEAR ---------------------
ENDED SIX MONTHS ONE MONTH
NOVEMBER ENDED MAY ENDED JUNE YEAR ENDED JUNE 30,
30, 1994 31, 1995 30, 1995 1995
-------- ---------- ------------ ---------------------
CLASS A CLASS A CLASS A FIDUCIARY CLASS A
-------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- ---------- ------------ ---------- --------
Investment Activities
Net investment income...................... 0.040 0.030 0.050 0.047
-------- ---------- ------------ ---------- --------
Distributions
Net investment income...................... (0.040) (0.030) (0.050) (0.047)
-------- ---------- ------------ ---------- --------
NET ASSET VALUE,
END OF PERIOD.............................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- ---------- ------------ ---------- --------
-------- ---------- ------------ ---------- --------
Total Return................................. 3.68% 5.73%(a) 0.96% 5.07% 4.81%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......... $296,365 $308,522 $299,250 $1,178,091 $98,723
Ratio of expenses to average net assets.... 0.43% 0.41%(a) 0.41%(a)(b) 0.41% 0.66%
Ratio of net investment income to average
net assets................................. 3.60% 5.54%(a) 5.54%(a)(b) 4.96% 4.71%
Ratio of expenses to average net assets*... 0.43% 0.41%(a) 0.41%(a)(b) 0.59% 0.94%
Ratio of net investment income to average
net assets*................................ 3.60% 5.54%(a) 5.54%(a)(b) 4.78% 4.43%
</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) Annualized.
(b) Ratios are from six months ended 5/31/95 representing most current available
information.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
121
<PAGE>
- --------------------------------------------------------------------------------
PARAGON SHORT-TERM GOVERNMENT FUND
THE ONE GROUP LIMITED VOLATILITY BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Unaudited)
<TABLE>
<CAPTION>
SHORT-TERM GOVERNMENT FUND
--------------------------------------------------------------------------
YEAR
YEAR ENDED SIX
ENDED NOVEMBER SIX MONTHS MONTHS ONE MONTH ONE MONTH
NOVEMBER 30, ENDED ENDED ENDED ENDED
30, 1994 MAY 31, MAY 31, JUNE 30, JUNE 30,
1994 --------- 1995 1995 1995 1995
-------- CLASS B ---------- --------- ------------ -----------
CLASS A (b) CLASS A CLASS B CLASS A CLASS B
-------- --------- ---------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............................. $ 10.34 $ 9.95 $ 9.85 $ 9.85 $ 10.13 $10.13
-------- --------- ---------- --------- ------------ -----------
Investment Activities
Net investment income........................... 0.50 0.05 0.27 0.24 0.04 0.04
Net realized and unrealized gains
(losses) from investments..................... (0.49) (0.10) 0.28 0.28 (0.02) (0.02)
-------- --------- ---------- --------- ------------ -----------
Total from Investment Activities.................. 0.01 (0.05) 0.55 0.52 0.02 0.02
-------- --------- ---------- --------- ------------ -----------
Distributions
Net investment income........................... (0.50) (0.05) (0.27) (0.24) (0.05) (0.04)
In excess of net investment income..............
-------- --------- ---------- --------- ------------ -----------
Total Distributions............................... (0.50) (0.05) (0.27) (0.24) (0.05) (0.04)
-------- --------- ---------- --------- ------------ -----------
NET ASSET VALUE,
END OF PERIOD................................... $ 9.85 $ 9.85 $ 10.13 $10.13 $ 10.10 $10.11
-------- --------- ---------- --------- ------------ -----------
-------- --------- ---------- --------- ------------ -----------
Total Return (Excluding Sales Charge)............. 0.12% (0.39)% 5.62% 5.24% 5.62%(d) 5.24%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............... $142,958 $ 41 $130,665 $ 164 $130,355 $ 308
Ratio of expenses to average net
assets........................................ 0.77% 1.53%(c) 0.78%(c) 1.53%(c) 0.78%(c)(d) 1.53%(c)(d)
Ratio of net investment income to average net
assets........................................ 4.89% 4.92%(c) 5.54%(c) 4.72%(c) 5.54%(c)(d) 4.72%(c)(d)
Ratio of expenses to average net assets *....... 0.77% 1.53%(c) 0.78%(c) 1.53%(c) 0.78%(c)(d) 1.53%(c)(d)
Ratio of net investment income to average net
assets *...................................... 4.89% 4.92%(c) 5.54%(c) 4.72%(c) 5.54%(c)(d) 4.72%(c)(d)
Portfolio Turnover.............................. 40.00% 40.00% 9.00% 9.00% 9.00%(d) 9.00%(d)
<CAPTION>
LIMITED VOLATILITY BOND FUND
----------------------------------------
YEAR ENDED JUNE 30, 1995
----------------------------------------
SERVICE
FIDUCIARY CLASS A CLASS B (a)
-------- ------- ------- ---------
<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)
-------- ------- ------- ---------
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 (Excluding Sales Charge)............. 7.96% 7.67% 7.18% (a)
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%(c)
Ratio of net investment income to average net
assets........................................ 5.82% 5.57% 5.10% 5.55%(c)
Ratio of expenses to average net assets *....... 0.85% 1.20% 1.86% 1.68%(c)
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%
</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 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%.
(b) Class B Share activity commenced October 19, 1994.
(c) Annualized.
(d) Information is from six months ended 5/31/95.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
122
<PAGE>
- --------------------------------------------------------------------------------
PARAGON INTERMEDIATE-TERM BOND FUND
THE ONE GROUP GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Unaudited)
<TABLE>
<CAPTION>
INTERMEDIATE-TERM BOND FUND
-------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED SIX MONTHS SIX MONTHS ONE MONTH ONE MONTH
NOVEMBER 30, NOVEMBER 30, ENDED MAY 31, ENDED MAY ENDED JUNE 30, ENDED JUNE
1994 1994 1995 31, 1995 1995 30, 1995
------------ ------------ ------------- ------------ -------------- -------------
CLASS A CLASS B (b) CLASS A CLASS B CLASS A CLASS B
------------ ------------ ------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD.......... $ 10.84 $ 9.74 $ 9.54 $ 9.56 $ 10.29 $10.32
------------ ------ ------------- ------------ -------------- ------
Investment
Activities
Net investment
income.......... 0.66 0.10 0.34 0.30 0.05 0.05
Net realized and
unrealized gains
from
investments..... (1.16) (0.18) 0.75 0.76 (0.02)
------------ ------ ------------- ------------ -------------- ------
Total from
Investment
Activities........ (0.50) (0.08) 1.09 1.06 0.03 0.05
------------ ------ ------------- ------------ -------------- ------
Distributions
Net investment
income.......... (0.66) (0.10) (0.34) (0.30) (0.06) (0.04)
In excess of net
investment
income.......... (0.14)
------------ ------ ------------- ------------ -------------- ------
Total
Distributions..... (0.80) (0.10) (0.34) (0.30) (0.06) (0.04)
------------ ------ ------------- ------------ -------------- ------
NET ASSET VALUE,
END OF PERIOD..... $ 9.54 $ 9.56 $ 10.29 $ 10.32 $ 10.26 $10.33
------------ ------ ------------- ------------ -------------- ------
------------ ------ ------------- ------------ -------------- ------
Total Return
(Excluding Sales
Charge)........... (4.77)% (0.76)% 11.60% 11.30% 11.60%(d) 11.30%(d)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end
of period
(000)........... $297,123 $ 250 $314,924 $ 687 $314,746 $ 794
Ratio of expenses
to average net
assets.......... 0.76% 1.52%(c) 0.76%(c) 1.51%(c) 0.76%(c)(d) 1.51%(c)(d)
Ratio of net
investment
income to
average net
assets.......... 6.56% 6.38%(c) 6.91%(c) 6.13%(c) 6.91%(c)(d) 6.13%(c)(d)
Ratio of expenses
to average net
assets *........ 0.76% 1.52%(c) 0.76%(c) 1.51%(c) 0.76%(c)(d) 1.51%(c)(d)
Ratio of net
investment
income to
average net
assets *........ 6.56% 6.38%(c) 6.91%(c) 6.13%(c) 6.91%(c)(d) 6.13%(c)(d)
Portfolio
Turnover.......... 38.00% 38.00% 18.00% 18.00% 18.00%(d) 18.00%(d)
<CAPTION>
GOVERNMENT BOND FUND
-------------------------------------------------
FIDUCIARY CLASS A CLASS B SERVICE (a)
--------- --------- -------- --------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD.......... $ 9.35 $ 9.35 $ 9.35 $ 9.32
--------- --------- -------- ------
Investment
Activities
Net investment
income.......... 0.62 0.61 0.55 0.44
Net realized and
unrealized gains
from
investments..... 0.46 0.45 0.46 0.46
--------- --------- -------- ------
Total from
Investment
Activities........ 1.08 1.06 1.01 0.90
--------- --------- -------- ------
Distributions
Net investment
income.......... (0.61) (0.59) (0.55) (0.44)
In excess of net
investment
income.......... (0.01) (0.01)
--------- --------- -------- ------
Total
Distributions..... (0.62) (0.60) (0.55) (0.44)
--------- --------- -------- ------
NET ASSET VALUE,
END OF PERIOD..... $ 9.81 $ 9.81 $ 9.81 $ 9.78
--------- --------- -------- ------
--------- --------- -------- ------
Total Return
(Excluding Sales
Charge)........... 12.04% 11.84% 11.20% (a)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end
of period
(000)........... $379,826 $ 8,130 $ 2,513
Ratio of expenses
to average net
assets.......... 0.71% 0.97% 1.62% 1.64%(c)
Ratio of net
investment
income to
average net
assets.......... 6.65% 6.46% 5.76% 6.65%(c)
Ratio of expenses
to average net
assets *........ 0.73% 1.09% 1.74% 1.66%(c)
Ratio of net
investment
income to
average net
assets *........ 6.63% 6.34% 5.64% 6.62%(c)
Portfolio
Turnover.......... 106.14% 106.14% 106.14% 106.14%
</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 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%.
(b) Class B Share activity commenced October 19, 1994.
(c) Annualized.
(d) Information is from six months ended 5/31/95.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
123
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE EQUITY INCOME FUND
THE ONE GROUP INCOME EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
VALUE EQUITY INCOME FUND
-----------------------------------------------------------------------------
YEAR
YEAR ENDED SIX
ENDED NOVEMBER SIX MONTHS MONTHS ONE MONTH
NOVEMBER 30, ENDED ENDED ENDED ONE MONTH
30, 1994 MAY 31, MAY 31, JUNE 30, ENDED
1994 --------- 1995 1995 1995 JUNE 30, 1995
-------- CLASS B ----------- --------- ------------ --------------
CLASS A (a) CLASS A CLASS B CLASS A CLASS B
-------- --------- ----------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.............. $ 12.74 $12.01 $ 11.55 $11.56 $12.93 $ 12.94
-------- --------- ----------- --------- ------------ ------
Investment Activities
Net investment income............ 0.30 0.04 0.16 0.11 0.03 0.02
Net realized and unrealized gains
from investments............... (0.54) (0.45) 1.75 1.76 0.45 0.46
-------- --------- ----------- --------- ------------ ------
Total from Investment Activities (0.24) (0.41) 1.91 1.87 0.48 0.48
-------- --------- ----------- --------- ------------ ------
Distributions
Net investment income............ (0.34) (0.04) (0.16) (0.12) (0.03) (0.02)
In excess of net investment
income.........................
Net realized gains............... (0.61) (0.37) (0.37)
-------- --------- ----------- --------- ------------ ------
(0.95) (0.04) (0.53) (0.49) (0.03) (0.02)
-------- --------- ----------- --------- ------------ ------
Total Distributions................ $ 11.55 $11.56 $ 12.93 $12.94 $13.38 $ 13.40
-------- --------- ----------- --------- ------------ ------
-------- --------- ----------- --------- ------------ ------
NET ASSET VALUE, END OF PERIOD..... (1.69 )% (3.40)% 17.16% 16.74% 17.16%(c) 16.74%(c)
-------- --------- ----------- --------- ------------ ------
Total Return (excluding sales
charge)..........................
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000).......................... $103,364 $ 31 $116,282 $ 243 $120,400 $ 303
Ratio of expenses to average net
assets......................... 0.93 % 1.67%(b) 0.90%(b) 1.65%(b) 0.90%(b)(c) 1.65%(b)(c)
Ratio of net investment income to
average net assets............. 2.50 % 1.71%(b) 2.62%(b) 1.81%(b) 2.62%(b)(c) 1.81%(b)(c)
Ratio of expenses to average net
assets *....................... 0.93 % 1.67%(b) 0.90%(b) 1.65%(b) 0.90%(b)(c) 1.65%(b)(c)
Ratio of net investment income to
average net assets *........... 2.50 % 1.71%(b) 2.62%(b) 1.81%(b) 2.62%(b)(c) 1.81%(b)(c)
Portfolio Turnover................. 49.00 % 49.00% 17.00% 17.00% 17.00%(c) 17.00%(c)
<CAPTION>
INCOME EQUITY FUND
---------------------------------
YEAR ENDED JUNE 30, 1995
---------------------------------
FIDUCIARY CLASS A CLASS B
--------- --------- ---------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.............. $ 13.22 $ 13.20 $ 13.23
--------- --------- ---------
Investment Activities
Net investment income............ 0.40 0.03 0.26
Net realized and unrealized gains
from investments............... 2.28 2.29 2.29
--------- --------- ---------
Total from Investment Activities 2.68 2.32 2.55
--------- --------- ---------
Distributions
Net investment income............ (0.40) (0.03) (0.25)
In excess of net investment
income......................... (0.01) (0.02)
Net realized gains............... (0.37) (0.37) (0.37)
--------- --------- ---------
(0.77) (0.41) (0.64)
--------- --------- ---------
Total Distributions................ $ 15.13 $ 15.11 $ 15.14
--------- --------- ---------
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD..... 21.04% 20.79% 19.91%
--------- --------- ---------
Total Return (excluding sales
charge)..........................
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000).......................... $170,919 $ 13,793 $ 3,468
Ratio of expenses to average net
assets......................... 1.01% 1.26% 2.01%
Ratio of net investment income to
average net assets............. 2.85% 2.61% 1.88%
Ratio of expenses to average net
assets *....................... 1.01% 1.36% 2.02%
Ratio of net investment income to
average net assets *........... 2.85% 2.51% 1.87%
Portfolio Turnover................. 4.03% 4.03% 4.03%
</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 B Share activity commenced October 19, 1994.
(b) Annualized.
(c) Information is from six months ended 5/31/95.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
124
<PAGE>
- --------------------------------------------------------------------------------
PARAGON LOUISIANA TAX-FREE FUND
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
LOUISIANA
TAX-FREE FUND
-------------
CLASS A
-------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................................................................................... $ 10.47
-------------
Investment Activities
Net investment income................................................................................... 0.53
Net realized and unrealized gains from investments...................................................... 0.12
-------------
Total from Investment Activities.......................................................................... 0.65
-------------
Distributions
Net investment income................................................................................... (0.53)
-------------
Total Distributions....................................................................................... (0.53)
-------------
NET ASSET VALUE, END OF PERIOD............................................................................ $ 10.59
-------------
-------------
Total Return (Excluding Sales Charge)..................................................................... 6.47%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................................................... $ 192,390
Ratio of expenses to average net assets (b)............................................................. 0.65%
Ratio of net investment income to average net assets (b)................................................ 5.15%
Ratio of expenses to average net assets* (b)............................................................ 0.80%
Ratio of net investment income to average net assets* (b)............................................... 5.00%
Portfolio Turnover...................................................................................... 21.00%
<CAPTION>
CLASS B (A)
-------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................................................................................... $ 10.41
-------------
Investment Activities
Net investment income................................................................................... 0.32
Net realized and unrealized gains from investments...................................................... 0.21
-------------
Total from Investment Activities.......................................................................... 0.53
-------------
Distributions
Net investment income................................................................................... (0.32 )
-------------
Total Distributions....................................................................................... (0.32 )
-------------
NET ASSET VALUE, END OF PERIOD............................................................................ $ 10.62
-------------
-------------
Total Return (Excluding Sales Charge)..................................................................... 5.20%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................................................... $ 932
Ratio of expenses to average net assets (b)............................................................. 1.40%
Ratio of net investment income to average net assets (b)................................................ 4.36%
Ratio of expenses to average net assets* (b)............................................................ 1.55%
Ratio of net investment income to average net assets* (b)............................................... 4.21%
Portfolio Turnover...................................................................................... 21.00%
</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 B Share activity commenced on September 16, 1994.
(b) Information is from six months ended 5/31/95.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
125
<PAGE>
- --------------------------------------------------------------------------------
PARAGON VALUE GROWTH FUND
THE ONE GROUP VALUE GROWTH FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
VALUE
GROWTH FUND
-----------
CLASS A
-----------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................................................................ $ 14.58
-----------
Investment Activities
Net investment income...................................................................................... 0.22
Net realized and unrealized gains from investments......................................................... 0.76
-----------
Total from Investment Activities............................................................................. 0.98
-----------
Distributions
Net investment income...................................................................................... (0.24)
-----------
Total Distributions.......................................................................................... (0.24)
-----------
NET ASSET VALUE, END OF PERIOD............................................................................... $ 14.90
-----------
-----------
Total Return (Excluding Sales Charge)........................................................................ 7.30%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................................................................... $ 193,134
Ratio of expenses to average net assets (b)................................................................ 0.95%
Ratio of net investment income to average net assets (b)................................................... 1.61%
Portfolio Turnover......................................................................................... 51.00%
<CAPTION>
CLASS B (A)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................................................................ $ 14.98
------
Investment Activities
Net investment income...................................................................................... 0.08
Net realized and unrealized gains from investments......................................................... 0.35
------
Total from Investment Activities............................................................................. 0.43
------
Distributions
Net investment income...................................................................................... (0.09)
------
Total Distributions.......................................................................................... (0.09)
------
NET ASSET VALUE, END OF PERIOD............................................................................... $ 14.88
------
------
Total Return (Excluding Sales Charge)........................................................................ 3.27%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................................................................... $ 1,453
Ratio of expenses to average net assets (b)................................................................ 1.70%
Ratio of net investment income to average net assets (b)................................................... 0.88%
Portfolio Turnover......................................................................................... 51.00%
</TABLE>
- ---------
(a) Class B Share activity commenced on September 9, 1994.
(b) Information is from six months ended 5/31/95.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
126
<PAGE>
- --------------------------------------------------------------------------------
PARAGON GULF SOUTH GROWTH FUND
THE ONE GROUP GULF SOUTH GROWTH FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
GULF SOUTH
GROWTH FUND
-------------
CLASS A
-------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................................................................................... $ 15.93
-------------
Investment Activities
Net investment income................................................................................... (0.05)
Net realized and unrealized gains from investments...................................................... 0.47
-------------
TOTAL FROM INVESTMENT ACTIVITIES.......................................................................... 0.42
-------------
Distributions
Net investment income...................................................................................
Net realized gains...................................................................................... (0.27)
-------------
Total Distributions....................................................................................... (0.27)
-------------
NET ASSET VALUE,
END OF PERIOD............................................................................................ $ 16.08
-------------
-------------
Total Return (Excluding Sales Charge)..................................................................... 2.79%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................................................... $ 87,362
Ratio of expenses to average net assets(b).............................................................. 1.01%
Ratio of net investment income to average net assets(b)................................................. 0.25%
Portfolio Turnover...................................................................................... 53.00%
<CAPTION>
CLASS B (A)
-------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................................................................................... $ 16.10
-------------
Investment Activities
Net investment income................................................................................... (0.06 )
Net realized and unrealized gains from investments...................................................... 0.22
-------------
TOTAL FROM INVESTMENT ACTIVITIES.......................................................................... 0.16
-------------
Distributions
Net investment income...................................................................................
Net realized gains...................................................................................... (0.27 )
-------------
Total Distributions....................................................................................... (0.27 )
-------------
NET ASSET VALUE,
END OF PERIOD............................................................................................ $ 15.99
-------------
-------------
Total Return (Excluding Sales Charge)..................................................................... 0.96%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................................................... $ 1,028
Ratio of expenses to average net assets(b).............................................................. 1.76%
Ratio of net investment income to average net assets(b)................................................. (1.01%
Portfolio Turnover...................................................................................... 53.00%
</TABLE>
- ---------
(a) Class B Share activity commenced on September 12, 1994.
(b) Information is from six months ended 5/31/95.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS.
127
