<PAGE> 1
THE ONE GROUP(R) FAMILY OF MUTUAL FUNDS
EQUITY FUNDS
COMBINED PROSPECTUS
NOVEMBER 1, 1997
THE ONE GROUP(R) ASSET ALLOCATION FUND
THE ONE GROUP(R) LARGE COMPANY GROWTH FUND
THE ONE GROUP(R) LARGE COMPANY VALUE FUND
THE ONE GROUP(R) GROWTH OPPORTUNITIES FUND
THE ONE GROUP(R) INTERNATIONAL EQUITY INDEX FUND
THE ONE GROUP(R) DISCIPLINED VALUE FUND
THE ONE GROUP(R) EQUITY INDEX FUND
THE ONE GROUP(R) INCOME EQUITY FUND
THE ONE GROUP(R) VALUE GROWTH FUND
THE ONE GROUP(R) SMALL CAPITALIZATION FUND
This prospectus describes ten mutual funds with a variety of investment
objectives, including total return, capital appreciation, current income, and
long-term capital growth. The information in this prospectus is important.
Please read it carefully before you invest, and save it for future reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: O ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED BY BANC ONE CORPORATION OR ITS AFFILIATES; O ARE NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY FEDERAL OR
STATE GOVERNMENTAL AGENCY; O INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
A BRIEF PREVIEW OF THE FUNDS............................ 1
ABOUT THE FUNDS......................................... 2
The One Group(R) Asset Allocation Fund............... 2
The One Group(R) Large Company Growth Fund........... 5
The One Group(R) Large Company Value Fund............ 8
The One Group(R) Growth Opportunities Fund........... 11
The One Group(R) International Equity Index Fund..... 14
The One Group(R) Disciplined Value Fund.............. 17
The One Group(R) Equity Index Fund................... 20
The One Group(R) Income Equity Fund.................. 23
The One Group(R) Value Growth Fund................... 26
The One Group(R) Small Capitalization Fund........... 29
MORE ABOUT THE FUNDS.................................... 32
HOW TO DO BUSINESS WITH THE ONE GROUP................... 33
Purchasing Fund Shares............................... 33
Sales Charges........................................ 34
Sales Charge Reductions and Waivers.................. 36
Exchanging Fund Shares............................... 37
Redeeming Fund Shares................................ 38
SHAREHOLDER INFORMATION................................. 40
Voting Rights........................................ 40
Dividend Policies.................................... 40
Tax Treatment of the Funds........................... 40
Tax Treatment of Shareholders........................ 40
Shareholder Inquiries................................ 41
ORGANIZATION AND MANAGEMENT OF THE FUNDS................ 42
The Funds............................................ 42
The Board of Trustees................................ 42
The Advisor.......................................... 42
The Sub-Advisor...................................... 42
The Distributor...................................... 43
The Administrator and Sub-Administrator.............. 43
The Transfer Agent, Custodian and Sub-Custodian...... 43
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND
POLICIES.............................................. 44
Investment Practices................................. 44
Investment Risks..................................... 47
Investment Policies.................................. 48
APPENDIX: DESCRIPTION OF RATINGS........................ 49
</TABLE>
<PAGE> 3
1
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE ONE GROUP EQUITY FUNDS?
The Funds are designed for a variety of investment objectives,
including total return, capital appreciation, current income,
and long-term capital growth. Each Fund pursues a different
objective and involves different risks. Please read about each
Fund before investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Funds normally will invest in a variety of equity
securities, including common stock. The Funds also may invest
in debt securities and preferred stocks which are convertible
into common stock. Most of the Funds may invest in securities
of foreign issuers.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
Equity securities such as those in which the Funds may invest
are more volatile and carry more risk than some other forms of
investment. Accordingly, as with all equity investments, you
may lose money by investing in the Funds. The Funds may invest
in derivative securities. These securities may expose the
Funds to special risks. In addition, investments in foreign
securities may expose the Funds to risks that are different
from investments in U.S. securities. For more information
about risks, please read "More About the Funds" and
"Investment Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
The Funds currently offer four classes of Shares: Class A,
Class B, Class C and Fiduciary Class. Class A, Class B and
Class C 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. The section called "How To Do
Business With The One Group" will provide more information.
Fiduciary Class shares are not available to Individual
Retirement Accounts ("IRA").
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the
Funds are open for business. Class C shares are not available
for purchase in all of the Funds. Purchase and redemption
procedures are explained in greater detail in "How To Do
Business With The One Group." For additional information, call
The One Group Services Company at 1-800-480-4111.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on the last business day of
each month and are distributed periodically on the first
business day of each month. The One Group International Equity
Index Fund, however, distributes dividends annually. Any
capital gains are distributed at least annually. Distributions
are paid in additional shares of the same class unless you
elect to take the payment in cash. For a more detailed
discussion of dividends, see "Dividend Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors"), an indirect subsidiary of BANC ONE CORPORATION,
serves as the advisor of the Funds. Banc One Investment
Advisors is paid a fee for its services. Independence
International Associates, Inc. (the "Sub-Advisor") serves as
Sub-Advisor to the International Equity Index Fund. The
Sub-Advisor's fees are paid by Banc One Investment Advisors. A
more detailed discussion regarding Banc One Investment
Advisors, its services and compensation can be found in the
Prospectus under the headings "The Advisor" and "Expense
Summary." Additional information regarding the Sub-Advisor is
located in the Prospectus under the heading "The Sub-Advisor."
<PAGE> 4
2
THE ONE GROUP(R)
ASSET ALLOCATION FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks to provide total return while preserving capital.
[ICON] INVESTMENT STRATEGY
The Fund invests in a combination of stocks, fixed income securities and money
market instruments. Banc One Investment Advisors will regularly review the
Fund's asset allocations and vary them over time to favor investments which they
believe will provide the most favorable total return. In making asset allocation
decisions, Banc One Investment Advisors will evaluate projections of risk,
market and economic conditions, volatility, yields and expected return. Because
the Fund seeks total return over the long term, Banc One Investment Advisors
will not attempt to time the market. Rather, asset allocation shifts will be
made gradually over time.
[ICON] PORTFOLIO SECURITIES
The Fund normally will invest between 40% and 75% of its total assets in all
types of equity securities, including the stock of both large and small
capitalization companies, as well as growth and value securities. Up to 20% of
the equities held by the Fund may be foreign securities, including American
Depository Receipts. Between 25% and 60% of the Fund's total assets will be
invested in fixed income securities, including bonds, notes, and other debt
securities. The balance of the Fund's total assets will be invested in money
market instruments. For a list of all the securities in which the Fund may
invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
As a result, the value of your investment in the Fund may increase or decrease
in value. The Fund also will invest in fixed income securities. The value of
these securities will change in response to interest rate changes and other
factors. This is especially true to the extent the Fund invests in debt
securities in the lowest investment grade category. Such securities have
speculative characteristics. Before you invest, please read "More About the
Funds" and "Investment Practices."
[ICON] FUND MANAGEMENT
Scott Grimshaw is the Manager of the fixed income portion of the Fund, having
served in that position since November, 1996. He has been employed as a research
analyst for Banc One Investment Advisors or its affiliates since 1988.
Since May 1, 1997, Dan Kapusta has served as Manager of the equity portion of
the Fund. Mr. Kapusta has been an equity analyst with Banc One Investment
Advisors since 1992. Before joining Banc One Investment Advisors, Mr. Kapusta
worked for Robert W. Baird, Inc. in Milwaukee, Wisconsin as an equity analyst.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .55% .55% .55% .55%
12b-1 Fees (after fee waiver) (5) .25% 1.00% 1.00% none
Other Expenses .40% .40% .40% .40%
Total Fund Operating Expenses (after fee
waivers) (6) 1.20% 1.95% 1.95% .95%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from the redemption amounts paid by
wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .65% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(6) Total Operating Expenses have been revised to reflect fee waivers. Without
the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.40% for Class A shares, 2.05% for Class B
shares, 2.05% for Class C shares and 1.05% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 57 $ 81 $ 108 $184
Class A (without fee waivers) $ 59 $ 87 $ 118 $205
Class B $ 70 $ 91 $ 125 $208
Class B (without fee waiver) $ 71 $ 94 $ 130 $221
Class C $ 30 $ 61 $ 105 $227
Class C (without fee waiver) $ 31 $ 64 $ 110 $238
Fiduciary Class $ 10 $ 30 $ 53 $117
Fiduciary Class (without fee waiver) $ 11 $ 33 $ 58 $128
</TABLE>
Assuming no redemption the end of each time period, 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 $ 57 $ 81 $ 108 $184
Class A (without fee waivers) $ 59 $ 87 $ 118 $205
Class B $ 20 $ 61 $ 105 $208
Class B (without fee waiver) $ 21 $ 64 $ 110 $221
Class C $ 20 $ 61 $ 105 $227
Class C (without fee waiver) $ 21 $ 64 $ 110 $238
Fiduciary Class $ 10 $ 30 $ 53 $117
Fiduciary Class (without fee waiver) $ 11 $ 33 $ 58 $128
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 5
3
THE ONE GROUP(R) ASSET ALLOCATION FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.71 $ 10.73 $ 9.64 $ 10.06 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.43 0.41 0.38 0.29 0.07
Net realized and unrealized gains (losses) from
investments 1.81 1.16 1.12 (0.38) 0.06
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.24 1.57 1.50 (0.09) 0.13
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.43) (0.41) (0.37) (0.29) (0.07)
From net realized gains (0.54) (0.18) (0.04) (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.97) (0.59) (0.41) (0.33) (0.07)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.98 $ 11.71 $ 10.73 $ 9.64 $ 10.06
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 20.16% 14.87% 16.06% (1.01)% 5.45%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 94,971 $ 50,323 $ 37,658 $ 42,751 $ 30,441
Ratio of expenses to average net assets 0.80% 0.94% 1.06% 1.06% 0.90%(b)
Ratio of net investment income to average net
assets 3.55% 3.58% 3.72% 2.91% 3.03%(b)
Ratio of expenses to average net assets* 1.00% 1.19% 1.31% 1.33% 1.34%(b)
Ratio of net investment income to average net
assets* 3.35% 3.33% 3.47% 2.64% 2.59%(b)
Portfolio turnover(c) 80.96% 73.38% 115.36% 56.55% 4.05%
Average commission rate paid(d) $ 0.0497 $ 0.0616
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Fiduciary Shares commenced offering on April 5,
1993. (b) Annualized. (c) Portfolio turnover is calculated on the basis of
the Fund as a whole without distinguishing among the classes of shares
issued. (d) The average commission represents the total dollar amount of
commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.72 $ 10.74 $ 9.65 $ 10.06 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.39 0.37 0.35 0.27 0.05
Net realized and unrealized gains (losses) from
investments 1.83 1.16 1.13 (0.38) 0.07
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.22 1.53 1.48 (0.11) 0.12
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions From net investment income (0.40) (0.37) (0.34) (0.26) (0.06)
In excess of net investment income -- -- (0.01) -- --
From net realized gains (0.54) (0.18) (0.04) (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.94) (0.55) (0.39) (0.30) (0.06)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 13.00 $ 11.72 $ 10.74 $ 9.65 $10.06
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 19.85% 14.48% 15.76% (1.19)% 5.23%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 31,379 $ 17,849 $ 4,745 $ 1,691 $ 571
Ratio of expenses to average net assets 1.05% 1.19% 1.31% 1.33% 1.15%(b)
Ratio of net investment income to average net
assets 3.30% 3.33% 3.57% 2.68% 2.84%(b)
Ratio of expenses to average net assets* 1.34% 1.54% 1.66% 1.67% 1.62%(b)
Ratio of net investment income to average net
assets* 3.01% 2.98% 3.22% 2.34% 2.37%(b)
Portfolio turnover(c) 80.96% 73.38% 115.36% 56.55% 4.05%
Average commission rate paid(d) $ 0.0497 $ 0.0616
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) The Fund commenced operations on April 2,
1993. (b) Annualized. (c) Portfolio turnover is calculated on the basis of
the Fund as a whole without distinguishing among the classes of shares
issued. (d) The average commission represents the total dollar amount of
commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<PAGE> 6
4
THE ONE GROUP(R) ASSET ALLOCATION FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.76 $ 10.76 $ 9.67 $ 10.37
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.30 0.28 0.27 0.08
Net realized and unrealized gains (losses) from investments 1.83 1.18 1.14 (0.70)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.13 1.46 1.41 (0.62)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions From net investment income (0.31) (0.28) (0.27) (0.08)
In excess of net investment income -- -- (0.01) --
From net realized gains (0.54) (0.18) (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.85) (0.46) (0.32) (0.08)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 13.04 $ 11.76 $ 10.76 $ 9.67
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 18.90% 13.79% 14.90% (5.98)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 43,900 $ 18,575 $ 3,019 $ 1,862
Ratio of expenses to average net assets 1.81% 1.94% 2.07% 2.40%(c)
Ratio of net investment income to average net assets 2.54% 2.58% 2.77% 1.99%(c)
Ratio of expenses to average net assets* 2.01% 2.19% 2.31% 2.40%(c)
Ratio of net investment income to average net assets* 2.34% 2.33% 2.52% 1.99%(c)
Portfolio turnover(d) 80.96% 73.38% 115.36% 56.55%
Average commission rate paid(e) $ 0.0497 $ 0.0616
</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 commenced offering shares on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE> 7
5
THE ONE GROUP(R)
LARGE COMPANY GROWTH FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation and growth of income by investing
primarily in equity securities.
[ICON] INVESTMENT STRATEGY
The Fund invests primarily in equity securities of large, well-established
companies. The weighted average capitalization of companies in which the Fund
invests normally will exceed the market median capitalization of the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500).*
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in the equity
securities of companies described above, including common stock, warrants and
rights to buy common stocks. The remainder of the Fund's total assets will be
invested in nonconvertible fixed income securities, options and futures,
repurchase agreements, and securities issued by the U.S. government and its
agencies and instrumentalities. For daily cash management purposes, the Fund may
invest in repurchase agreements and cash equivalents. For a list of all the
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
As a result, the value of your investment in the Fund may increase or decrease
in value. The Fund also will invest in fixed income securities. The value of
these securities will change in response to interest rate changes and other
factors. This is especially true to the extent the Fund invests in debt
securities with speculative characteristics. Before you invest, please read
"More About the Funds" and "Investment Practices."
[ICON] FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
*"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 the Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .26% .26% .26% .26%
Total Fund Operating Expenses (after fee
waiver) (5) 1.25% 2.00% 2.00% 1.00%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.35% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 57 $ 83 $ 111 $189
Class A (without fee waiver) $ 58 $ 86 $ 116 $200
Class B $ 70 $ 93 $ 128 $213
Class C $ 30 $ 63 $ 108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Assuming no redemption at the end of the periods, 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...................................... $ 57 $ 83 $ 111 $189
Class A (without fee waiver)................. $ 58 $ 86 $ 116 $200
Class B...................................... $ 20 $ 63 $ 108 $213
Class C...................................... $ 20 $ 63 $ 108 $233
Fiduciary Class.............................. $ 10 $ 32 $ 55 $122
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 8
6
THE ONE GROUP(R) LARGE COMPANY GROWTH FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $ 15.44 $ 13.47 $ 11.32 $ 10.92 $ 9.85 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.12 0.18 0.20 0.20 0.23 0.08
Net realized and
unrealized gains
(losses) from
investments 4.79 2.14 3.04 0.67 1.12 (0.16)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 4.91 2.32 3.24 0.87 1.35 (0.08)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment
income (0.11) (0.18) (0.20) (0.20) (0.23) (0.07)
From net realized gains (0.80) (0.17) (0.89) (0.27) (0.05) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.91) (0.35) (1.09) (0.47) (0.28) (0.07)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 19.44 $ 15.44 $ 13.47 $ 11.32 $ 10.92 $ 9.85
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 33.11% 17.36% 21.85% 8.04% 13.92% (0.80)%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $ 1,142,864 $ 745,986 $ 531,595 $ 150,035 $ 41,317 $ 25,019
Ratio of expenses to
average net assets 0.99% 0.96% 1.00% 0.78% 0.39% 0.30%(d)
Ratio of net investment
income to average net
assets 0.69% 1.20% 1.72% 1.87% 2.24% 2.37%(d)
Ratio of expenses to
average net assets* 0.99% 0.99% 1.00% 1.13% 1.43% 1.49%(d)
Ratio of net investment
income to average net
assets* 0.69% 1.17% 1.72% 1.52% 1.21% 1.12%(d)
Portfolio turnover(a) 57.17% 35.51% 14.22% 9.04% 10.61% 3.09%
Average commission rate
paid(b) $ 0.0681 $ 0.0647
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) The Fund commenced operations on February 28,
1992. (d) Annualized.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
CLASS A 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 15.83 $ 13.83 $ 11.62 $ 11.78
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.08 0.14 0.17 0.04
Net realized and unrealized gains (losses) from
investments 4.88 2.17 3.10 (0.16)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 4.96 2.31 3.27 (0.12)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment
income (0.07) (0.14) (0.16) (0.04)
In excess of net
investment income -- -- (0.01) --
From net realized gains (0.80) (0.17) (0.89) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.87) (0.31) (1.06) (0.04)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 19.92 $ 15.83 $ 13.83 $ 11.62
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes
Sales Charge) 32.57% 16.85% 21.52% (1.02)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $ 125,910 $ 75,114 $ 27,428 $ 368
Ratio of expenses to
average net assets 1.24% 1.21% 1.26% 1.25%(c)
Ratio of net investment
income to average net
assets 0.44% 0.95% 1.49% 1.78%(c)
Ratio of expenses to
average net assets* 1.32% 1.34% 1.36% 1.35%(c)
Ratio of net investment
income to average net
assets* 0.36% 0.82% 1.39% 1.68%(c)
Portfolio turnover(d) 57.17% 35.51% 14.22% 9.04%
Average commission rate
paid(e) $ 0.0681 $ 0.0647
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Class A Shares commenced offering on January 1, 1994. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued. (e) The average commission represents the total dollar amount
of commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<PAGE> 9
7
THE ONE GROUP(R) LARGE COMPANY GROWTH FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.63 $ 13.63 $ 11.47 $ 11.57
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (0.04) 0.05 0.09 0.03
Net realized and unrealized gains (losses) from
investments 4.82 2.17 3.06 (0.10)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 4.78 2.22 3.15 (0.07)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions From net investment income -- (0.05) (0.09) (0.03)
In excess of net investment income -- -- (0.01) --
From net realized gains (0.80) (0.17) (0.89) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.80) (0.22) (0.99) (0.03)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 19.61 $ 15.63 $ 13.63 $ 11.47
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 31.74% 16.41% 20.65% (0.66)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 132,268 $ 56,261 $ 6,918 $ 334
Ratio of expenses to average net assets 2.00% 1.96% 2.01% 1.99%(c)
Ratio of net investment income (loss) to average net
assets (0.33)% 0.20% 0.74% 0.96%(c)
Ratio of expenses to average net assets* 2.00% 1.99% 2.01% 1.99%(c)
Ratio of net investment income (loss) to average net
assets* (0.33)% 0.17% 0.74% 0.96%(c)
Portfolio turnover(d) 57.17% 35.51% 14.22% 9.04%
Average commission rate paid(e) $ 0.0681 $ 0.0647
</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 Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE> 10
8
THE ONE GROUP(R)
LARGE COMPANY VALUE FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks capital appreciation with the incidental goal of achieving
current income by investing primarily in equity securities.
[ICON] INVESTMENT STRATEGY
The Fund invests in equity securities of large capitalization companies that are
believed to be selling below their long-term investment values. The weighted
average capitalization of companies in which the Fund invests normally will
exceed the market median capitalization of the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500).* The Fund also may invest in the stock of
companies which have "breakup values" well in excess of current market values or
which have uniquely undervalued corporate assets.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in the equity
securities of companies described above, including common stocks and debt
securities and preferred stock that is convertible to common stock. A portion of
the Fund's assets will be held in cash equivalents. For a list of all the
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
As a result, the value of your investment in the Fund may increase or decrease
in value. Before you invest, please read "More About the Funds" and "Investment
Practices."
[ICON] FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
*"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 the Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver)(4) .25% 1.00% 1.00% none
Other Expenses .25% .25% .25% .25%
Total Fund Operating Expenses (after fee
waiver) (5) 1.24% 1.99% 1.99% .99%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary 12b-1 fees, Total Operating Expenses would be 1.34%
for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 57 $ 83 $ 110 $188
Class A (without fee waiver) $ 58 $ 86 $ 115 $199
Class B $ 70 $ 92 $ 127 $212
Class C $ 30 $ 62 $ 107 $232
Fiduciary Class $ 10 $ 32 $ 55 $121
</TABLE>
Assuming no redemption at the end of the period, 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 $ 57 $ 83 $ 110 $188
Class A (without fee waiver) $ 58 $ 86 $ 115 $199
Class B $ 20 $ 62 $ 107 $212
Class C $ 20 $ 62 $ 107 $232
Fiduciary Class $ 10 $ 32 $ 55 $121
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 11
9
THE ONE GROUP(R) LARGE COMPANY VALUE FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991(c)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $ 12.83 $ 12.87 $ 11.34 $ 11.64 $ 11.34 $ 10.07 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.27 0.31 0.31 0.20 0.18 0.21 0.08
Net realized and
unrealized gains
(losses) from
investments 3.01 1.20 2.18 (0.01) 0.58 1.34 0.07
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 3.28 1.51 2.49 0.19 0.76 1.55 0.15
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.26) (0.31) (0.32) (0.19) (0.18) (0.21) (0.08)
From net realized gains (1.06) (1.24) (0.64) (0.30) (0.28) (0.07) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.32) (1.55) (0.96) (0.49) (0.46) (0.28) (0.08)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 14.79 $ 12.83 $ 12.87 $ 11.34 $ 11.64 $ 11.34 $ 10.07
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 27.10% 12.71% 23.42% (1.59)% 6.73% 15.53% 4.47%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $ 686,156 $ 584,527 $ 365,376 $ 169,127 $ 132,833 $ 62,075 $ 36,237
Ratio of expenses to
average net assets 0.97% 0.97% 1.00% 0.95% 0.86% 0.82% 0.52%(b)
Ratio of net investment
income to average net
assets 1.99% 2.43% 2.74% 1.72% 1.62% 1.91% 2.48%(b)
Ratio of expenses to
average net assets* 0.97% 0.98% 1.01% 1.02% 1.12% 1.34% 1.26%(b)
Ratio of net investment
income to average net
assets* 1.99% 2.42% 2.73% 1.65% 1.36% 1.39% 1.74%(b)
Portfolio turnover(a) 77.05% 186.84% 203.13% 111.72% 51.75% 55.90% 19.87%
Average commission rate
paid(d) $ 0.0575 $ 0.0415
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) The Fund commenced operations on March 1,
1991. (d) The average commission represents the total dollar amount of
commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.87 $ 12.89 $ 11.34 $ 11.64 $ 11.33 $ 11.42
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.23 0.27 0.28 0.17 0.16 0.07
Net realized and unrealized gains
(losses) from investments 3.04 1.22 2.20 (0.01) 0.59 (0.08)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 3.27 1.49 2.48 0.16 0.75 (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.23) (0.27) (0.27) (0.16) (0.16) (0.08)
In excess of net investment income -- -- (0.02) -- -- --
From net realized gains (1.06) (1.24) (0.64) (0.30) (0.28) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.29) (1.51) (0.93) (0.46) (0.44) (0.08)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.85 $ 12.87 $ 12.89 $ 11.34 $ 11.64 $ 11.33
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 26.90% 12.40% 22.64% 1.35% 6.64% (0.33%)(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 14,832 $ 9,380 $ 3,481 $ 698 $ 451 $ 12
Ratio of expenses to average net assets 1.22% 1.22% 1.25% 1.20% 1.10% 1.02%(d)
Ratio of net investment income to average
net assets 1.72% 2.18% 2.52% 1.57% 1.41% 2.12%(d)
Ratio of expenses to average net assets* 1.31% 1.33% 1.37% 1.37% 1.50% 1.22%(d)
Ratio of net investment income to average
net assets* 1.63% 2.07% 2.41% 1.40% 1.01% 1.92%(d)
Portfolio turnover(a) 77.05% 186.84% 203.13% 111.72% 51.75% 55.90%
Average commission rate paid(b) $ 0.0575 $ 0.0415
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) Class A Shares commenced offering on February
28, 1992. (d) Annualized.
<PAGE> 12
10
THE ONE GROUP(R) LARGE COMPANY VALUE FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.98 $ 12.96 $ 11.41 $ 11.87
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.14 0.18 0.17 0.05
Net realized and unrealized gains (losses) from investments 3.04 1.26 2.19 (0.46)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 3.18 1.44 2.36 (0.41)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.15) (0.18) (0.17) (0.05)
From net realized gains (1.06) (1.24) (0.64) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.21) (1.42) (0.81) (0.05)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.95 $ 12.98 $ 12.96 $ 11.41
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 25.86% 11.95% 22.28% 3.48%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 9,288 $ 4,135 $ 861 $ 182
Ratio of expenses to average net assets 1.97% 1.97% 2.00% 2.00%(c)
Ratio of net investment income to average net assets 0.96% 1.43% 1.74% 1.06%(c)
Ratio of expenses to average net assets* 1.97% 1.98% 2.01% 2.00%(c)
Ratio of net investment income to average net assets* 0.96% 1.42% 1.72% 1.06%(c)
Portfolio turnover(d) 77.05% 186.84% 203.13% 111.72%
Average commission rate paid(e) $ 0.0575 $ 0.0415
</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 Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE> 13
11
THE ONE GROUP(R)
GROWTH OPPORTUNITIES FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks growth of capital and secondarily, current income by investing
primarily in equity securities.
[ICON] INVESTMENT STRATEGY
The Fund invests in securities that have the potential to produce above-average
earnings growth per share over a one-to-three year period. Typically, the Fund
acquires shares of established companies with a history of above-average growth,
as well as those companies expected to enter periods of above average growth.
Not all the securities purchased by the Fund will pay dividends. The Fund also
invests in smaller companies in emerging growth industries.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 80% of its total assets in equity securities,
including common stocks and debt securities and preferred stocks that are
convertible to common stock. A portion of the Fund's assets will be held in cash
equivalents. For a list of all the securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
Therefore, the value of your investment in the Fund may increase or decrease in
value. Also, the stocks of smaller companies may be subject to greater risks
than those of larger companies. Before you invest, please read "More About the
Funds" and "Investment Practices."
[ICON] FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .26% .26% .26% .26%
Total Fund Operating Expenses (after fee
waiver) (5) 1.25% 2.00% 2.00% 1.00%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from the redemption amounts paid by
wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.35% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 57 $ 83 $ 111 $189
Class A (without fee waiver) $ 58 $ 86 $ 116 $200
Class B $ 70 $ 93 $ 128 $213
Class C $ 30 $ 63 $ 108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Assuming no redemption at the end of the period, 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 $ 57 $ 83 $ 111 $189
Class A (without fee waiver) $ 58 $ 86 $ 116 $200
Class B $ 20 $ 63 $ 108 $213
Class C $ 20 $ 63 $ 108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 14
12
THE ONE GROUP(R) GROWTH OPPORTUNITIES FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.81 $ 18.40 $ 15.96 $ 16.96 $ 14.54 $ 12.92 $ 12.14
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.25 0.20 0.06 0.07 0.06 0.09 0.21
Net realized and unrealized gains
(losses) from investments 3.59 3.83 2.98 (0.05) 2.99 1.87 0.92
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 3.84 4.03 3.04 0.02 3.05 1.96 1.13
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.25) (0.20) (0.06) (0.07) (0.06) (0.08) (0.21)
In excess of net investment (0.02) -- -- -- -- -- --
From net realized gains (2.92) (3.42) (0.54) (0.95) (0.57) (0.26) (0.14)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (3.19) (3.62) (0.60) (1.02) (0.63) (0.34) (0.35)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 19.46 $ 18.81 $ 18.40 $ 15.96 $ 16.96 $ 14.54 $ 12.92
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 22.75% 24.63% 19.75% (0.16)% 21.36% 15.15% 9.85%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 623,911 $ 532,525 $ 413,518 $389,567 $ 232,898 $ 131,533 $ 53,831
Ratio of expenses to average net assets 0.99% 1.00% 0.98% 0.98% 0.89% 0.75% 0.45%
Ratio of net investment income to
average net assets 1.32% 1.15% 0.38% 0.42% 0.41% 1.23% 1.75%
Ratio of expenses to average net assets* 0.99% 1.01% 0.98% 1.03% 1.11% 0.51% 1.19%
Ratio of net investment income to
average net assets* 1.32% 1.14% 0.38% 0.37% 0.19% 0.03% 1.01%
Portfolio turnover(a) 301.35% 435.30% 132.63% 70.67% 64.64% 42.77% 68.83%
Average commission rate paid(b) $ 0.0386 $ 0.0451
<CAPTION>
------------------------
FIDUCIARY 1990 1989(c)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.71 $ 10.00
- ---------------------------------------------------------------------
Investment Activities
Net investment income 0.19 0.11
Net realized and unrealized gains
(losses) from investments 1.97 0.71
- ---------------------------------------------------------------------
Total from Investment Activities 2.16 0.82
- ---------------------------------------------------------------------
Distributions
From net investment income (0.19) (0.11)
In excess of net investment -- --
From net realized gains (0.54) --
- ---------------------------------------------------------------------
Total Distributions (0.73) (0.11)
- ---------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.14 $ 10.71
- ---------------------------------------------------------------------
Total Return 20.83% 24.86%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 31,804 $ 22,753
Ratio of expenses to average net assets 0.41% 0.38%(d)
Ratio of net investment income to
average net assets 1.65% 3.20%(d)
Ratio of expenses to average net assets* 1.15% 1.12%(d)
Ratio of net investment income to
average net assets* 0.91% 2.46%(d)
Portfolio turnover(a) 92.55% 68.51%
Average commission rate paid(b)
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) The Fund commenced operations on March 2, 1989;
at that time, the Fund did not offer multiple classes of shares. Subsequently
all shares of the Fund were redesignated as Fiduciary Class
shares. (d) Annualized.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(d)
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.76 $ 18.36 $ 15.93 $ 16.96 $ 14.54 $ 16.53
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.21 0.17 0.02 0.04 0.03 0.01
Net realized and unrealized gains (losses) from
investments 3.58 3.80 2.98 (0.08) 3.00 (1.99)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 3.79 3.97 3.00 (0.04) 3.03 (1.98)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.24) (0.15) (0.01) (0.03) (0.04) (0.01)
In excess of net investment income (0.02) -- (0.02) (0.01) -- --
From net realized gains (2.92) (3.42) (0.54) (0.95) (0.57) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (3.18) (3.57) (0.57) (0.99) (0.61) (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 19.37 $ 18.76 $ 18.36 $ 15.93 $ 16.96 $ 14.54
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 22.52% 24.32% 19.50% (0.52)% 21.70%(a) (34.00)%(a)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 43,370 $ 28,052 $ 11,178 $ 8,097 $ 5,757 $ 84
Ratio of expenses to average net assets 1.25% 1.25% 1.23% 1.22% 1.11%(a) 1.31%(a)
Ratio of net investment income to average net
assets 0.92% 0.90% 0.12% 0.27% 0.25%(a) 0.12%(a)
Ratio of expenses to average net assets* 1.34% 1.36% 1.33% 1.38% 1.48%(a) 1.50%(a)
Ratio of net investment income (loss) to average
net assets* 0.83% 0.79% 0.02% 0.11% (0.12)%(a) (0.07)%(a)
Portfolio turnover(b) 301.35% 435.30% 132.63% 70.67% 64.64% 42.77%
Average commission rate paid(c) $ 0.0386 $ 0.0451
</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) Portfolio turnover is calculated on the basis
of the Fund as a whole without distinguishing among the classes of shares
issued. (c) The average commission represents the total dollar amount of
commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year. (d) Class A Shares
commenced offering on February 18, 1992.
<PAGE> 15
13
THE ONE GROUP(R) GROWTH OPPORTUNITIES FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.43 $ 18.14 $ 15.85 $ 17.44
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) 0.11 0.09 (0.07) (0.02)
Net realized and unrealized gains (losses) from investments 3.44 3.69 2.90 (1.56)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 3.55 3.78 2.83 (1.58)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.22) (0.07) -- (0.01)
In excess of net investment income (0.02) -- -- --
From net realized gains (2.92) (3.42) (0.54) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (3.16) (3.49) (0.54) (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 18.82 $ 18.43 $ 18.14 $ 15.85
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 21.73% 23.53% 18.47% (9.07)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 37,409 $ 12,910 $ 2,787 $1,131
Ratio of expenses to average net assets 2.00% 2.00% 1.98% 2.12%(c)
Ratio of net investment income (loss) to average net assets 0.01% 0.15% (0.63)% (0.55)%(c)
Ratio of expenses to average net assets* 2.00% 2.01% 1.98% 2.12%(c)
Ratio of net investment income (loss) to average net assets* 0.01% 0.14% (0.63)% (0.55)%(c)
Portfolio turnover(d) 301.35% 435.30% 132.63% 70.67%
Average commission rate paid(e) $ 0.0386 $ 0.0451
</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 Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE> 16
14
THE ONE GROUP(R)
INTERNATIONAL EQUITY INDEX FUND
- -------------------------------
[ICON] INVESTMENT OBJECTIVE
The Fund seeks to provide investment results that correspond to the aggregate
price and dividend performance of the securities in the MSCI EAFE GDP Index.*
[ICON] INVESTMENT STRATEGY
The Fund attempts to track the capital performance and dividend income of the
Index by investing in a representative portion of the stocks which match as
closely as possible the characteristics of the stocks which comprise the Index.
The Fund also will invest in stock index futures. The Fund will attempt to
achieve a correlation between the performance of its portfolio and that of the
MSCI EAFE GDP Index of at least 0.90, without taking into account expenses.
Perfect correlation would be 1.00.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in foreign equity
securities, consisting of common stocks (including American Depository Receipts)
and preferred stocks, securities convertible to common stock (provided they are
traded on an exchange or over-the-counter), warrants and receipts. No more than
10% of the Fund's assets will be held in cash or cash equivalents. The Fund may
invest up to 10% of its net assets in securities of emerging international
markets such as Mexico, Chile and Brazil, either directly through local
exchanges, through publicly traded closed-end country funds, or through "passive
foreign investment companies." A substantial portion of the Fund's assets will
be denominated in foreign currencies. For a list of all the securities in which
the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
Therefore, the value of your investment in the Fund may increase or decrease in
value. Because the Fund's investments are tied to an index, fluctuations in the
index will affect the value of your investment in the Fund. Also, investments in
foreign securities involve risks different from investments in U.S. securities.
Before you invest, please read "More About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Independence International Associates, Inc. ("Independence International")
serves as sub-advisor to the Fund. Independence International is an indirect
subsidiary of John Hancock Mutual Life Insurance Company.
*Gross Domestic Produced Weighted Morgan Stanley Capital International Europe,
Australia and Far East Index. MSCI EAFE GDP Index is a registered service mark
of Morgan Stanley Capital International, which does not sponsor and is in no
way affiliated with the Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .55% .55% .55% .55%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .41% .41% .41% .41%
Total Fund Operating Expenses (after fee
waiver) (5) 1.21% 1.96% 1.96% .96%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from the redemption amounts paid by
wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.31% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 57 $ 82 $ 109 $185
Class A (without fee waiver) $ 58 $ 85 $ 114 $196
Class B $ 70 $ 92 $ 126 $209
Class C $ 30 $ 62 $ 106 $229
Fiduciary Class $ 10 $ 31 $ 53 $118
</TABLE>
Assuming no redemption at the end of the period, 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 $ 57 $ 82 $ 109 $185
Class A (without fee waiver) $ 58 $ 85 $ 114 $196
Class B $ 20 $ 62 $ 106 $209
Class C $ 20 $ 62 $ 106 $229
Fiduciary Class $ 10 $ 31 $ 53 $118
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 17
15
THE ONE GROUP(R) INTERNATIONAL EQUITY INDEX FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.17 $ 13.93 $ 13.46 $ 11.80 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.15 0.11 0.13 0.11 0.06
Net realized and unrealized gains from
investments 2.02 1.43 0.46 1.68 1.75
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.17 1.54 0.59 1.79 1.81
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.17) (0.16) (0.08) (0.11) (0.01)
In excess of net investment income (0.13) (0.02) -- -- --
From net realized gains (0.15) (0.12) (0.04) (0.01) --
In excess of net realized gains -- -- -- (0.01) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.45) (0.30) (0.12) (0.13) (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 16.89 $ 15.17 $ 13.93 $ 13.46 $ 11.80
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 14.64% 11.22% 4.20% 15.44% 26.96%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 449,949 $ 347,790 $ 218,299 $ 145,640 $ 35,384
Ratio of expenses to average net assets 0.86% 0.97% 1.04% 1.02% 1.22%(b)
Ratio of net investment income to average
net assets 1.00% 1.04% 1.25% 1.27% 1.37%(b)
Ratio of expenses to average net assets* 0.86% 1.00% 1.04% 1.02% 2.34%(b)
Ratio of net investment income to average
net assets* 1.00% 1.01% 1.25% 1.27% 0.25%(b)
Portfolio turnover(c) 9.61% 6.28% 4.67% 7.74% 3.10%
Average commission rate paid(d) $ 0.0034 $ 0.0022
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Fiduciary Shares commenced offering on April 5,
1993. (b) Annualized. (c) Portfolio turnover is calculated on the basis of
the Fund as a whole without distinguishing among the classes of shares
issued. (d) The average commission represents the total dollar amount of
commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.16 $ 13.92 $ 13.49 $ 11.80 $ 11.74
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.11 0.14 0.12 0.09 0.02
Net realized and unrealized gains from
investments 2.03 1.40 0.43 1.67 0.04
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.14 1.54 0.55 1.76 0.06
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.13) (0.16) (0.08) (0.05) --
In excess of net investment income (0.10) (0.02) -- -- --
From net realized gains (0.15) (0.12) (0.04) (0.02) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.38) (0.30) (0.12) (0.07) --
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 16.92 $ 15.16 $ 13.92 $ 13.49 $11.80
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 14.31% 11.20% 3.87% 15.18% 2.87%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 12,562 $ 10,789 $ 5,028 $ 2,395 $ 153
Ratio of expenses to average net assets 1.11% 1.22% 1.28% 1.26% 1.47%(b)
Ratio of net investment income to average
net assets 0.73% 0.79% 1.09% 1.15% 2.10%(b)
Ratio of expenses to average net assets* 1.19% 1.35% 1.38% 1.36% 2.35%(b)
Ratio of net investment income to average
net assets* 0.65% 0.66% 0.99% 1.05% 1.22%(b)
Portfolio turnover(c) 9.61% 6.28% 4.67% 7.74% 3.10%
Average commission rate paid(d) $ 0.0034 $ 0.0022
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated. (a)
The Fund commenced operations on April 2, 1993. (b) Annualized. (c)
Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued. (d) The average
commission represents the total dollar amount of commissions paid on portfolio
security transactions divided by the total number of portfolio shares
purchased and sold for which commissions were charged. For the year ended June
30, 1996, the average commission was calculated for only the last seven months
of the year.
<PAGE> 18
16
THE ONE GROUP(R) INTERNATIONAL EQUITY INDEX FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.79 $ 13.73 $ 13.40 $ 13.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.09 0.03 0.03 0.06
Net realized and unrealized gains from investments 1.86 1.32 0.41 0.34
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.95 1.35 0.44 0.40
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.08) (0.15) (0.07) --
In excess of net investment income (0.07) (0.02) -- --
From net realized gains (0.15) (0.12) (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.30) (0.29) (0.11) --
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 16.44 $ 14.79 $ 13.73 $ 13.40
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 13.37% 9.97% 3.17% 3.23%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 10,033 $ 5,856 $ 3,687 $ 1,872
Ratio of expenses to average net assets 1.86% 1.97% 2.04% 2.00%(c)
Ratio of net investment income to average net assets 0.08% 0.04% 0.25% 1.37%(c)
Ratio of expenses to average net assets* 1.86% 2.00% 2.04% 2.00%(c)
Ratio of net investment income to average net assets* 0.08% 0.01% 0.25% 1.37%(c)
Portfolio turnover(d) 9.61% 6.28% 4.67% 7.74%
Average commission rate paid(e) $ 0.0034 $ 0.0022
</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 Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE> 19
17
THE ONE GROUP(R)
DISCIPLINED VALUE FUND
- ----------------------
[ICON] INVESTMENT OBJECTIVE
The Fund seeks capital appreciation with the secondary goal of achieving current
income by investing primarily in equity securities.
[ICON] INVESTMENT STRATEGY
The Fund primarily invests in the equity securities of companies with
below-market average price-to-earnings and price-to-book value ratios. The Fund
considers the issuer's soundness and earnings prospects. If Banc One Investment
Advisors determines that a company's fundamentals are declining or that the
company's ability to pay dividends has been impaired, it likely will eliminate
the Fund's holding of the company's stock.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 80% of its total assets in equity securities,
including common stocks, debt securities, and preferred stocks that are
convertible into common stocks. A portion of the Fund's assets will be held in
cash equivalents. For a list of all the securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
Therefore, the value of your investment in the Fund may increase or decrease in
value. Before you invest, please read "More About the Funds" and "Investment
Practices."
[ICON] FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .26% .26% .26% .26%
Total Fund Operating Expenses (after fee
waiver) (5) 1.25% 2.00% 2.00% 1.00%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from the redemption amounts paid by
wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.35% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 57 $ 83 $ 111 $189
Class A (without fee waiver) $ 58 $ 86 $ 116 $200
Class B $ 70 $ 93 $ 128 $213
Class C $ 30 $ 63 $ 108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 57 $ 83 $ 111 $189
Class A (without fee waiver) $ 58 $ 86 $ 116 $200
Class B $ 20 $ 63 $ 108 $213
Class C $ 20 $ 63 $ 108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 20
18
THE ONE GROUP(R) DISCIPLINED VALUE FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.69 $ 13.20 $ 11.90 $ 12.76 $ 11.49 $ 10.20 $ 10.42
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.22 0.29 0.28 0.26 0.28 0.34 0.39
Net realized and unrealized gains from
investments 2.57 2.27 1.57 0.29 1.27 1.29 (0.23)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.79 2.56 1.85 0.55 1.55 1.63 0.16
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.22) (0.29) (0.27) (0.26) (0.28) (0.34) (0.38)
From net realized gains (1.61) (0.78) (0.28) (1.15) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.83) (1.07) (0.55) (1.41) (0.28) (0.34) (0.38)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 15.65 $ 14.69 $ 13.20 $ 11.90 $ 12.76 $ 11.49 $ 10.20
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 20.56% 20.10% 16.03% 4.04% 13.58% 16.24% 1.75%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 562,302 $ 522,474 $ 448,530 $ 418,238 $ 211,785 $ 115,234 $ 74,481
Ratio of expenses to average net assets 0.98% 0.99% 1.00% 0.93% 0.89% 0.69% 0.41%
Ratio of net investment income to
average net assets 1.52% 2.04% 2.21% 2.14% 2.30% 3.17% 3.92%
Ratio of expenses to average net assets* 0.98% 1.00% 1.10% 0.98% 1.08% 1.23% 1.15%
Ratio of net investment income to
average net assets* 1.52% 2.03% 2.11% 2.09% 2.11% 2.63% 3.18%
Portfolio turnover(a) 92.66% 90.55% 176.66% 56.33% 108.79% 25.32% 49.62%
Average commission rate paid(b) $ 0.0601 $ 0.0576
<CAPTION>
------------------------
FIDUCIARY 1990 1989(c)
<S> <C> <C>
- --------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.85 $ 10.00
- --------------------------------------------------------------------
Investment Activities
Net investment income 0.48 0.14
Net realized and unrealized gains from
investments (0.09) 0.85
- --------------------------------------------------------------------
Total from Investment Activities 0.39 0.99
- --------------------------------------------------------------------
Distributions
From net investment income (0.48) (0.14)
From net realized gains (0.34) --
- ---------------------------------------------------------------------
Total Distributions (0.82) (0.14)
- ---------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.42 $ 10.85
- ---------------------------------------------------------------------
Total Return 3.49% 29.90%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 59,992 $ 45,872
Ratio of expenses to average net assets 0.35% 0.33%(d)
Ratio of net investment income to
average net assets 4.36% 3.95%(d)
Ratio of expenses to average net assets* 1.09% 1.07%(d)
Ratio of net investment income to
average net assets* 3.62% 3.21%(d)
Portfolio turnover(a) 51.14% 14.66%
Average commission rate paid(b)
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) Fiduciary Class Shares commenced offering on
March 2, 1989. (d) Annualized.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.72 $ 13.22 $ 11.91 $ 12.75 $ 11.49 $ 11.45
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.19 0.25 0.24 0.24 0.25 0.12
Net realized and unrealized gains from investments 2.57 2.28 1.59 0.30 1.26 0.06
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.76 2.53 1.83 0.54 1.51 0.18
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.19) (0.25) (0.24) (0.23) (0.25) (0.14)
From net realized gains (1.61) (0.78) (0.26) (1.10) -- --
In excess of net realized gains -- -- (0.02) (0.05) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.80) (1.03) (0.52) (1.38) (0.25) (0.14)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 15.68 $ 14.72 $ 13.22 $ 11.91 $ 12.75 $11.49
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 20.21% 19.80% 15.43% 3.95% 13.27% 1.56%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 23,909 $ 20,838 $ 13,560 $ 10,448 $ 3,435 $ 35
Ratio of expenses to average net assets 1.23% 1.24% 1.26% 1.18% 1.12% 1.29%(d)
Ratio of net investment income to average net
assets 1.26% 1.79% 1.99% 2.00% 2.06% 2.43%(d)
Ratio of expenses to average net assets* 1.31% 1.35% 1.36% 1.33% 1.46% 1.49%(d)
Ratio of net investment income to average net
assets* 1.18% 1.68% 1.89% 1.85% 1.72% 2.23%(d)
Portfolio turnover(a) 92.66% 90.55% 176.66% 56.33% 108.79% 25.32%
Average commission rate paid(b) $ 0.0601 $ 0.0576
</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) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued. (b) The average
commission represents the total dollar amount of commissions paid on portfolio
security transactions divided by the total number of portfolio shares
purchased and sold for which commissions were charged. For the year ended June
30, 1996, the average commission was calculated for only the last seven months
of the year. (c) Class A Shares commenced offering on February 18,
1992. (d) Annualized.
<PAGE> 21
19
THE ONE GROUP(R) DISCIPLINED VALUE FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.69 $ 13.19 $ 11.90 $ 12.60
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.08 0.15 0.15 0.07
Net realized and unrealized gains (losses) from investments 2.55 2.27 1.58 (0.70)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.63 2.42 1.73 (0.63)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.07) (0.14) (0.15) (0.06)
In excess of net investment income -- -- (0.01) (0.01)
From net realized gains (1.61) (0.78) (0.28) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.68) (0.92) (0.44) (0.07)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 15.64 $ 14.69 $ 13.19 $ 11.90
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 19.19% 18.93% 14.92% (5.00)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 20,499 $ 16,305 $ 11,222 $ 5,356
Ratio of expenses to average net assets 1.98% 1.99% 2.00% 1.96%(c)
Ratio of net investment income to average net assets 0.51% 1.04% 1.26% 1.80%(c)
Ratio of expenses to average net assets* 1.98% 2.00% 2.01% 1.96%(c)
Ratio of net investment income to average net assets* 0.51% 1.03% 1.25% 1.80%(c)
Portfolio turnover(d) 92.66% 90.55% 176.66% 56.33%
Average commission rate paid(e) $ 0.0601 $ 0.0576
</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 Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE> 22
20
THE ONE GROUP(R)
EQUITY INDEX FUND
- -----------------
[ICON] INVESTMENT OBJECTIVE
The Fund seeks investment results that correspond to the aggregate price and
dividend performance of securities in the S&P 500 Index.*
[ICON] INVESTMENT STRATEGY
The Fund invests primarily in stocks included in the S&P 500 Index and,
secondarily in stock index futures. Banc One Investment Advisors will seek to
achieve a correlation between the performance of the Fund and that of the S&P
500 Index. To implement this strategy, Banc One Investment Advisors generally
selects stocks in the order of their weightings in the S&P 500 Index beginning
with the heaviest weighted stocks. The Fund will attempt to achieve a
correlation between the performance of its portfolio and that of the S&P 500
Index of at least 0.95, without taking into account expenses. Perfect
correlation would be 1.00.
[ICON] PORTFOLIO SECURITIES
The percentage of a stock that the Fund holds will be approximately the same
percentage that the stock represents in the S&P 500 Index. In addition, the Fund
may hold up to 10% of its net assets in cash or cash equivalents. For a list of
all the securities in which the Fund may invest, please read "Investment
Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
Therefore, the value of your investment in the Fund may increase or decrease in
value. Because the Fund's investments are tied to an index, fluctuations in the
index will affect the value of your investment in the Fund. Before you invest,
please read "More About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Michael D. Weiner has been the Manager of the Fund since November 1994. Mr.
Weiner also serves as the Managing Director of Equity Research for Banc One
Investment Advisors. Before joining Banc One Investment Advisors, Mr. Weiner
served as the Director of Research and Head of U.S. Equities for the Dupont
Pension Fund Investment Company of Wilmington, Delaware from 1986 to 1994.
*"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 the Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .10% .10% .10% .10%
12b-1 Fees (after fee waiver) (5) .25% 1.00% 1.00% none
Other Expenses (6) .25% .25% .25% .25%
Total Fund Operating Expenses (after fee
waivers) (7) .60% 1.35% 1.35% .35%
</TABLE>
(1) If you buy or sell shares through an account with a Shareholder Servicing
Agent, you may be charged separate transaction fees by the Shareholder
Servicing Agent. In addition, a $7.00 charge is deducted from the redemption
amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .30% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(6) Without the fee waiver, other expenses would be .35% for all classes.
(7) Without the voluntary reduction of Investment Advisory, 12b-1 fees and other
expenses, Total Operating Expenses would be 1.00% for Class A shares, 1.65%
for Class B shares, 1.65% for Class C shares and .65% for Fiduciary Class
shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 51 $ 63 $ 77 $117
Class A (without fee waivers) $ 55 $ 75 $ 98 $162
Class B $ 64 $ 73 $ 94 $142
Class B (without fee waivers) $ 67 $ 82 $ 110 $175
Class C $ 24 $ 43 $ 74 $162
Class C (without fee waivers) $ 27 $ 52 $ 90 $195
Fiduciary Class $ 4 $ 11 $ 20 $ 44
Fiduciary Class (without fee waiver) $ 7 $ 21 $ 36 $ 81
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 51 $ 63 $ 77 $117
Class A (without fee waivers) $ 55 $ 75 $ 98 $162
Class B $ 14 $ 43 $ 74 $142
Class B (without fee waivers) $ 17 $ 52 $ 90 $175
Class C $ 14 $ 43 $ 74 $162
Class C (without fee waivers) $ 17 $ 52 $ 90 $195
Fiduciary Class $ 4 $ 11 $ 20 $ 44
Fiduciary Class (without fee waivers) $ 7 $ 21 $ 36 $ 81
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 23
21
THE ONE GROUP(R) EQUITY INDEX FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
$ 16.66 $ 14.03 $ 11.59 $ 11.92 $ 10.92 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.35 0.33 0.32 0.29 0.30 0.26
Net realized and unrealized
gains (losses) from
investments 5.27 3.16 2.59 (0.20) 1.13 0.95
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.62 3.49 2.91 0.09 1.43 1.21
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.33) (0.33) (0.29) (0.29) (0.30) (0.26)
In excess of net investment
income -- (0.01) (0.02) (0.04) -- --
From net realized gains (0.15) (0.52) (0.16) (0.09) (0.13) (0.03)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.48) (0.86) (0.47) (0.42) (0.43) (0.29)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.80 $ 16.66 $ 14.03 $ 11.59 $ 11.92 $ 10.92
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 34.30% 25.47% 25.79% 0.63% 13.04% 12.14%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $ 480,819 $ 321,058 $ 234,895 $ 165,370 $ 96,446 $62,150
Ratio of expenses to average
net assets 0.30% 0.30% 0.33% 0.46% 0.50% 0.73%(d)
Ratio of net investment income
to average net assets 1.87% 2.18% 2.57% 2.44% 2.46% 2.43%(d)
Ratio of expenses to average
net assets * 0.61% 0.59% 0.66% 0.59% 0.87% 1.16%(d)
Ratio of net investment income
to average net assets * 1.56% 1.89% 2.24% 2.31% 2.09% 2.00%(d)
Portfolio turnover(a) 5.81% 9.08% 2.71% 11.81% 2.71% 21.90%
Average commission rate paid(b) $ 0.0449 $ 0.0490
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) The Fund commenced operations on July 2,
1991. (d) Annualized.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
$ 16.67 $ 14.02 $ 11.59 $ 11.91 $ 10.92 $10.94
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.29 0.27 0.29 0.28 0.30 0.08
Net realized and unrealized
gains (losses) from
investments 5.28 3.18 2.58 (0.20) 1.10 --
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.57 3.45 2.87 0.08 1.40 0.08
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.28) (0.27) (0.28) (0.27) (0.28) (0.10)
In excess of net investment
income -- (0.01) -- (0.04) -- --
From net realized gains (0.15) (0.52) (0.16) (0.09) (0.13) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.43) (0.80) (0.44) (0.40) (0.41) (0.10)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.81 $ 16.67 $ 14.02 $ 11.59 $ 11.91 $10.92
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales
Charge) 33.94% 25.16% 25.43% 0.56% 12.75% 1.32%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $ 98,338 $32,186 $ 3,003 $1,416 $512 $ 5
Ratio of expenses to average
net assets 0.55% 0.55% 0.56% 0.62% 0.52% 1.09%(d)
Ratio of net investment income
to average net assets 1.59% 1.93% 2.38% 2.37% 2.51% 1.97%(d)
Ratio of expenses to average
net assets * 0.95% 0.94% 1.01% 0.94% 0.99% 1.27%(d)
Ratio of net investment income
to average net assets * 1.19% 1.54% 1.94% 2.05% 2.04% 1.79%(d)
Portfolio turnover(a) 5.81% 9.08% 2.71% 11.81% 2.71% 21.90%
Average commission rate paid(b) $ 0.0449 $ 0.0490
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) Class A Shares commenced offering on February
18, 1992. (d) Annualized.
<PAGE> 24
22
THE ONE GROUP(R) EQUITY INDEX FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
$ 16.68 $ 14.05 $ 11.61 $ 12.39
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.16 0.16 0.18 0.09
Net realized and unrealized
gains (losses) from
investments 5.27 3.16 2.61 (0.78)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.43 3.32 2.79 (0.69)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.16) (0.16) (0.19) (0.09)
In excess of net investment
income -- (0.01) -- --
From net realized gains (0.15) (0.52) (0.16) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.31) (0.69) (0.35) (0.09)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.80 $ 16.68 $ 14.05 $ 11.61
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales
Charge) 32.93% 24.05% 24.58% (5.57)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $ 168,699 $ 38,538 $ 1,408 $ 248
Ratio of expenses to average
net assets 1.30% 1.30% 1.34% 1.10%(c)
Ratio of net investment income
to average net assets 0.83% 1.18% 1.60% 2.08%(c)
Ratio of expenses to average
net assets* 1.61% 1.59% 1.67% 1.15%(c)
Ratio of net investment income
to average net assets* 0.52% 0.89% 1.27% 2.03%(c)
Portfolio turnover(d) 5.81% 9.08% 2.71% 11.81%
Average commission rate paid(e) $ 0.0449 $ 0.0490
</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 Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE> 25
23
THE ONE GROUP(R)
INCOME EQUITY FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks current income through regular payment of dividends with the
secondary goal of achieving capital appreciation by investing primarily in
equity securities.
[ICON] INVESTMENT STRATEGY
The Fund attempts to keep its yield above the S&P 500 Index* by investing in
common stocks of corporations which regularly pay dividends, as well as stocks
with favorable long-term fundamental characteristics. Continued payment of
dividends cannot be assured. Because achieving yield is the primary
consideration in selecting securities, stocks of companies that are out of favor
in the financial community may also be purchased.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in the equity
securities of companies described above, including common stocks, debt
securities, and preferred stocks that are convertible into common stocks. A
portion of the Fund's assets will be held in cash equivalents. For a list of all
the securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
Therefore, the value of your investment in the Fund may increase or decrease in
value. Before you invest, please read "More About the Funds" and "Investment
Practices."
[ICON] FUND MANAGEMENT
R. Lynn Yturri has served as manager of the Fund since July, 1993. Mr. Yturri
has 25 years of investment management experience. Prior to 1993, Mr. Yturri
served as Manager of Trust Investments at Valley National Bank of Arizona before
the bank was acquired by BANC ONE CORPORATION.
*"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 the Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3)
(as a percentage of average
daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .27% .27% .27% .27%
Total Fund Operating Expenses
(after fee waiver) (5) 1.26% 2.01% 2.01% 1.01%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.36% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 57 $ 83 $ 111 $190
Class A (without fee waiver) $ 58 $ 86 $ 116 $201
Class B $ 70 $ 93 $ 128 $214
Class C $ 30 $ 63 $ 108 $234
Fiduciary Class $ 10 $ 32 $ 56 $124
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 57 $ 83 $ 111 $190
Class A (without fee waiver) $ 58 $ 86 $ 116 $201
Class B $ 20 $ 63 $ 108 $214
Class C $ 20 $ 63 $ 108 $234
Fiduciary Class $ 10 $ 32 $ 56 $124
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 26
24
THE ONE GROUP(R) INCOME EQUITY FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 17.65 $ 15.13 $ 13.22 $ 13.21 $ 12.24 $ 11.35 $ 11.06
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.36 0.40 0.40 0.39 0.43 0.49 0.54
Net realized and unrealized
gains from investments 4.89 3.22 2.28 0.01 0.97 0.90 0.26
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.25 3.62 2.68 0.40 1.40 1.39 0.80
- --------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.36) (0.40) (0.40) (0.39) (0.43) (0.50) (0.51)
From net realized gains (0.61) (0.70) (0.37) -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.97) (1.10) (0.77) (0.39) (0.43) (0.50) (0.51)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.93 $ 17.65 $ 15.13 $ 13.22 $ 13.21 $ 12.24 $ 11.35
- --------------------------------------------------------------------------------------------------------------------------
Total Return 30.90% 24.53% 21.04% 3.27% 11.56% 12.36% 7.48%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $ 649,007 $ 321,827 $ 170,919 $ 198,787 $ 153,144 $ 125,050 $ 73,552
Ratio of expenses to average
net assets 1.00% 0.98% 1.01% 0.98% 0.90% 0.70% 0.42%
Ratio of net investment income
to average net assets 1.91% 2.44% 2.85% 3.18% 3.37% 4.12% 4.80%
Ratio of expenses to average
net assets* 1.00% 1.01% 1.01% 1.05% 1.07% 1.23% 1.16%
Ratio of net investment income
to average net assets* 1.91% 2.41% 2.85% 3.11% 3.20% 3.59% 4.06%
Portfolio turnover(a) 28.18% 14.92% 4.03% 22.69% 7.53% 5.99% 9.36%
Average commission rate
paid(b) $ 0.0681 $ 0.0673
<CAPTION>
-------------------------------------
FIDUCIARY 1990 1989 1988(d)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 10.32 $ 9.10 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.53 0.45 0.23
Net realized and unrealized
gains from investments 0.77 1.22 (0.40)
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.30 1.67 (0.67)
- --------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.56) (0.45) (0.23)
From net realized gains -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.56) (0.45) (0.23)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.06 $ 10.32 $ 9.10
- --------------------------------------------------------------------------------------------------------------------------
Total Return 12.79% 18.59% (6.73)%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $ 37,056 $ 24,591 $ 1,028
Ratio of expenses to average
net assets 0.49% 0.66% 2.29%(c)
Ratio of net investment income
to average net assets 4.94% 5.35% 2.43%(c)
Ratio of expenses to average
net assets* 1.23% 1.42% 3.23%(c)
Ratio of net investment income
to average net assets* 4.20% 4.59% 1.99%(c)
Portfolio turnover(a) 9.81% 7.14% 18.65%
Average commission rate
paid(b)
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) Annualized. (d) Share class commenced
operations July 2, 1987.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.64 $ 15.11 $ 13.20 $ 13.20 $ 12.23 $ 12.34
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.31 0.38 0.03 0.36 0.40 0.20
Net realized and unrealized gains from investments 4.87 3.20 2.29 -- 0.98 (0.10)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.18 3.58 2.32 0.36 1.38 0.10
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.31) (0.35) (0.03) (0.34) (0.41) (0.21)
In excess of net investment income -- -- (0.01) (0.02) -- --
From net realized gains (0.61) (0.70) (0.37) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.92) (1.05) (0.41) (0.36) (0.41) (0.21)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.90 $ 17.64 $ 15.11 $ 13.20 $ 13.20 $12.23
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 30.39% 24.23% 20.79% 2.95% 11.38% 2.16%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 78,976 $ 44,284 $ 13,793 $ 12,054 $ 9,513 $ 118
Ratio of expenses to average net assets 1.25% 1.23% 1.26% 1.23% 1.11% 1.29%(d)
Ratio of net investment income to average net
assets 1.65% 2.19% 2.61% 3.01% 3.32% 3.97%(d)
Ratio of expenses to average net assets* 1.34% 1.36% 1.36% 1.40% 1.43% 1.49%(d)
Ratio of net investment income to average net
assets* 1.56% 2.06% 2.51% 2.84% 3.00% 3.77%(d)
Portfolio turnover(a) 28.18% 14.92% 4.03% 22.69% 7.53% 5.99%
Average commission rate paid(b) $ 0.0681 $ 0.0673
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) Class A Shares commenced offering on February
18, 1992. (d) Annualized.
<PAGE> 27
25
THE ONE GROUP(R) INCOME EQUITY FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.68 $ 15.14 $ 13.23 $ 13.83
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.17 0.24 0.26 0.11
Net realized and unrealized gains (losses) from investments 4.89 3.23 2.29 (0.60)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.06 3.47 2.55 (0.49)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.18) (0.23) (0.25) (0.11)
In excess of net investment income -- -- (0.02) --
From net realized gains (0.61) (0.70) (0.37) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.79) (0.93) (0.64) (0.11)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.95 $ 17.68 $ 15.14 $ 13.23
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 29.48% 23.41% 19.91% (3.37)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $79,518 $29,169 $3,468 $1,714
Ratio of expenses to average net assets 2.00% 1.98% 2.01% 1.95%(c)
Ratio of net investment income to average net assets 0.89% 1.44% 1.88% 2.70%(c)
Ratio of expenses to average net assets* 2.00% 2.01% 2.02% 1.95%(c)
Ratio of net investment income to average net assets* 0.89% 1.41% 1.87% 2.70%(c)
Portfolio turnover(d) 28.18% 14.92% 4.03% 22.69%
Average commission rate paid (e) $ 0.0681 $ 0.0673
</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 Shares commenced offering on January 14,
1994. (b) Not Annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE> 28
26
THE ONE GROUP(R)
VALUE GROWTH FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks long term capital growth and growth of income with a secondary
objective of providing a moderate level of current income.
[ICON] INVESTMENT STRATEGY
The Fund invests primarily in common stocks, debt securities, preferred stocks,
convertible securities, warrants, and other equity securities of overlooked or
undervalued companies that have the potential for earnings growth over time.
Although the Fund expects to invest in securities that pay a moderate level of
income, it may also invest in non-income producing securities if the potential
for capital growth or future income appears promising. Because the Fund seeks
return over the long term, Banc One Investment Advisors will not attempt to time
the market.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in the securities
described in "Investment Strategy." Up to 35% of its total assets may be
invested in U.S. Government Securities, other investment grade fixed income
securities, cash, and cash equivalents. For a list of all the securities in
which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
As a result, your investment in the Fund may increase or decrease in value. The
Fund also will invest in fixed income securities. The value of these securities
will change in response to interest rate changes and other factors. This is
especially true to the extent that the Fund invests in debt securities with
speculative characteristics. Before you invest, please read "More About the
Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Michael D. Weiner has been the Manager of the Fund since February, 1996. Since
1994, Mr. Weiner also has served as manager of the Equity Index Fund. Mr. Weiner
also serves as the Managing Director of Equity Research for Banc One Investment
Advisors. Before joining Banc One Investment Advisors, Mr. Weiner served as the
Director of Research and Head of U.S. Equities for the Dupont Pension Fund
Investment Company of Wilmington, Delaware from 1986 to 1994.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3)
(as a percentage of average daily
net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .31% .31% .31% .31%
Total Fund Operating Expenses
(after fee waiver) (5) 1.30% 2.05% 2.05% 1.05%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.40% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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
Class A (without fee waiver) $ 59 $ 87 $ 118 $205
Class B $ 71 $ 94 $ 130 $219
Class C $ 31 $ 64 $ 110 $238
Fiduciary Class $ 11 $ 33 $ 58 $128
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 58 $ 84 $ 113 $195
Class A (without fee waiver) $ 59 $ 87 $ 118 $205
Class B $ 21 $ 64 $ 110 $219
Class C $ 21 $ 64 $ 110 $238
Fiduciary Class $ 11 $ 33 $ 58 $128
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 29
27
THE ONE GROUP(R) VALUE GROWTH FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR MARCH 26,
ENDED 1996 TO
JUNE 30, JUNE 30,
FIDUCIARY 1997 1996(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.39 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.11 0.03
Net realized and unrealized gains from investments 2.85 0.39
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.96 0.42
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.11) (0.03)
From net realized gains (1.73) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.84) (0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.51 $ 10.39
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 31.97% 10.49%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $430,837 $ 191,212
Ratio of expenses to average net assets 0.98% 0.95%(d)
Ratio of net investment income to average net assets 1.06% 1.13%(d)
Ratio of expenses to average net assets* 1.00% 1.04%(d)
Ratio of net investment income to average net assets* 1.04% 1.04%(d)
Portfolio turnover(e) 113.17% 65.21%
Average commission rate paid(f) $ 0.0532 $ 0.0373
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Period from date reorganized as a fund of The One
Group. (b) Represents total return for Class A Shares from December 1, 1995
through March 25, 1996 plus total return for Fiduciary Shares for the period
from March 26, 1996 through June 30, 1996. (c) Not
annualized. (d) Annualized. (e) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued. (f) The average commission represents the total dollar amount
of commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<TABLE>
<CAPTION>
SEVEN MONTHS YEAR ENDED JUNE 30,
YEAR ENDED ENDED JUNE
JUNE 30, 30, ------------------------------------------------------------
CLASS A 1997 1996(a) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 10.39 $ 11.15 $ 9.00 $ 10.02 $ 9.42 $ 7.80 $ 6.39
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities Net
investment income 0.09 0.94 0.12 0.13 0.11 0.11 0.12
Net realized and
unrealized gains
(losses) from
investments 2.83 0.08 2.44 (0.56) 0.83 1.75 1.44
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 2.92 1.02 2.56 (0.43) 0.94 1.86 1.56
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.08) (0.94) (0.12) (0.14) (0.12) (0.10) (0.14)
In excess of net
investment income -- (0.01) -- -- -- -- --
From net realized gains (1.73) (0.83) (0.29) (0.45) (0.22) (0.14) (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.81) (1.78) (0.41) (0.59) (0.34) (0.24) (0.15)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 11.50 $ 10.39 $ 11.15 $ 9.00 $ 10.02 $ 9.42 $ 7.80
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales
Charge) 31.53% 10.40%(b) 29.57% (4.32)% 10.13% 24.27% 24.97%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $47,306 $35,984 $217,978 $173,198 $171,141 $133,614 $93,400
Ratio of expenses to
average net assets 1.23% 0.97%(c) 0.95% 0.96% 0.96% 0.97% 0.95%
Ratio of net investment
income to average net
assets 0.83% 0.65%(c) 1.25% 1.34% 1.21% 1.25% 1.73%
Ratio of expenses to
average net assets* 1.34% 1.05%(c) 0.95% 0.96% 0.96% 0.97% 1.02%
Ratio of net investment
income to average net
assets* 0.72% 0.77%(c) 1.25% 1.34% 1.21% 1.25% 1.66%
Portfolio turnover(d) 113.17% 65.21% 77.00% 53.00% 66.00% 43.00% 54.00%
Average commission rate
paid(e) $ 0.0532 $ 0.0373
</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) Upon reorganizing as a fund of The One Group, the Paragon
Value Growth Fund became the Value Growth Fund. Financial highlights for the
periods prior to March 26, 1996 represent the Paragon Value Growth Fund. The
per share data for the periods prior to March 26, 1996 have been restated to
reflect the impact of restatement of net asset value from $15.26 to $10.00
effective March 26, 1996. (b) Not annualized. (c) Annualized. (d) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued. (e) The average commission
represents the total dollar amount of commissions paid on portfolio security
transactions divided by the total number of portfolio shares purchased and
sold for which commissions were charged. For the year ended June 30, 1996, the
average commission was calculated for only the last seven months of the year.
<PAGE> 30
28
THE ONE GROUP(R) VALUE GROWTH FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SEVEN
YEAR MONTHS Year September 9,
ENDED ENDED ended 1994 to
JUNE 30, JUNE 30, November 30, November 30,
CLASS B 1997 1996(a) 1995 1994(b)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.39 $ 11.16 $ 9.01 $ 9.85
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.01 0.91 0.05 0.02
Net realized and unrealized gains (losses) from
investments 2.82 0.07 2.46 (0.84)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.83 0.98 2.51 (0.82)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.02) (0.91) (0.07) (0.02)
In excess of net investment income -- (0.01) -- --
From net realized gains (1.73) (0.83) (0.29) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.75) (1.75) (0.36) (0.02)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.47 $ 10.39 $ 11.16 $ 9.01
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 30.52% 9.86%(c) 28.74% (8.31)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $10,517 $4,673 $2,923 $412
Ratio of expenses to average net assets 1.98% 1.56%(d) 1.70% 1.71%(d)
Ratio of net investment income to average net assets 0.07% 0.13%(d) 0.38% 0.76%(d)
Ratio of expenses to average net assets* 2.00% 1.94%(d) 1.70% 1.71%(d)
Ratio of net investment income to average net assets* 0.05% 0.05%(d) 0.38% 0.76%(d)
Portfolio turnover(e) 113.17% 65.21% 77.00% 53.00%
Average commission rate paid(f) $ 0.0532 $ 0.0373
</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) Upon reorganizing as a fund of The One Group, the Paragon
Value Growth Fund became the Value Growth Fund. Financial highlights for the
periods prior to March 26, 1996 represent the Paragon Value Growth Fund. The
per share data for the periods prior to March 26, 1996 have been restated to
reflect the impact of restatement of net asset value from $15.21 to $10.00
effective March 26, 1996. (b) Class B Shares commenced offering September 9,
1994. (c) Not annualized. (d) Annualized. (e) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (f) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE> 31
29
THE ONE GROUP(R)
SMALL CAPITALIZATION FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth primarily by investing in a portfolio of
equity securities of small capitalization and emerging growth companies.
[ICON] INVESTMENT STRATEGY
The Fund invests primarily in common stocks, debt securities, preferred stocks,
convertible securities, warrants, and other equity securities of small
capitalization companies. Generally, Banc One Investment Advisors selects a
portfolio of companies with a market capitalization equivalent to the median
market capitalization of the S&P Small-Cap 600 Index*, although the Fund may
occasionally hold securities of companies with larger capitalizations if doing
so contributes to the Fund's investment objective. This Fund was formerly called
The One Group Gulf South Growth Fund.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 65% of its total assets in the securities described in
"Investment Strategy." Up to 35% of its total assets may be invested in U.S.
Government Securities, other investment grade fixed income securities, cash, and
cash equivalents. For a list of all the securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
As a result, your investment in the Fund may increase or decrease in value.
Also, smaller companies may be subject to greater business risks than larger
companies. Before you invest, please read "More About the Funds" and "Investment
Risks."
[ICON] FUND MANAGEMENT
In 1996, Richard R. Jandrain, III, Senior Managing Director of Equity Securities
for Banc One Investment Advisors, became co-manager of the Fund. Mr. Jandrain
has been a manager of the Growth Opportunities Fund since 1994. Mr. Jandrain has
over 19 years of investment experience and has served in various investment
management positions with Banc One Investment Advisors and its affiliates for
the past eight years.
Donald E. Allred has served as co-manager of the Fund since its inception in
1996. Mr. Allred served as manager of the Fund's predecessor, Paragon Gulf South
Growth Fund, from its inception in 1991 to 1996. Mr. Allred has over 30 years of
investment management experience.
*"Standard & Poor's Small-Cap 600" is a registered service mark of Standard &
Poor's Corporation, which does not sponsor and is in no way affiliated with the
Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or redemption
proceeds, as applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee waiver) (5) 1.31% 2.06% 2.06% 1.06%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.41% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 58 $ 85 $ 114 $196
Class A (without fee waiver) $ 59 $ 88 $ 119 $206
Class B $ 71 $ 95 $ 131 $220
Class C $ 31 $ 65 $ 111 $239
Fiduciary Class $ 11 $ 34 $ 58 $129
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 58 $ 85 $ 114 $196
Class A (without fee waiver) $ 59 $ 88 $ 119 $206
Class B $ 21 $ 65 $ 111 $220
Class C $ 21 $ 65 $ 111 $239
Fiduciary Class $ 11 $ 34 $ 58 $129
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 32
30
THE ONE GROUP(R) SMALL CAPITALIZATION FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR MARCH 26,
ENDED 1996 TO
JUNE 30, JUNE 30,
FIDUCIARY 1997 1996(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.75 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (0.02) --
Net realized and unrealized gains from investments 1.31 0.78
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.29 0.78
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net realized gains (1.10) (0.03)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.10) (0.03)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.94 $ 10.75
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 13.44% 13.39%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $78,318 $83,371
Ratio of expenses to average net assets 1.02% 0.96%(d)
Ratio of net investment income (loss) to average net assets (0.16)% (0.16)(d)
Ratio of expenses to average net assets* 1.12% 1.05%(d)
Ratio of net investment income (loss) to average net assets* (0.26)% (0.25)%(d)
Portfolio turnover(e) 92.01% 59.57%
Average commission rate paid(f) $ 0.0676 $ 0.0685
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Period from date reorganized as a fund of The One
Group. (b) Represents total return for Class A Shares from December 1, 1995
through March 25, 1996 plus total return for Fiduciary Shares for the period
from March 26, 1996 through June 30, 1996. (c) Not
annualized. (d) Annualized. (e) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued. (f) The average commission represents the total dollar amount
of commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<TABLE>
<CAPTION>
YEAR SEVEN MONTHS FIVE MONTHS
ENDED ENDED JUNE YEAR ENDED NOVEMBER 30, ENDED
JUNE 30, 30, ------------------------------------------------------ NOVEMBER 30,
CLASS A 1997 1996(a) 1995 1994 1993 1992 1991(f)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.73 $ 11.50 $ 9.36 $ 10.11 $ 9.48 $ 7.38 $ 6.37
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment
income (loss) (0.04) (0.07) (0.04) (0.04) (0.02) 0.01 0.01
Net realized and
unrealized gains
(losses) from
investments 1.35 1.40 2.35 (0.63) 0.88 2.10 1.01
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 1.31 1.33 2.31 (0.67) 0.86 2.11 1.02
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment
income -- -- -- -- (0.01) (0.01) (0.01)
From net realized
gains (1.10) (2.10) (0.17) (0.08) (0.22) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.10) (2.10) (0.17) (0.08) (0.23) (0.01) (0.01)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD $ 10.94 $ 10.73 $ 11.50 $ 9.36 $ 10.11 $ 9.48 $ 7.38
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes
Sales Charge) 13.52% 12.85%(b) 25.07% (6.66)% 9.10% 28.59% 16.12%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000) $17,299 $18,356 $95,467 $77,540 $74,982 $55,719 $34,546
Ratio of expenses to
average net assets 1.27% 1.05%(c) 1.03% 1.00% 1.01% 1.00% 1.05%(c)
Ratio of net
investment income
(loss) to average
net assets (0.41)% (0.33)%(c) (0.36)% (0.38)% (0.21)% 0.15% 0.31%(c)
Ratio of expenses to
average net
assets* 1.45% 1.37%(c) 1.03% 1.00% 1.01% 1.00% 1.05%(c)
Ratio of net
investment income
(loss) to average
net assets* (0.59)% (0.35)%(c) (0.36)% (0.30)% (0.21)% 0.15% 0.31%(c)
Portfolio
turnover(d) 92.01% 59.57% 65.00% 51.00% 59.00% 42.00% 12.00%
Average commission
rate paid(e) $ 0.0676 $ 0.0685
</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) Upon reorganizing as a fund of The One Group, the Paragon Gulf
South Growth Fund became the Gulf South Growth Fund. Financial highlights for
the periods prior to March 26, 1996 represent the Paragon Gulf South Growth
Fund. The per share data for the periods prior to March 26, 1996 have been
restated to reflect the impact of restatement of net asset value from $15.70
to $10.00 effective March 26, 1996. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued. (e) The average commission represents the total dollar amount
of commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year. (f) Period from
commencement of operations.
<PAGE> 33
31
THE ONE GROUP(R) SMALL CAPITALIZATION FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SEVEN
YEAR MONTHS Year September 12,
ENDED ENDED ended 1994 to
JUNE 30, JUNE 30, November 30, November 30,
CLASS B 1997 1996(a) 1995 1994(b)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.72 $ 11.56 $ 9.47 $ 10.40
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment loss (0.10) (0.06) (0.07) (0.01)
Net realized and unrealized gains (losses) from
investments 1.32 1.35 2.33 (0.92)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.22 1.29 2.26 (0.93)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net realized gains (1.10) (2.13) (0.17) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.10) (2.13) (0.17) --
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.84 $ 10.72 $ 11.56 $ 9.47
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 12.74% 12.47%(c) 24.21% (9.08)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $3,835 $2,545 $1,814 $231
Ratio of expenses to average net assets 2.02% 1.87%(d) 1.78% 1.75%(d)
Ratio of net investment income (loss) to average net
assets (1.16)% (1.10)%(d) (1.16)% (0.90)%(d)
Ratio of expenses to average net assets* 2.12% 1.92%(d) 1.78% 1.75%(d)
Ratio of net investment income (loss) to average net
assets* (1.26)% (1.15)%(d) (1.16)% (0.90)%(d)
Portfolio turnover(e) 92.01% 59.57% 65.00% 51.00%
Average commission rate paid(f) $ 0.0676 $ 0.0685
</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) Upon reorganizing as a fund of The One Group, the Paragon Gulf
South Growth Fund became the Gulf South Growth Fund. Financial highlights for
the periods prior to March 26, 1996 represent the Paragon Gulf South Growth
Fund. The per share data for the periods prior to March 26, 1996 have been
restated to reflect the impact of restatement of net asset value from $15.48
to $10.00 effective March 26, 1996. (b) Class B Shares commenced offering
September 12, 1994. (c) Not annualized. (d) Annualized. (e) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued. (f) The average commission
represents the total dollar amount of commissions paid on portfolio security
transactions divided by the total number of portfolio shares purchased and
sold for which commissions were charged. For the year ended June 30, 1996, the
average commission was calculated for only the last seven months of the year.
<PAGE> 34
MORE ABOUT THE FUNDS
32
PORTFOLIO QUALITY
- ----------------------------------------------------
The Funds only purchase securities that meet certain rating criteria.
- - >If the Funds invest in municipal bonds, the bonds must be rated as investment
grade.
- - >Other municipal securities, such as tax-exempt commercial paper, notes and
variable rate demand obligations, must be rated in one of the two highest
investment grade categories at the time of investment.
- - >Corporate bonds generally will be rated in one of the three highest
investment grade categories.
- - >Banc One Investment Advisors reserves the right to invest in corporate bonds
which present attractive opportunities and are rated in the lowest investment
grade category. These corporate bonds may be riskier than higher rated bonds.
If the securities are unrated, Banc One Investment Advisors must determine that
they are of comparable quality to rated securities. Banc One Investment Advisors
will look at a security's rating at the time of investment. For more information
about ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
- ----------------------------------------------------
Each Fund may invest up to 15% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK
CONSIDERATIONS
- ----------------------------------------------------
DERIVATIVES: Some of the Funds invest in securities that are considered to be
derivatives. These securities may be more volatile than other investments. These
include:
- - >options, futures contracts, and options on futures contracts
- - >warrants
- - >mortgage-backed securities, including collateralized mortgage obligations and
Real Estate Mortgage Investment Conduits (CMOs and REMICs) and stripped
mortgage-backed securities (IOs and POs)
- - >asset-backed securities
- - >swap, cap and floor transactions
- - >new financial products
- - >currency forwards
- - >structured instruments
Derivatives may be riskier than traditional investments.
SMALL CAPITALIZATION COMPANIES: Investments in smaller, younger companies may be
riskier than investments in larger, more established companies. These companies
may be more vulnerable to changes in economic conditions, specific industry
conditions, market fluctuations, and other factors effecting the profitability
of other companies. Because economic events may have a greater impact on smaller
companies, there may be a greater and more frequent fluctuation in their stock
price. This may cause frequent and unexpected increases or decreases in the
value of your investment.
FIXED INCOME SECURITIES: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
INDEX FUNDS: An index fund's investment objective is to track the performance of
a specified index. Therefore, securities may be purchased, retained and sold by
an index fund at times when an actively managed fund would not do so. As a
result, you can expect greater risk of loss (and a correspondingly greater
prospect of gain) from changes in the value of securities that are heavily
weighted in the index than would be the case if the funds were not fully
invested in such securities. Because of this, an index fund's share price can be
volatile and you should be able to handle sudden, and sometimes substantial,
fluctuations in the value of your investment.
INTERNATIONAL FUNDS: Investments in foreign securities involve risks different
from investments in U.S. securities. For more details, see "Investment
Practices" and "Investment Risks." Because of these risk factors, the share
price of the International Equity Index Fund is expected to be volatile, and you
should be able to sustain sudden, and sometimes substantial, fluctuations in the
value of your investment.
<PAGE> 35
HOW TO DO BUSINESS WITH THE ONE GROUP
33
PURCHASING
FUND SHARES
- ----------------------------------------------------
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
- - The One Group Services Company, and
- - Shareholder Servicing Agents. These include investment advisors, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased this way will be held for
you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
- - Purchases may be made on any business day. This includes any day that the
Funds are open for business, other than weekends and the following holidays:
New Years Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.
- - Purchase requests received by The One Group Services Company before 4 p.m.
Eastern Standard Time ("EST") will be effective that day.
- - Purchase orders may be cancelled by the Fund's Custodian, State Street Bank
and Trust Company, if it does not receive "federal funds" by 4:00 p.m. EST (i)
on the business day after the order is placed if you are buying Fiduciary
Class shares, and (ii) on the third business day if you are purchasing Class
A, Class B or Class C shares.
- - If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase or
redemption order to the Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption requests.
- - The One Group Services Company can reject a purchase order if it does not
think that it is in the best interests of a Fund and/or its shareholders to
accept the order.
- - Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
The One Group offers the following classes of shares:
- - Class A, Class B and Class C shares are available to the general public.
- - Fiduciary Class shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or agency
capacity. We will refer to these entities as "Intermediaries."
- - If you intend to hold your shares for six or more years, Class B shares may be
appropriate for you. If you intend to hold your shares for less than six
years, you may want to consider Class A or Class C shares.
The One Group Fund Direct IRA. The One Group offers a retirement plan and, in
1998, will offer an education plan. These plans allow participants to defer
taxes while their retirement and education savings grow. The education IRA
requires a minimum investment of $500. Call The One Group Services Company at
1-800-480-4111 for an Adoption Agreement.
HOW MUCH DO SHARES COST?
- - Shares are sold at net asset value ("NAV") plus a sales charge, if any.
- - Each class of shares in each Fund has a different NAV. This is primarily
because each class has different distribution expenses.
- - NAV per share is calculated by dividing the total market value of a Fund's
investments and other assets allocable to a class (minus class expenses) by
the number of outstanding shares in that class.
- - A Fund's NAV changes every day. NAV is calculated each business day at 4:00
p.m. EST.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most appropriate
for you.
2. Decide how much you want to invest.
- The minimum initial investment is $1,000 ($100 for employees of BANC ONE
CORPORATION and its affiliates).
- Subsequent investments must be at least $100 ($25 for employees of BANC ONE
CORPORATION and its affiliates).
- You may purchase no more than $250,000 of Class B shares at one time.
- The One Group Services Company may waive these minimums.
3.Complete the Account Application Form. Be sure to sign up for all of the
Account privileges that you plan to take advantage of. Doing so now means that
you will not have to complete additional paperwork later.
<PAGE> 36
34
4.Send the completed application and a personal check (unless you choose to pay
by wire or bank transfer) payable to "The One Group" to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
Contributions to Fund Direct IRAs should be made payable to "State Street
Bank and Trust Company for the Benefit of (your name)."
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions from a Fund will not be permitted for ten (10) calendar
days if purchases are made by check or under the Systematic Investment Plan
(see below).
6. If you purchase shares through a Shareholder Servicing Agent, you may be
required to complete additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent regarding purchases,
exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or call
The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
- - Contact your Shareholder Servicing Agent or The One Group Services Company at
1-800-480-4111 to relay your purchase instructions.
- - Send a personal check made payable to "The One Group" to State Street Bank and
Trust Company (see address above), authorize a bank transfer or initiate a
wire transfer.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - You may revoke your right to make purchases over the telephone by sending a
letter to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CAN I AUTOMATICALLY INVEST ON A
SYSTEMATIC BASIS?
Yes. After your Account is established, you may purchase additional Class A,
Class B and Class C shares by making automatic monthly investments from your
bank account. The minimum initial investment is still $1,000, but minimum
automatic additions are only $25. The One Group Services Company may waive these
minimums. To establish a Systematic Investment Plan:
- - Select the "Systematic Investment Plan" option on the Account Application
Form.
- - Provide the necessary information about the bank account from which your
investments will be made.
- - Shares purchased under a Systematic Investment Plan may not be redeemed for
ten (10) calendar days.
- - The One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for debiting your
bank account.
- - You may revoke your right to make systematic investments by sending a letter
to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CONVERSION FEATURE
Your Class B shares automatically convert to Class A shares after eight years
(measured from the end of the month in which they were purchased).
- - After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Class A shares.
- - You will not be assessed any sales charges or fees for conversion of shares,
nor will you be subject to any tax.
- - Because the share price of the Class A shares may be higher than that of the
Class B shares at the time of conversion, you may receive fewer Class A
shares; however, the dollar value will be the same.
- - If you have exchanged Class B shares of one Fund for Class B shares of
another, the time you held the shares in each Fund will be added together.
SALES CHARGES
- ----------------------------------------------------
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of The One Group. Compensation comes from sales charges, 12b-1 fees and
payments by The One Group Services Company from its own resources. The One Group
Services Company, at its own expense, also will provide promotional incentives
in the form of travel expenses, lodging and bonuses to licensed individuals who
sell shares of the Funds, as well as vacation trips (including lodging at luxury
resorts), tickets to entertainment events, and merchandise.
<PAGE> 37
35
CLASS A SHARES
This table shows the amount of sales charge you pay and the commissions paid to
Shareholder Servicing Agents.
<TABLE>
<CAPTION>
SALES CHARGE AS A %
OF THE OFFERING SALES CHARGE AS A % COMMISSION AS A %
AMOUNT OF PURCHASE PRICE OF YOUR INVESTMENT OF OFFERING PRICE
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.05%
$100,000-$249,999 3.50% 3.63% 3.05%
$250,000-$499,999 2.50% 2.56% 2.05%
$500,000-$999,999 2.00% 2.04% 1.60%
$1,000,000* 0.00% 0.00% 0.00%
</TABLE>
* If you purchase $1 million or more of Class A shares and are not assessed a
sales charge at the time of purchase, you will be charged the equivalent of
1% of the purchase price if you redeem any or all of the Class A shares
within one year of purchase.
CLASS B SHARES
Class B shares are offered at NAV, without any up-front sales charges. However,
if you redeem these shares within six years of the purchase date, you will be
assessed a Contingent Deferred Sales Charge ("CDSC") according to the following
schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 0.00%
</TABLE>
The One Group Services Company pays a commission of 4.00% of the original
purchase price to Shareholder Servicing Agents who sell Class B shares.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
assessed a CDSC as follows:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 1.00%
After first year none
</TABLE>
Shareholder Servicing Agents selling Class C shares receive a commission of
1.00% of the original purchase price from The One Group Services Company.
How the CDSC is Calculated
- - The Fund assumes that all purchases made in a given month were made on the
first day of the month.
- - The CDSC is based on the current market value or the original cost of the
shares, whichever is less.
- - A sales charge is not imposed on increases in NAV above the initial purchase
price, nor is a sales charge assessed on shares acquired through reinvestment
of dividends or capital gains distributions.
- - To keep your CDSC as low as possible, the Fund first will redeem any shares in
your account that carry no CDSC, starting with Class A Shares. After that, the
Fund will redeem the shares you have held for the longest time and thus have
the lowest CDSC.
<PAGE> 38
36
12B-1 FEES
12b-1 fees are paid by The One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to Shareholder Servicing Agents that sell
shares of The One Group.
- - The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .35% of the average daily net assets of
the Fund, which is currently being waived to .25%.
2. Class B and Class C shares pay a 12b-1 fee of 1.00% of the average daily
net assets of the Fund. This will cause expenses for Class B and Class C
shares to be higher and dividends to be lower than for Class A shares.
3. There are no 12b-1 fees for Fiduciary Class shares.
- - 12b-1 fees, together with the CDSC, help The One Group Services Company sell
Class B and Class C shares without an "up-front" sales charge by defraying the
costs of advancing brokerage commissions and other expenses paid to
Shareholder Servicing Agents.
- - The One Group Services Company may use up to .25% of the fees for shareholder
servicing and up to .75% for distribution. During the last fiscal year, The
One Group Services Company received 12b-1 fees totaling .25% and 1.00% of the
average daily net assets of Class A and Class B shares, respectively.
- - The One Group Services Company may pay 12b-1 fees to its affiliates and to
Banc One Investment Advisors and its affiliates (or any sub-advisor) for
brokerage and other agency transactions.
SALES CHARGE
REDUCTIONS
AND WAIVERS
- ----------------------------------------------------
REDUCING YOUR CLASS A SALES CHARGES
There are several ways you can reduce the sales charges you pay on Class A
shares:
1. Right of Accumulation: You may add the market value of any Class A, Class B
or Class C shares of a Fund (except a money market fund) that you (and your
spouse and minor children) already own to the amount of your next Class A
purchase for purposes of calculating the sales charge. An Intermediary also
may take advantage of this option.
2. Letter of Intent: With an initial investment of $2,000, you may purchase
Class A shares of one or more funds over the next 13 months and pay the same
sales charge that you would have paid if all shares were purchased at once. A
percentage of your investment will be held in escrow until the full amount
covered by the Letter of Intent has been invested.
To take advantage of the accumulation privilege or letter of intent, complete
the appropriate section of your fund application, or contact your investment
representative. To determine if you are eligible for the accumulation privilege,
contact The One Group Services Company at 1-800-480-4111. These programs may be
terminated or amended at any time.
WAIVER OF THE CLASS A SALES CHARGE
No sales charge is imposed on Class A shares of the Funds if the shares were:
1. Bought with the reinvestment of dividends and capital gains distributions.
2. Acquired in exchange for other Fund shares if a comparable sales charge has
been paid for the exchanged shares.
3. Bought by officers, directors or trustees, retirees and employees (and their
spouses and immediate family members) of:
- The One Group.
- BANC ONE CORPORATION and its subsidiaries and affiliates.
- The One Group Services Company and its subsidiaries and affiliates.
- State Street Bank and Trust Company and its subsidiaries and affiliates.
- Broker/dealers who have entered into dealer agreements with The One Group
and their subsidiaries and affiliates.
- An investment sub-advisor of a fund of The One Group and such sub-advisor's
subsidiaries and affiliates.
4. Bought by:
- Affiliates of BANC ONE CORPORATION and certain accounts (other than IRA
Accounts) for which an Intermediary acts in a fiduciary, advisory, agency,
custodial or similar capacity.
- Accounts as to which a bank or broker-dealer charges an asset allocation
fee, provided the bank or broker-dealer has an agreement with The One Group
Services Company.
- Retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to, those defined in sections 401(a),
403(b) or 457 of the Internal Revenue Code and "rabbi trusts."
<PAGE> 39
37
- Shareholder Servicing Agents who have a dealer arrangement with The One
Group Services Company, who place trades for their own accounts or for the
accounts of their clients and who charge a management, consulting or other
fee for their services, as well as clients of such Shareholder Servicing
Agents who place trades for their own accounts if the accounts are linked
to the master account of such Shareholder Servicing Agent.
5. Bought with proceeds from the sale of Fiduciary Class shares of a Fund of The
One Group or acquired in an exchange of Fiduciary Class shares of a Fund for
Class A shares of the same Fund, but only if the purchase is made within 60
days of the sale or distribution.
6. Bought with proceeds from the sale of shares of a mutual fund (other than a
fund of The One Group) for which a sales charge was paid, but only if the
purchase is made within 60 days of the sale or distribution.
7. Bought in an IRA with the proceeds of a distribution from an employee benefit
plan, but only if the purchase is made within 60 days of the sale or
distribution and, at the time of the distribution, the employee benefit plan
had plan assets invested in a Fund of The One Group.
8. Bought with assets of The One Group.
9. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
The waivers described in (5), (6) and (7) above will not continue indefinitely
and may be discontinued at any time without notice.
WAIVER OF THE CLASS B SALES CHARGE
No sales charge is imposed on redemptions of Class B shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class B shares of other Funds of The One Group.
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class C shares of other Funds of The One Group.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance. To see if you qualify, contact The One Group Services
Company at 1-800-480-4111 or your Shareholder Servicing Agent.
EXCHANGING
FUND SHARES
- ----------------------------------------------------
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
- - Fiduciary Class shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group.
- - Class A shares of a Fund may be exchanged for Fiduciary Class shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group, but only if you are eligible to purchase those shares.
- - Class B shares of a Fund may be exchanged for Class B shares of another Fund
of The One Group.
- - Class C shares of a Fund may be exchanged for Class C shares of another Fund
of The One Group.
<PAGE> 40
38
The One Group does not charge a fee for this privilege. In addition, The One
Group may change the terms and conditions of your exchange privileges upon 60
days written notice.
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
- - State Street Bank and Trust Company receives the request by 4:00 p.m., EST.
- - You have provided The One Group with all of the information necessary to
process the exchange.
- - You have received a current prospectus of the Fund or Funds in which you wish
to invest.
- - You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
- - You will pay a sales charge if you own Fiduciary Class shares of a Fund and
you want to exchange those shares for Class A shares, unless you qualify for a
sales charge waiver (see above).
- - You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange them for
shares of a Fund that does, in which case you would pay the sales charge
applicable to the Fund into which you are exchanging.
2.That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that Fund's
sales charge and all other sales charges you have already paid.
- - If you exchange Class B or Class C shares of a Fund, you will not pay a sales
charge at the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC of
either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C shares is
carried over to your new shares.
ARE EXCHANGES TAXABLE?
Generally:
- - An exchange between classes of shares of the same Fund is not taxable.
- - An exchange between Funds is considered a sale and generally results in a
capital gain or loss for Federal income tax purposes.
- - You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short term movements in the market. Therefore:
- - To prevent disruptions in the management of the Funds, The One Group limits
excessive exchange activity.
- - Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- - In addition, The One Group reserves the right to reject any exchange request
(even those that are not excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or otherwise adversely
affect other shareholders.
REDEEMING
FUND SHARES
- ----------------------------------------------------
WHEN CAN I REDEEM SHARES?
You may redeem all or some of your shares on any day that the Funds are open for
business.
- - Redemption requests received by The One Group Services Company before 4:00
p.m. EST will be effective that day.
HOW DO I REDEEM SHARES?
- - Unless you have selected the telephone option on your Account Application
Form, you must send a written redemption request to your Shareholder Servicing
Agent, if applicable, or to State Street Bank and Trust Company at the
following address:
The One Group
c/o State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
- - All requests for redemptions from IRA accounts must be in writing.
- - You may request redemption forms by calling The One Group Services Company at
1-800-480-4111.
- - State Street Bank and Trust Company may require that the signature on your
redemption request be guaranteed by a commercial bank, a member of a domestic
stock exchange, or a member of the Securities Transfer Association
<PAGE> 41
39
Medallion Program or the Stock Exchange Medallion Program, unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record; and
3.the redemption check is mailed to the shareholder at the record address.
- - On the Account Application Form you may elect to have the redemption proceeds
mailed or wired to:
1. a designated commercial bank; or
2.State Street Bank and Trust Company or your Shareholder Servicing Agent.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - Your redemption proceeds will be paid within seven days after receipt of the
redemption request.
WHAT WILL MY SHARES BE WORTH?
- - If you own Class A and Fiduciary Class shares and the Fund receives your
redemption request by 4:00 p.m. EST, you will receive that day's NAV.
- - If you own Class B or Class C shares and the Fund receives your redemption
request by 4:00 p.m. EST, you will receive that day's NAV, minus the amount of
any applicable CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
- - Call your Shareholder Servicing Agent or State Street Bank and Trust Company
at 1-800-480-4111 to relay your redemption request.
- - Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - REDEMPTIONS FROM YOUR IRA ACCOUNT MAY NOT BE MADE BY TELEPHONE.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000, you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
- - Select the "Systematic Withdrawal Plan" option on the Account Application
Form.
- - Specify the amount you wish to receive and the frequency of the payments.
- - You may designate a person other than yourself as the payee.
- - There is no charge for this service.
- - If you select this option, please keep in mind that:
1. It may not be in your best interest to buy additional Class A shares while
participating in a Systematic Withdrawal Plan. This is because Class A
shares have an up-front sales charge.
2. If you own Class B or Class C shares, you or your designated payee may
receive systematic payments provided the payments are limited to no more
than 10% of your account value annually, measured from the date the
redemption request is received.
3. If you are age 70 1/2, you may elect to receive payments to the extent
that the payment represents a minimum required distribution from an IRA or
other qualifying retirement plan.
4. If the amount of the systematic payment exceeds the income earned by your
account since the previous payment under the Systematic Withdrawal Plan,
payments will be made by redeeming some of your shares. This will reduce
the amount of your investment.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
- - All redemptions will be for cash.
- - If you redeem shares for which you paid by check, and The One Group has not
yet received payment on the check, The One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been collected from
your bank.
- - Because of the high cost of handling small investments, The One Group will
automatically redeem shares in accounts which, because of shareholder
redemptions, have values of less than $1,000. No sales charges will be
assessed and you will be given 60 days to make additional investments in the
Fund to increase the value of your account to at least $1,000.
- - The One Group may suspend your ability to redeem, or will redeem your shares
involuntarily, when it seems appropriate to do so in light of its
responsibilities under the Federal securities laws. The Statement of
Additional Information offers more details about this process.
<PAGE> 42
SHAREHOLDER INFORMATION
40
VOTING RIGHTS
- ----------------------------------------------------
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
BANC ONE CORPORATION (100 East Broad Street, Columbus, Ohio, 43271), through its
affiliates, may be deemed for purposes of the Investment Company Act of 1940, to
control the Funds. This is because as of August 5, 1997, BANC ONE CORPORATION or
its affiliates possessed the power to vote substantially all of the Fiduciary
Class shares of the Funds.
DIVIDEND POLICIES
- ----------------------------------------------------
DIVIDENDS
The Funds generally declare dividends on the last business day of each month.
Dividends are distributed on the first business day of the next month. Capital
gains, if any, for all Funds are distributed at least annually.
The Funds pay dividends and distributions on a per-share basis. This means that
the value of your shares will be reduced by the amount of the payment. If you
purchase shares shortly before the record date for a dividend or the
distribution of capital gains, you will pay the full price for the shares and
receive some portion of the price back as a taxable dividend or distribution.
Dividends payable on Fiduciary Class shares will be more than those payable on
other classes of shares. This is because Class A, Class B and Class C shares
have higher distribution expenses.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8500, Boston, MA
02266-8500, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street.
SPECIAL DIVIDEND RULES FOR CLASS B SHARES
Class B shares received as dividends and capital gains distributions will be
accounted for separately. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of the Class B shares in
the sub-account will also convert to Class A shares. (See "Conversion Feature.")
TAX TREATMENT
OF THE FUNDS
- ----------------------------------------------------
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT
OF SHAREHOLDERS
- ----------------------------------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares generally will produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
TAXATION OF DISTRIBUTIONS
Each Fund will distribute substantially all of its net investment income
(including net short-term capital gains) on at least an annual basis. Dividends
you receive from a Fund, whether reinvested or received in cash, will be taxable
to you. Dividends from a Fund's net investment income will be taxable as
ordinary income and dividends from a Fund's long-term capital gains will be
taxable to you as such, regardless of how long you have held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid the previous December.
<PAGE> 43
41
TAXATION OF RETIREMENT PLANS
Distributions by the Funds to qualified retirement plans will not be taxable.
However, if shares are held by a plan that ceases to qualify for tax-exempt
treatment or by an individual who has received shares as a distribution from a
retirement plan, the distributions will be taxable to the plan or individual as
described in "Taxation of Distributions." If you are considering purchasing
shares with qualified retirement plan assets, you should consult your tax
advisor for a more complete explanation of the Federal, state, local and (if
applicable) foreign tax consequences of making such an investment.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
SHAREHOLDER INQUIRIES
- ----------------------------------------------------
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In March and September you will receive a financial report from The One
Group. In addition, The One Group will periodically send you proxy
statements and other reports.
<PAGE> 44
ORGANIZATION AND MANAGEMENT OF THE FUNDS
42
THE FUNDS
Each Fund is a series of The One Group, an open-end management investment
company. The One Group currently consists of 40 separate Funds. Ten of the Funds
are described in this prospectus; the other Funds are described in separate
prospectuses. Each Fund described in this prospectus is diversified. Each Fund
is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of The One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to The
One Group since 1993. Prior to that time, The One Group was advised by
affiliates of Banc One Investment Advisors. In addition to The One Group, Banc
One Investment Advisors serves as investment advisor to other mutual funds and
individual, corporate, charitable and retirement accounts. As of June 30, 1997,
Banc One Investment Advisors, an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, managed over $47 billion in assets.
For the fiscal year ended June 30, 1997, the Funds paid advisory fees at the
following rates:
<TABLE>
<CAPTION>
FUND NAME ANNUAL RATE AS PERCENTAGE
OF AVERAGE DAILY NET ASSETS
<S> <C> <C>
The One Group(R) Asset Allocation Fund .55%
The One Group(R) Large Company Growth
Fund .74%
The One Group(R) Large Company Value Fund .74%
The One Group(R) Growth Opportunities
Fund .74%
The One Group(R) International Equity
Index Fund .55%
The One Group(R) Disciplined Value Fund .74%
The One Group(R) Equity Index Fund .10%
The One Group(R) Income Equity Fund .74%
The One Group(R) Value Growth Fund .74%
The One Group(R) Small Capitalization
Fund .74%
</TABLE>
THE SUB-ADVISOR
Independence International Associates, Inc. ("Independence International"), 75
State Street, Boston, Massachusetts, 02109, is the sub-advisor to the
International Equity Index Fund. Independence International specializes in the
management of international equity portfolios. Independence International is an
indirect subsidiary of John Hancock Mutual Life Insurance Company. As of June
30, 1997, Independence International had approximately $26.8 billion in assets
under management.
For the fiscal year ended June 30, 1997, Banc One Investment Advisors paid
Independence International sub-investment advisory fees at the following rates:
<TABLE>
<CAPTION>
FUND ASSETS ANNUAL RATE AS PERCENTAGE
OF AVERAGE DAILY NET ASSETS
<S> <C> <C>
Up to $10 million .275%
Over $10,000,000 up to $25,000,000 .225%
Over $25,000,000 up to $50,000,000 .195%
Over $50,000,000 up to $100,000,000 .125%
Over $100,000,000 .060%
</TABLE>
<PAGE> 45
43
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory compliance and
reporting. For these services, The One Group Services Company receives a fee
based on the total assets of The One Group. For the first $1.5 billion in One
Group assets, The One Group Services Company receives an annual fee of .20% of
each Fund's average daily net assets. The annual rate declines to .18% on assets
up to $2 billion, and to .16% when assets exceed $2 billion. The fee is
calculated daily and paid monthly. Some Funds are not included in the
calculations. Banc One Investment Advisors, the Sub-Administrator, provides
office space, equipment, and facilities, as well as legal and regulatory
support.
THE TRANSFER AGENT, CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500, or
your Shareholder Servicing Agent, if appropriate, handles shareholder
recordkeeping and statementing, distributes dividends, and processes buy and
sell requests. As the Funds' custodian, State Street holds the Funds' assets,
settles all portfolio trades and assists in calculating the Funds' net asset
values. Bank One Trust Company, N.A. serves as sub-custodian in connection with
the Funds' securities lending activities under an agreement with State Street
Bank and Trust Company. Bank One Trust Company, N.A. is paid a fee by the Funds
for this service.
<PAGE> 46
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
44
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Equity securities are subject mainly to market
risk. Fixed income securities are primarily influenced by market, credit and
prepayment risks, although certain securities may be subject to additional
risks. For a more complete discussion, see the Statement of Additional
Information. Following the table is a more complete discussion of risk.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
<S> <C> <C>
The One Group(R) Asset Allocation Fund 1
The One Group(R) Large Company Growth Fund 2
The One Group(R) Large Company Value Fund 3
The One Group(R) Growth Opportunities Fund 4
The One Group(R) Disciplined Value Fund 5
The One Group(R) Income Equity Fund 6
The One Group(R) Value Growth Fund 7
The One Group(R) Small Capitalization Fund 8
The One Group(R) International Equity Index
Fund 9
The One Group(R) Equity Index Fund 10
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, bonds, STRIPS, and 1-10 Market
CUBES.
TREASURY RECEIPTS: TRS, TIGRS, and CATS. 1-10 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies 1-10 Market
and instrumentalities of the U.S. Government. These include Credit
Ginnie Mae, Fannie Mae, and Freddie Mac.
CERTIFICATES OF DEPOSIT: Negotiable instruments with a stated 1-10 Market
maturity. Credit
Liquidity
TIME DEPOSITS: Non-negotiable receipts issued by a bank in 1-10 Liquidity
exchange for the deposit of funds. Credit
Market
COMMON STOCK: Shares of ownership of a company. 1-10 Market
REPURCHASE AGREEMENTS: The purchase of a security and the 1-10 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
REVERSE REPURCHASE AGREEMENT: The sale of a security and the 1-10 Market
simultaneous commitment to buy the security back at an agreed Leverage
upon price on an agreed upon date. This is treated as a
borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33% of the securities 1-10 Credit
owned by a Fund. In return the Fund will receive cash and/or Market
other securities as collateral. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Purchase or 1-10 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
INVESTMENT COMPANY SECURITIES: Shares of other mutual funds, 1-10 Market
including money market funds of The One Group and shares of
other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. Banc One
Investment Advisors will waive certain fees when investing in
funds for which it serves as investment advisor.
CONVERTIBLE SECURITIES: Bonds or preferred stock that convert to 1-10 Market
common stock. Credit
</TABLE>
<PAGE> 47
45
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
CALL AND PUT OPTIONS: A call option gives the buyer the right to 1-10 Management
buy, and obligates the seller of the option to sell, a security Liquidity
at a specified price. A put option gives the buyer the right to Credit
sell, and obligates the seller of the option to buy, a security Market
at a specified price. The Funds will sell only covered call and Leverage
secured put options.
FUTURES AND RELATED OPTIONS: A contract providing for the future 1-10 Management
sale and purchase of a specified amount of a specified security, Market
class of securities, or an index at a specified time in the Credit
future and at a specified price. Liquidity
Leverage
REAL ESTATE INVESTMENT TRUSTS ("REITS"): Pooled investment 1-10 Liquidity
vehicles which invest primarily in income producing real estate Management
or real estate related loans or interest. Market
Regulatory
Tax
Pre-payment
BANKERS' ACCEPTANCES: Bills of exchange or time drafts drawn on 1-8, 10 Credit
and accepted by a commercial bank. Maturities are generally six Liquidity
months or less. Market
COMMERCIAL PAPER: Secured and unsecured short-term promissory 1-8, 10 Credit
notes issued by corporations and other entities. Maturities Liquidity
generally vary from a few days to nine months. Market
FOREIGN SECURITIES: Stocks issued by foreign companies, as well 1-9 Market
as commercial paper of foreign issuers and obligations of Political
foreign banks, overseas branches of U.S. banks and supranational Liquidity
entities. Includes American Depository Receipts. Foreign Investment
RESTRICTED SECURITIES: Securities not registered under the 1-8, 10 Liquidity
Securities Act of 1933, such as privately placed commercial Market
paper and Rule 144A securities.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1-8 Credit
interest rates which are reset daily, weekly, quarterly or some Liquidity
other period and which may be payable to the Fund on demand. Market
WARRANTS: Securities, typically issued with preferred stock or 1-3, 7-9 Market
bonds, that give the holder the right to buy a proportionate Credit
amount of common stock at a specified price.
PREFERRED STOCK: A class of stock that generally pays a dividend 1-10 Market
at a specified rate and has preference over common stock in the
payment of dividends and in liquidation.
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real 1 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs"), Real Estate Mortgage Investment Credit
Conduits ("REMICs") and Stripped Mortgage-Backed Securities Regulatory
("SMBS").
CORPORATE DEBT SECURITIES: Corporate bonds and non-convertible 1 Market
debt securities. Credit
DEMAND FEATURES: Securities that are subject to puts and standby 1 Market
commitments to purchase the securities at a fixed price (usually Liquidity
with accrued interest) within a fixed period of time following Management
demand by a Fund.
ASSET-BACKED SECURITIES: Securities secured by company 1 Pre-payment
receivables, home equity loans, truck and auto loans, leases, Market
credit card receivables and other securities backed by other Credit
types of receivables or other assets.
MORTGAGE DOLLAR ROLLS: A transaction in which a Fund sells 1 Pre-payment
securities for delivery in a current month and simultaneously Market
contracts with the same party to repurchase similar but not Regulatory
identical securities on a specified future date.
ADJUSTABLE RATE MORTGAGE LOANS ("ARMS"): Loans in a mortgage 1 Pre-payment
pool which provide for a fixed initial mortgage interest rate Market
for a specified period of time, after which the rate may be Credit
subject to periodic adjustments. Regulatory
SWAPS, CAPS AND FLOORS: A Fund may enter into these transactions 1-10 Management
to manage its exposure to changing interest rates and other Credit
factors. Swaps involve an exchange of obligations by two Liquidity
parties. Caps and floors entitle a purchaser to a principal Market
amount from the seller of the cap or floor to the extent that a
specified index exceeds or falls below a predetermined interest
rate or amount.
</TABLE>
<PAGE> 48
46
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
NEW FINANCIAL PRODUCTS: New options and futures contracts and 1-10 Management
other financial products, continue to be developed and the Funds Credit
may invest in such options, contracts and products. Market
Liquidity
STRUCTURED INSTRUMENTS: Debt securities issued by agencies and 1 Market
instrumentalities of the U.S. government, banks, municipalities, Liquidity
corporations and other businesses whose interest and/or Management
principal payments are indexed to foreign currency exchange Credit
rates, interest rates, or one or more other references indices. Foreign Investment
MUNICIPAL SECURITIES: Securities issued by a state or political 1 Market
subdivision to obtain funds for various public purposes. Credit
Municipal securities include private activity bonds and Political
industrial development bonds, as well as General Obligation Tax
Notes, Tax Anticipation Notes, Bond Anticipation Notes, Revenue
Anticipation Notes, Project Notes, other short-term tax-exempt
obligations, municipal leases, and obligations of municipal
housing authorities and single family revenue bonds.
OBLIGATIONS OF SUPRANATIONAL AGENCIES: Obligations of 9 Credit
supranational agencies who are chartered to promote economic Foreign Investment
development and are supported by various governments and
governmental agencies.
CURRENCY FUTURES AND RELATED OPTIONS: The Fund may engage in 9 Management
transactions in financial futures and related options, which are Liquidity
generally described above. The Fund will enter into these Credit
transactions in foreign currencies and for hedging purposes Market
only. Political
Leverage
Foreign Investment
FORWARD FOREIGN EXCHANGE TRANSACTIONS: Contractual agreement to 9 Management
purchase or sell one specified currency for another currency at Liquidity
a specified future date and price. The Fund will enter into Credit
forward foreign exchange transactions for hedging purposes only. Market
Political
Leverage
Foreign Investment
</TABLE>
<PAGE> 49
47
INVESTMENT RISKS
- ----------------------------------------------------
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Funds may fluctuate, as will the value of
your investment in the Funds. Certain investments are more susceptible to these
risk than others.
- - CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default
rises.
- - LEVERAGE RISK. The risk associated with securities or practices that multiply
small index or market movements into large changes in value. Leverage is often
associated with investments in derivatives, but also may be embedded directly
in the characteristics of other securities.
- HEDGED. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Hedges are sometimes subject to imperfect matching between
the derivative and underlying security, and there can be no assurance that
a Fund's hedging transactions will be effective.
- SPECULATIVE. To the extent that a derivative is not used as a hedge, the
fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater
than the derivative's original cost.
- - LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that would normally prevail in
the market. The seller may have to lower the price, sell other securities
instead or forego an investment opportunity, any of which could have a
negative effect on fund management or performance. This includes the risk of
missing out on an investment opportunity because the assets necessary to take
advantage of it are tied up in less advantageous investments.
- - MANAGEMENT RISK. The risk that a strategy used by a fund's management may fail
to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than
it was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. There is also the
risk that the current interest rate may not accurately reflect existing market
rates. For fixed income securities, market risk is largely, but not
exclusively, influenced by changes in interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Finally, key information about a security or market may be
inaccurate or unavailable. This is particularly relevant to investments in
foreign securities.
- - POLITICAL RISK. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
- - FOREIGN INVESTMENT RISK. The risk associated with higher transaction costs,
delayed settlements, currency controls and adverse economic developments. This
also includes the risk that fluctuations in the exchange rates between the
U.S. dollar and foreign currencies may negatively affect an investment.
Adverse changes in exchange rates may erode or reverse any gains produced by
foreign currency denominated investments and may widen any losses. Exchange
rate volatility also my affect the ability of an issuer to repay U.S. dollar
denominated debt, thereby increasing credit risk.
- - PRE-PAYMENT RISK. The risk that the principal repayment of a security will
occur at an unexpected time, especially that the repayment of a mortgage or
asset-backed security occurs either significantly sooner or later than
expected. Changes in pre-payment rates can result in greater price and yield
volatility. Pre-payments generally accelerate when interest rates decline.
<PAGE> 50
48
When mortgage and other obligations are pre-paid, a Fund may have to reinvest
in securities with a lower yield. Further, with early prepayment, a Fund may
fail to recover any premium paid, resulting in an unexpected capital loss.
- - TAX RISK. The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
- - REGULATORY RISK. The risk associated with Federal and state laws which may
restrict the remedies that a mortgage lender has when a borrower defaults on
mortgage loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor relief laws,
restrictions on "due on sale" clauses, and state usury laws.
INVESTMENT POLICIES
- ----------------------------------------------------
Each Fund's investment objective and the investment policies summarized below
are fundamental. This means that they cannot be changed without the consent of a
majority of the outstanding shares of the Funds. The full text of the
fundamental policies can be found in the Statement of Additional Information.
Each Fund may not:
1. Purchase an issuer's securities if as a result more than 5% of its total
assets would be invested in the securities of that issuer or the Fund would
own more than 10% of the outstanding voting securities of that issuer. This
does not include securities issued or guaranteed by the United States, its
agencies or instrumentalities, and repurchase agreements involving these
securities. This restriction applies with respect to 75% of a Fund's total
assets.
2. Concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include obligations issued or guaranteed by the
U.S. government or its agencies and instrumentalities and repurchase
agreements involving such securities.
3. 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.
The One Group Equity Index Fund may not:
1. Invest more than 10% of its total assets in securities issued or guaranteed
by the United States, its agencies or instrumentalities.
Additional investment policies can be found in the Statement of Additional
Information.
TEMPORARY DEFENSIVE POSITION
Sometimes Banc One Investment Advisors decides that the Funds should temporarily
be invested in cash and cash equivalents. Cash equivalents include:
- - Securities issued by the U.S. Government, its agencies and instrumentalities
- - Repurchase Agreements
- - Certificates of Deposit
- - Bankers' Acceptances
- - Commercial Paper (rated in one of the two highest rating categories)
- - Variable Rate Master Demand Notes
- - Bank Money Market Deposit Accounts
All of the Funds (other than the International Equity Index Fund and the Equity
Index Fund) may temporarily invest up to 100% of their total assets in cash and
cash equivalents. The Equity Index Fund may temporarily invest only 10% of its
total assets in cash and cash equivalents, while the International Equity Index
Fund may invest up to 20% of its total assets in debt securities issued or
guaranteed by foreign governments or any of their political subdivisions,
agencies or instrumentalities, or by supranational issuers rated in one of the
three highest rating categories.
While the Funds are engaged in a temporary defensive position, they will not be
pursuing their investment objectives. Therefore, the Funds will pursue a
temporary defensive position only when market conditions warrant.
PORTFOLIO TURNOVER
Portfolio turnover may vary greatly from year to year, as well as within a
particular year.
Higher portfolio turnover rates will likely result in higher transaction costs
to the Funds and may result in additional tax consequences to you. The portfolio
turnover rate for each Fund for the fiscal year ended June 30, 1997 is shown on
the Financial Highlights.
<PAGE> 51
APPENDIX
49
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free U.S. Treasury
obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet financial
commitment is strong. Obligations designated with a plus sign (+)
indicate that capacity to meet financial commitment is extremely
strong.
A-2 Issues somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than obligations in higher rating
categories. However, the capacity to meet financial commitments is
satisfactory.
FITCH'S INVESTORS SERVICE, L.P. ("FITCH")
F-1+ Exceptionally strong credit quality. Strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Assurance of timely payment is only
slightly less in degree than issues rated F-1+.
F-2 Good credit quality. Satisfactory degree of assurance for timely
payment, but the margin of safety is not as good as for issues assigned
F-1+ and F-1 ratings.
IBCA LIMITED ("IBCA")
A1 Highest capacity for timely repayment. Those issues rated A1+ possess a
particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such capacity may
be susceptible to adverse changes in business, economic or financial
conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
<PAGE> 52
50
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
Aaa The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
Aa The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
Aa These insurance companies offer excellent financial security. Together
with the Aaa group, they constitute what are generally known as high
grade companies. They are rated lower than Aaa companies because
long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
DESCRIPTION OF CORPORATE/
MUNICIPAL BOND RATINGS
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong capacity to
meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's capacity
to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories. However, capacity to meet its financial commitment on
the obligation is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligation.
Speculative Grade
BB Less vulnerable to non-payment than other speculative issues. However,
these bonds face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet financial commitment on the obligation.
B More vulnerable to non-payment than obligations rated BB, but currently
has the capacity to meet its financial commitment on the obligation.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to meet its financial commitment on the
obligation.
CCC Currently vulnerable to non-payment, and is dependent upon favorable
business, financial, and economic conditions to meet its financial
commitment on the obligation. In the event of adverse busi-
<PAGE> 53
51
ness, financial, or economic conditions, they are not likely to have the
capacity to meet its financial commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments
on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
Investment Grade
Aaa Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large, or an exceptionally stable, margin and principal is secure.
Aa High quality by all standards. Margins of protection may not be as
large as in Aaa securities, fluctuation of protective elements may be
greater, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
Baa These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
Ba These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may be
small).
Caa Bonds in this category have poor standing and may be in default. These
bonds carry an element of danger with respect to principal and interest
payments.
Ca Speculative to a high degree and could be in default or have other
marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S
MIG1 & Short-term municipal securities rated MIG1 or VMIG1 are of the best
VMIGX1 quality. They have strong protection from established cash flows,
superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2 & These Short-term municipal securities are of high quality. Margins of
VMIG2 protection are ample although not so large as in the preceding group.
MIG3 & Favorable quality. All security elements are accounted for, but the
VMIG3 undeniable strength of the preceding grades is lacking. Liquidity and
cash flow protection may be narrow and marketing access for
refinancing is likely to be less well established.
S&P
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
aaa Top-quality preferred stock. This rating indicates good asset
protection and the
<PAGE> 54
52
least risk of dividend impairment within the universe of preferred
stocks.
aa High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
a Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues
rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock obligations.
Whereas the issuer normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest will be paid
on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal and
interest is strong, the relative degree is not as high as for issues
rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to adverse
developments than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
<PAGE> 55
Investment Advisor and Sub-Administrator
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Sub-Advisor
Independence International Associates, Inc.
75 State Street
Boston, MA 02109
Distributor
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES COMPANY AT 3435
STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL INFORMATION IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS A WEB SITE
(WWW.SEC.COM) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIALS
INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING THE ONE GROUP(R).
TOG-F-120
<PAGE> 56
THE ONE GROUP(R) FAMILY OF MUTUAL FUNDS
MUNICIPAL BOND FUNDS
COMBINED PROSPECTUS
NOVEMBER 1, 1997
THE ONE GROUP(R) INTERMEDIATE TAX-FREE BOND FUND
THE ONE GROUP(R) MUNICIPAL INCOME FUND
THE ONE GROUP(R) ARIZONA MUNICIPAL BOND FUND
THE ONE GROUP(R) WEST VIRGINIA MUNICIPAL BOND FUND
THE ONE GROUP(R) LOUISIANA MUNICIPAL BOND FUND
THE ONE GROUP(R) OHIO MUNICIPAL BOND FUND
THE ONE GROUP(R) KENTUCKY MUNICIPAL BOND FUND
This prospectus describes seven mutual funds that attempt to produce income
exempt from Federal and/or state income tax. The information in this
prospectus is important. Please read it carefully before you invest, and
save it for future reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: oO ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY BANC ONE CORPORATION OR ITS AFFILIATES; oO ARE
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
BY ANY FEDERAL OR STATE GOVERNMENTAL AGENCY; oO
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 57
TABLE OF CONTENTS
<TABLE>
<S> <C>
A BRIEF PREVIEW OF THE FUNDS............................. 1
ABOUT THE FUNDS.......................................... 2
The One Group(R) Intermediate Tax-Free Bond Fund...... 2
The One Group(R) Municipal Income Fund................ 5
The One Group(R) Arizona Municipal Bond Fund.......... 8
The One Group(R) West Virginia Municipal Bond Fund.... 11
The One Group(R) Louisiana Municipal Bond Fund........ 14
The One Group(R) Ohio Municipal Bond Fund............. 17
The One Group(R) Kentucky Municipal Bond Fund......... 20
MORE ABOUT THE FUNDS..................................... 23
HOW TO DO BUSINESS WITH THE ONE GROUP.................... 24
Purchasing Fund Shares................................ 24
Sales Charges......................................... 25
Sales Charge Reductions and Waivers................... 27
Exchanging Fund Shares................................ 28
Redeeming Fund Shares................................. 29
SHAREHOLDER INFORMATION.................................. 31
Voting Rights......................................... 31
Dividend Policies..................................... 31
Tax Treatment of the Funds............................ 32
Tax Treatment of Shareholders......................... 32
Shareholder Inquiries................................. 33
ORGANIZATION AND MANAGEMENT OF THE FUNDS................. 34
The Funds............................................. 34
The Board of Trustees................................. 34
The Advisor........................................... 34
The Distributor....................................... 34
The Administrator and Sub-Administrator............... 34
The Transfer Agent, Custodian and Sub-Custodian....... 34
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND
POLICIES............................................... 35
Investment Practices.................................. 35
Investment Risks...................................... 37
Investment Policies................................... 38
APPENDIX: DESCRIPTION OF RATINGS......................... 40
</TABLE>
<PAGE> 58
1
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE MUNICIPAL BOND FUNDS?
The Funds are designed to produce income exempt from Federal
and/ or state income tax. Each Fund pursues a different
investment objective and involves different risks. These Funds
may not be appropriate for Individual Retirement Accounts,
Qualified Plans, and other Retirement Plans that receive
favorable tax treatment. Please read about each Fund before
investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Intermediate Tax-Free Bond Fund and the Municipal Income
Fund invest in debt securities issued by or on behalf of
states, territories, and possessions of the United States and
their agencies that produce interest that is exempt from
Federal income tax. The Arizona Municipal Bond Fund, the West
Virginia Municipal Bond Fund, the Louisiana Municipal Bond
Fund, the Kentucky Municipal Bond Fund and the Ohio Municipal
Bond Fund invest in debt securities of their respective states
that produce interest that is exempt from Federal Income Tax
and the personal income tax of each Fund's respective state.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
The Funds invest in fixed-income investments that are subject
to market fluctuations as a result of changes in interest
rates. As a result, the value of investments in the Funds may
decrease during periods of rising interest rates and increase
during periods of declining interest rates. In addition, some
of the Funds invest in mortgage-related securities which may
have greater price and yield volatility than traditional
fixed-income securities. All of the Funds, except the
Intermediate Tax Free Bond Fund and the Municipal Income Fund,
are non-diversified funds which expose investors to special
risks, including risks associated with state specific
investments. For more information about risks, please read
"More About the Funds" and "Investment Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
The Funds currently offer four classes of Shares: Class A,
Class B, Class C and Fiduciary Class. Class A, Class B and
Class C 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. The section called "How To Do
Business With The One Group" will provide more information.
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the
Funds are open for business. Class C shares are not available
for purchase in all of the funds. Purchase and redemption
procedures are explained in greater detail in "How To Do
Business With The One Group." For additional information, call
The One Group Services Company at 1-800-480-4111.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on each business day and are
distributed periodically on the first business day of each
month. Any capital gains are distributed at least annually.
Distributions are paid in additional shares of the same class
unless you elect to take the payment in cash. For a more
detailed discussion of dividends, see "Dividend Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors"), an indirect subsidiary of BANC ONE CORPORATION,
serves as the advisor of the Funds. Banc One Investment
Advisors is paid a fee for its services. A more detailed
discussion regarding Banc One Investment Advisors, its
services and compensation can be found in the Prospectus under
the headings "The Advisor" and "Expense Summary."
<PAGE> 59
2
THE ONE GROUP(R)
INTERMEDIATE TAX-FREE BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a diversified fund that seeks current income exempt from Federal
income taxes consistent with prudent investment management and the preservation
of capital.
[ICON] INVESTMENT STRATEGY
The Fund invests in bonds and notes of states, territories and possessions of
the United States, including the District of Columbia, and their respective
authorities, political subdivisions, agencies and instrumentalities, the
interest on which is exempt from Federal income tax ("Municipal Securities").
The Fund's average weighted maturity normally will range between three and ten
years.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its net assets in Municipal Securities. As a
matter of fundamental policy, the Fund invests at least 65% of its total assets
in bonds. The Fund also may invest in mortgage-backed securities, restricted
securities, and mortgage dollar rolls. The securities in which the Fund invests
may have fixed rates of return or floating or variable rates. For a list of all
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund may invest in Municipal Securities that are rated in the lowest
investment grade. Even though such securities are generally considered
investment grade they are considered to have speculative characteristics.
Issuers of such securities are more vulnerable to changes in economic conditions
than issuers of higher grade securities. The Municipal Securities are also fixed
income investments. The value of these securities will change in response to
interest rate changes and other factors. In addition, the Fund invests in
mortgage-related securities which have significantly greater price and yield
volatility than traditional fixed-income securities. Before you invest, please
read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 20% of the Fund's assets may be invested in Municipal Securities, the
interest on which is subject to the Federal alternative minimum tax.
Shareholders who are subject to the Federal alternative minimum tax may have all
or a portion of their income from the Fund subject to Federal income tax. In
addition, corporate shareholders will be required to take the interest on
Municipal Securities into account in determining their alternative minimum
taxable income.
[ICON] FUND MANAGEMENT
Patrick M. Morrissey has served as the manager of the Fund since February, 1994.
Since 1993, Mr. Morrissey also has managed the Municipal Income Fund. Mr.
Morrissey has been employed by Banc One Investment Advisors and its affiliates
since October, 1992. From September, 1986 to October, 1992, Mr. Morrissey served
as Portfolio Manager at Norwest Investments and Trust.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .26% .26% .26% .26%
Total Fund Operating Expenses (after fee
waivers) (6) .91% 1.56% 1.56% .66%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.21% for Class A shares, 1.86% for Class B
shares, 1.86% for Class C shares and .86% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 73 $ 93 $152
Class A (without fee waivers) $ 57 $ 82 $ 109 $185
Class B $ 66 $ 79 $ 105 $168
Class B (without fee waivers) $ 69 $ 88 $ 121 $201
Class C $ 26 $ 49 $ 85 $186
Class C (without fee waivers) $ 29 $ 58 $ 101 $218
Fiduciary Class $ 7 $ 21 $ 37 $ 82
Fiduciary Class (without fee waiver) $ 9 $ 27 $ 48 $106
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 54 $ 73 $ 93 $152
Class A (without fee waivers) $ 57 $ 82 $ 109 $185
Class B $ 16 $ 49 $ 85 $168
Class B (without fee waivers) $ 19 $ 58 $ 101 $201
Class C $ 16 $ 49 $ 85 $186
Class C (without fee waivers) $ 19 $ 58 $ 101 $218
Fiduciary Class $ 7 $ 21 $ 37 $ 82
Fiduciary Class (without fee waiver) $ 9 $ 27 $ 48 $106
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 60
3
THE ONE GROUP(R) INTERMEDIATE TAX-FREE BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
------------------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991(c)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 10.67 $ 10.64 $ 10.49 $ 11.15 $ 10.69 $ 10.28 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.54 0.52 0.54 0.52 0.53 0.55 0.49
Net realized and
unrealized gains
(losses) from
investments 0.27 0.04 0.15 (0.52) 0.49 0.42 0.27
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 0.81 0.56 0.69 0.00 1.02 0.97 0.76
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.54) (0.51) (0.54) (0.53) (0.52) (0.55) (0.48)
In excess of net
investment income -- -- -- (0.01) -- -- --
Net realized gains (0.02) (0.02) -- (0.01) (0.04) (0.01) --
In excess of net realized
gains -- -- -- (0.11) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.56) (0.53) (0.54) (0.66) (0.56) (0.56) (0.48)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 10.92 $ 10.67 $ 10.64 $ 10.49 $ 11.15 $ 10.69 $ 10.28
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 7.76% 5.39% 6.75% (0.11)% 9.79% 9.54% 9.49%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $451,089 $217,201 $211,229 $182,611 $166,489 $142,672 $82,192
Ratio of expenses to
average net assets 0.58% 0.54% 0.53% 0.48% 0.54% 0.55% 0.30%(b)
Ratio of net investment
income to average net
assets 5.05% 4.87% 5.17% 4.78% 4.93% 5.28% 6.04%(b)
Ratio of expenses to
average net assets* 0.81% 0.87% 0.88% 0.84% 0.94% 1.07% 0.90%(b)
Ratio of net investment
income to average net
assets* 4.82% 4.54% 4.82% 4.42% 4.53% 4.77% 5.44%(b)
Portfolio turnover(a) 86.89% 111.58% 199.76% 105.98% 31.99% 11.50% 35.15%
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) The Fiduciary Class commenced operations on
September 4, 1990.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
------------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.67 $ 10.63 $ 10.48 $ 11.14 $ 10.69 $ 10.57
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.51 0.50 0.51 0.50 0.55 0.15
Net realized and unrealized gains
(losses) from investments 0.26 0.05 0.15 (0.52) 0.44 0.18
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.77 0.55 0.66 (0.02) 0.99 0.33
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.51) (0.49) (0.49) (0.52) (0.50) (0.21)
In excess of net investment income -- -- (0.02) (0.01) -- --
Net realized gains (0.02) (0.02) -- -- (0.04) --
In excess of net realized gains -- -- -- (0.11) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.53) (0.51) (0.51) (0.64) (0.54) (0.21)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.91 $ 10.67 $ 10.63 $ 10.48 $ 11.14 $ 10.69
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.39% 5.28% 6.49% (0.33)% 9.47% 8.68%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 8,457 $ 6,622 $ 5,614 $ 5,556 $ 5,480 $ 5
Ratio of expenses to average net assets 0.83% 0.79% 0.78% 0.73% 0.71% 1.02%(b)
Ratio of net investment income to average
net assets 4.75% 4.62% 4.91% 4.57% 4.77% 4.91%(b)
Ratio of expenses to average net assets* 1.15% 1.22% 1.23% 1.19% 1.27% 1.32%(b)
Ratio of net investment income to average
net assets* 4.43% 4.19% 4.46% 4.11% 4.21% 4.61%(b)
Portfolio turnover(a) 86.89% 111.58% 199.76% 105.98% 31.99 11.50%
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) Class A Shares commenced offering on February
18, 1992.
<PAGE> 61
4
THE ONE GROUP(R) INTERMEDIATE TAX-FREE BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.68 $ 10.65 $ 10.50 $ 11.18
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.45 0.43 0.46 0.17
Net realized and unrealized gains (losses) from investments 0.27 0.04 0.14 (0.67)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.72 0.47 0.60 (0.50)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.45) (0.42) (0.45) (0.17)
Net realized gains (0.02) (0.02) -- --
In excess of net realized gains -- -- -- (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.44) (0.45) (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.93 $ 10.68 $ 10.65 $ 10.50
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.82% 4.48% 5.89% (4.48)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 3,307 $ 2,439 $ 1,116 $ 549
Ratio of expenses to average net assets 1.47% 1.44% 1.43% 1.40%(c)
Ratio of net investment income to average net assets 4.09% 3.97% 4.29% 4.08%(c)
Ratio of expenses to average net assets* 1.78% 1.87% 1.88% 1.85%(c)
Ratio of net investment income to average net assets* 3.78% 3.54% 3.84% 3.63%(c)
Portfolio turnover(d) 86.89% 111.58% 199.76% 105.98%
</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 Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE> 62
5
THE ONE GROUP(R)
MUNICIPAL INCOME FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a diversified fund that seeks current income exempt from Federal
income taxes.
[ICON] INVESTMENT STRATEGY
The Fund invests in debt securities of states, territories and possessions of
the United States, including the District of Columbia, and their respective
authorities, political subdivisions, agencies and instrumentalities, the
interest on which is exempt from Federal income tax ("Municipal Securities").
The Fund's average weighted maturity normally will range from five to fifteen
years, although the Fund may shorten its average weighted maturity to as little
as two years if appropriate for temporary defensive purposes.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its net assets in Municipal Securities. As a
matter of fundamental policy, the Fund invests at least 65% of its total assets
in bonds. As a matter of fundamental policy, the Fund will not invest more than
25% of its net assets (i) in securities within a single industry; or (ii) in
securities of governmental units or issuers in the same state, territory, or
possession. However, the Fund will, from time to time, invest more than 25% of
its net assets in municipal housing authority obligations and single-family
mortgage revenue bonds. The Fund also may invest in mortgage-backed securities,
restricted securities, and mortgage dollar rolls. The securities in which the
Fund invests may have fixed rates of return or floating or variable rates. For a
list of all securities in which the Fund may invest, please read "Investment
Practices."
[ICON] RISK CONSIDERATIONS
The Fund may invest in Municipal Securities that are rated in the lowest
investment grade. Even though such securities are generally considered
investment grade securities, they are considered to have speculative
characteristics. Issuers of such securities are more vulnerable to changes in
economic conditions than issuers of higher grade securities. The Municipal
Securities are also fixed-income investments. The value of these securities will
change in response to interest rates and other factors. In addition, the Fund
invests in mortgage-related securities which may have greater price and yield
volatility than traditional fixed-income securities. Before you invest, please
read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in Municipal Securities the
interest on which is subject to Federal alternative minimum tax. Shareholders
who are subject to the Federal alternative minimum tax may have all or a portion
of their income from the Fund subject to Federal income tax. In addition,
corporate shareholders will be required to take the interest on Municipal
Securities into account in determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
Patrick M. Morrissey has served as the manager of the Fund since its inception
in February, 1993. Mr. Morrissey has been employed by Banc One Investment
Advisors and its affiliates as a fixed income portfolio manager since October,
1992. From September, 1986 to October, 1992, Mr. Morrissey served as Portfolio
Manager at Norwest Investments and Trust.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .35% .35% .35% .35%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .27% .27% .27% .27%
Total Fund Operating Expenses (after fee
waivers) (6) .87% 1.52% 1.52% .62%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .45% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.07% for Class A shares, 1.72% for Class B
shares, 1.72% for Class C shares and .72% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 55 $ 78 $ 101 $171
Class B $ 65 $ 78 $ 103 $164
Class B (without fee waivers) $ 67 $ 84 $ 113 $186
Class C $ 25 $ 48 $ 83 $181
Class C (without fee waivers) $ 16 $ 51 $ 88 $192
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 7 $ 23 $ 40 $ 89
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 55 $ 78 $ 101 $171
Class B $ 15 $ 48 $ 83 $164
Class B (without fee waivers) $ 15 $ 48 $ 83 $181
Class C $ 27 $ 54 $ 93 $203
Class C (without fee waivers) $ 17 $ 54 $ 93 $203
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 7 $ 23 $ 40 $ 89
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 63
6
THE ONE GROUP(R) MUNICIPAL INCOME FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.66 $ 9.69 $ 9.66 $ 10.11 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.53 0.56 0.57 0.56 0.19
Net realized and unrealized gains (losses)
from investments 0.18 (0.03) 0.03 (0.42) 0.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.71 0.53 0.60 0.14 0.30
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.53) (0.56) (0.57) (0.56) (0.19)
In excess of net realized gains -- -- -- (0.03) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.53) (0.56) (0.57) (0.59) (0.19)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.84 $ 9.66 $ 9.69 $ 9.66 $ 10.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 7.49% 5.54% 6.46% 1.36% 5.18%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $408,577 $241,115 $185,916 $152,763 $40,777
Ratio of expenses to average net assets 0.57% 0.56% 0.56% 0.54% 0.54%(b)
Ratio of net investment income to average
net assets 5.38% 5.70% 6.02% 5.61% 5.66%(b)
Ratio of expenses to average net assets* 0.68% 0.76% 0.74% 0.71% 1.01%(b)
Ratio of net investment income to average
net assets* 5.27% 5.50% 5.84% 5.44% 5.19%(b)
Portfolio turnover(c) 62.83% 83.17% 66.02% 101.48% 66.12%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced operations on February 9, 1993. (b) Annualized. (c) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.69 $ 9.72 $ 9.67 $ 10.12 $ 10.06
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.51 0.55 0.55 0.55 0.19
Net realized and unrealized gains (losses)
from investments 0.18 (0.04) 0.05 (0.43) 0.05
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.69 0.51 0.60 0.12 0.24
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.51) (0.54) (0.55) (0.54) (0.18)
In excess of net realized gains -- -- -- (0.03) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.51) (0.54) (0.55) (0.57) (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.87 $ 9.69 $ 9.72 $ 9.67 $ 10.12
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.24% 5.35% 6.21% 1.34% 6.86%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $41,829 $25,787 $11,462 $10,725 $4,106
Ratio of expenses to average net assets 0.82% 0.81% 0.81% 0.79% 0.80%(b)
Ratio of net investment income to average
net assets 5.13% 5.45% 5.76% 5.44% 5.71%(b)
Ratio of expenses to average net assets* 1.03% 1.11% 1.09% 1.06% 1.36%(b)
Ratio of net investment income to average
net assets* 4.92% 5.15% 5.48% 5.17% 5.15%(b)
Portfolio turnover(c) 62.83% 83.17% 66.02% 101.48% 66.12%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class A Shares commenced offering on February 23, 1993.
(b) Annualized. (c) Portfolio turnover is calculated on the basis of the
Fund as a whole without distinguishing among the classes of shares issued.
<PAGE> 64
7
THE ONE GROUP(R) MUNICIPAL INCOME FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.66 $ 9.69 $ 9.62 $ 10.10
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.44 0.47 0.49 0.24
Net realized and unrealized gains (losses) from investments 0.18 (0.03) 0.07 (0.48)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.62 0.44 0.56 (0.24)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.44) (0.47) (0.49) (0.24)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.44) (0.47) (0.49) (0.24)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.84 $ 9.66 $ 9.69 $ 9.62
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.55% 4.65% 5.58% (1.98)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 36,258 $ 23,204 $ 8,326 $4,855
Ratio of expenses to average net assets 1.47% 1.46% 1.46% 1.41%(c)
Ratio of net investment income to average net assets 4.48% 4.80% 5.14% 4.95%(c)
Ratio of expenses to average net assets* 1.67% 1.76% 1.74% 1.62%(c)
Ratio of net investment income to average net assets* 4.28% 4.50% 4.86% 4.74%(c)
Portfolio turnover(d) 62.83% 83.17% 66.02% 101.48%
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized. (c) Annualized. (d) Portfolio turnover is calculated
on the basis of the Fund as a whole without distinguishing among the classes
of shares issued.
<PAGE> 65
8
THE ONE GROUP(R)
ARIZONA MUNICIPAL BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified fund that seeks current income exempt from Federal
income tax and Arizona personal income tax, consistent with the preservation of
principal.
[ICON] INVESTMENT STRATEGY
The Fund invests in debt securities issued by or on behalf of Arizona and its
respective authorities, political subdivisions, agencies and instrumentalities,
the interest on which, in the opinion of issuer's counsel, is exempt from
Federal income tax and Arizona personal income tax ("Arizona Municipal
Securities"). The Fund's average weighted maturity normally will be between five
and twenty years, although the Fund may invest in securities of any maturity.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its total assets in Arizona Municipal
Securities. This is a fundamental policy. The Fund also may invest up to 20% of
its total assets in bonds and notes of states (other than Arizona) as well as of
territories and possessions of the United States, including the District of
Columbia, and their respective authorities, agencies, instrumentalities, and
political subdivisions, the interest on which is exempt from Federal income tax
("Municipal Securities"). The securities in which the Fund invests may have
fixed rates of return or floating or variable rates. For a list of all
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in Arizona Municipal Securities, which may be impacted by
economic and political developments in Arizona. The Arizona Municipal Securities
also include fixed-income investments. The value of these securities will change
in response to interest rate changes and other factors. Before you invest,
please read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in Arizona Municipal Securities
and Municipal Securities the interest on which is subject to Federal alternative
minimum tax. Shareholders who are subject to the Federal alternative minimum tax
may have all or a portion of their income from the Fund subject to Federal
income tax. In addition, corporate shareholders will be required to take the
interest on Municipal Securities and Arizona Municipal Securities into account
in determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
Todd Curtis, CFA, has served as the manager of the Fund since its inception in
1997. From 1984 to 1996, Mr. Curtis managed a bank common trust fund with
substantially the same investment objectives as the Fund. Mr. Curtis has been
involved in the management of both Arizona and national municipal securities
since 1984 and has been employed by Banc One Investment Advisors and its
affiliates in the investment management business since 1981.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee
waivers) (6) .97% 1.62% 1.62% .72%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .45% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.12% for Class A shares, 1.77% for Class B
shares, 1.77% for Class C shares and .77% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 66 $ 81 $ 108 $175
Class B (without fee waivers) $ 68 $ 86 $ 116 $191
Class C $ 26 $ 51 $ 88 $192
Class C (without fee waivers) $ 28 $ 56 $ 96 $208
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 16 $ 51 $ 88 $175
Class B (without fee waivers) $ 18 $ 56 $ 96 $191
Class C $ 16 $ 51 $ 88 $192
Class C (without fee waivers) $ 18 $ 56 $ 96 $208
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 66
9
THE ONE GROUP(R) ARIZONA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
FIDUCIARY 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.23
Net realized and unrealized gains from investments 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.29
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.23)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.23)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.06
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 2.90%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $255,755
Ratio of expenses to average net assets 0.59%(c)
Ratio of net investment income to average net assets 5.09%(c)
Ratio of expenses to average net assets* 0.66%(c)
Ratio of net investment income to average net assets* 5.02%(c)
Portfolio turnover(d) 5.66%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
CLASS A 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.15
Net realized and unrealized gains (losses) from investments (0.01)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.14
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.15)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.15)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.99
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 1.40%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $1,500
Ratio of expenses to average net assets 0.85%(c)
Ratio of net investment income to average net assets 4.90%(c)
Ratio of expenses to average net assets* 0.96%(c)
Ratio of net investment income to average net assets* 4.79%(c)
Portfolio turnover(d) 5.66%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 67
10
THE ONE GROUP(R) ARIZONA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
CLASS B 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net realized and unrealized gains from investments 0.09
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.09
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.09
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 0.90%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $-- (c)
Ratio of expenses to average net assets -- (d)
Ratio of net investment income to average net assets -- (d)
Ratio of expenses to average net assets* -- (d)
Ratio of net investment income to average net assets* -- (d)
Portfolio turnover(e) 5.66%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Amount is less than $1,000. (d) Since net assets are less
than $1,000, ratios have not been presented. (e) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE> 68
11
THE ONE GROUP(R)
WEST VIRGINIA MUNICIPAL BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified fund that seeks current income exempt from Federal
income tax and West Virginia personal income tax, consistent with the
preservation of principal.
[ICON] INVESTMENT STRATEGY
The Fund invests in debt securities issued by or on behalf of West Virginia and
its respective authorities, political subdivisions, agencies and
instrumentalities, the interest on which, in the opinion of issuer's counsel, is
exempt from Federal income tax and West Virginia personal income tax ("West
Virginia Municipal Securities"). Generally, the Fund's average weighted maturity
will be between five and twenty years, although the Fund may invest in
securities of any maturity.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its total assets in West Virginia Municipal
Securities. This is a fundamental policy. The Fund also may invest up to 20% of
its total assets in bonds and notes of states (other than West Virginia) as well
as of territories and possessions of the United States, including the District
of Columbia, and their respective authorities, agencies, instrumentalities, and
political subdivisions, the interest on which is exempt from Federal income tax
("Municipal Securities"). The securities in which the Fund invests may have
fixed rates of return or floating or variable rates. For a list of all
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in West Virginia Municipal Securities, which may be impacted by
economic and political developments in West Virginia. The West Virginia
Municipal Securities also include fixed-income investments. The value of these
securities will change in response to interest rate changes and other factors.
Before you invest, please read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in West Virginia Municipal
Securities and Municipal Securities the interest on which is subject to Federal
alternative minimum tax. Shareholders who are subject to the Federal alternative
minimum tax may have all or a portion of their income from the Fund subject to
Federal income tax. In addition, corporate shareholders will be required to take
the interest on Municipal Securities and West Virginia Municipal Securities into
account in determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
David M. Sivinski, CFA, has served as the manager of the Fund since 1997. Prior
to that time, Mr. Sivinski managed a bank common trust fund with substantially
the same investment objectives as the Fund. Since 1994, Mr. Sivinski also has
managed the Ohio and Kentucky Municipal Bond Funds. Mr. Sivinski has managed the
Louisiana Municipal Bond Fund since 1996. Mr. Sivinski has been with Banc One
Investment Advisors or its affiliates since 1975, working primarily in fixed
income portfolio management and mortgage/asset backed research.
As of November, 1997, Thomas S. Albright has served as co-manager of the Fund.
From 1981 until its acquisition by BANC ONE CORPORATION in 1994, Mr. Albright
served as an investment officer and portfolio manager for individual client
portfolios and other investment accounts with Liberty National Bank and Trust
Company of Kentucky or its affiliates. Since 1994, Mr. Albright has been
employed by Banc One Investment Advisors where he has been responsible for the
management of individual client portfolios.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee
waivers) (6) .97% 1.62% 1.62% .72%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .45% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.12% for Class A shares, 1.77% for Class B
shares, 1.77% for Class C shares and .77% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 66 $ 81 $ 108 $175
Class B (without fee waivers) $ 68 $ 86 $ 116 $191
Class C $ 26 $ 51 $ 88 $192
Class C ((without fee waivers) $ 28 $ 56 $ 96 $208
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 16 $ 51 $ 88 $175
Class B (without fee waivers) $ 18 $ 56 $ 96 $191
Class C $ 16 $ 51 $ 88 $192
Class C (without fee waivers) $ 18 $ 56 $ 96 $208
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 69
12
THE ONE GROUP(R) WEST VIRGINIA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
FIDUCIARY 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.22
Net realized and unrealized gains from investments 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.28
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.22)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.22)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.06
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 2.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $96,270
Ratio of expenses to average net assets 0.59%(c)
Ratio of net investment income to average net assets 5.04%(c)
Ratio of expenses to average net assets* 0.67%(c)
Ratio of net investment income to average net assets* 4.96%(c)
Portfolio turnover(d) 6.21%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
CLASS A 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.16
Net realized and unrealized gains from investments 0.15
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.31
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.16)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.16)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.15
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 3.08%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 808
Ratio of expenses to average net assets 0.84%(c)
Ratio of net investment income to average net assets 4.94%(c)
Ratio of expenses to average net assets* 0.97%(c)
Ratio of net investment income to average net assets* 4.81%(c)
Portfolio turnover(d) 6.21%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 70
13
THE ONE GROUP(R) WEST VIRGINIA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
CLASS B 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.14
Net realized and unrealized gains from investments 0.12
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.26
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.14)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.12
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 2.64%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 614
Ratio of expenses to average net assets 1.49%(c)
Ratio of net investment income to average net assets 4.08%(c)
Ratio of expenses to average net assets* 1.62%(c)
Ratio of net investment income to average net assets* 3.95%(c)
Portfolio turnover(d) 6.21%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 71
14
THE ONE GROUP(R)
LOUISIANA MUNICIPAL BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified fund that seeks current income both consistent
with the preservation of principal and exempt from Federal income tax and
Louisiana income tax.
[ICON] INVESTMENT STRATEGY
The Fund invests in investment grade municipal securities issued by or on behalf
of Louisiana and its authorities, political subdivisions, agencies and
instrumentalities, the interest on which, in the opinion of issuer's counsel, is
exempt from both Federal income tax and Louisiana state income tax ("Louisiana
Municipal Securities"). The Fund's average weighted maturity normally will be
between five and twenty years, although the Fund may invest in securities of any
maturity.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its net assets in Louisiana Municipal
Securities. This is a fundamental policy. The Fund also may hold up to 20% of
its total assets in cash or invest in municipal securities of other states
("Municipal Securities"), short-term taxable investments including repurchase
agreements, and U.S. Government Securities or other cash equivalents. The
securities in which the Fund invests may have fixed rates of return or floating
or variable rates. For a list of all securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in Louisiana Municipal Securities, which may be impacted by
economic and political developments in Louisiana. The Louisiana Municipal
Securities also include fixed-income investments. The value of these securities
will change in response to interest rate changes and other factors. Before you
invest, please read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in Louisiana Municipal
Securities and Municipal Securities the interest on which is subject to Federal
alternative minimum tax. Shareholders who are subject to the Federal alternative
minimum tax may have all or a portion of their income from the Fund subject to
Federal income tax. In addition, corporate shareholders will be required to take
the interest on Municipal Securities and Louisiana Municipal Securities into
account in determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
David M. Sivinski, CFA, has served as the manager of the Fund since February,
1996. Since 1994, Mr. Sivinski has also managed the Ohio and Kentucky Municipal
Bond Funds. Mr. Sivinski began managing the West Virginia Municipal Bond Fund in
1997. Mr. Sivinski has been with Banc One Investment Advisors or its affiliates
since 1975, working primarily in fixed income portfolio management and
mortgage/asset backed research.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee
waivers) (6) .97% 1.62% 1.62% .72%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.27% for Class A shares, 1.92% for Class B
shares, 1.92% for Class C shares and .92% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 75 $ 96 $159
Class A (without fee waivers) $ 57 $ 83 $ 112 $191
Class B $ 66 $ 81 $ 108 $175
Class B (without fee waivers) $ 69 $ 90 $ 124 $207
Class C $ 26 $ 51 $ 88 $192
Class C (without fee waivers) $ 29 $ 60 $ 104 $224
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 9 $ 29 $ 51 $113
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 57 $ 83 $ 112 $191
Class B $ 16 $ 51 $ 88 $175
Class B (without fee waivers) $ 19 $ 60 $ 104 $207
Class C $ 16 $ 51 $ 88 $192
Class C (without fee waivers) $ 19 $ 60 $ 104 $224
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 9 $ 29 $ 51 $113
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 72
15
THE ONE GROUP(R) LOUISIANA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR MARCH 26, 1996
ENDED THROUGH
JUNE 30, JUNE 30,
FIDUCIARY 1997 1996(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.93 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.49 0.13
Net realized and unrealized gains (losses) from investments 0.17 (0.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.66 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.49) (0.13)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.49) (0.13)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.10 $ 9.93
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 6.81% 0.90%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $113,338 $136,041
Ratio of expenses to average net assets 0.62% 0.71%(d)
Ratio of net investment income to average net assets 4.91% 4.76%(d)
Ratio of expenses to average net assets* 0.84% 0.86%(d)
Ratio of net investment income to average net assets* 4.69% 4.61%(d)
Portfolio turnover(e) 17.39% 16.72%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from date reorganized as a fund of The One
Group. (b) Not annualized. (c) Represents total return for Class A Shares
from December 1, 1995 through March 25, 1996 plus total return for Fiduciary
Shares for the period March 26, 1996 through June 30,
1996. (d) Annualized. (e) Portfolio turnover is calculated on the basis of
the Fund as a whole without distinguishing among the classes of shares issued.
<TABLE>
<CAPTION>
SEVEN
YEARS MONTHS YEAR ENDED NOVEMBER 30,
ENDED JUNE ENDED JUNE
30, 30, ------------------------------------------------------------
CLASS A 1997 1996(a) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 9.93 $ 10.09 $ 9.38 $ 10.27 $ 9.92 $ 9.73 $ 9.51
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.47 0.24 0.50 0.49 0.52 0.55 0.56
Net realized and unrealized
gains (losses) from
investments 0.17 (0.16) 0.71 (0.79) 0.42 0.26 0.22
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 0.64 0.08 1.21 (0.30) 0.94 0.82 0.78
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.47) (0.24) (0.50) (0.49) (0.52) (0.55) (0.56)
Net realized gains -- -- -- (0.10) (0.07) (0.07) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.24) (0.50) (0.59) (0.59) (0.62) (0.56)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.10 $ 9.93 $ 10.09 $ 9.38 $ 10.27 $ 9.92 $ 9.73
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales
Charge) 6.55% 0.84%(b) 13.11% (2.97)% 9.65% 8.64% 8.45%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $48,498 $53,479 $206,119 $196,820 $196,534 $135,692 $88,503
Ratio of expenses to average
net assets 0.87% 0.69%(c) 0.62% 0.65% 0.62% 0.58% 0.61%
Ratio of net investment
income to average net
assets 4.66% 4.71%(c) 5.07% 4.97% 5.07% 5.70% 5.86%
Ratio of expenses to average
net assets* 1.19% 0.86%(c) 0.77% 0.80% 0.78% 0.83% 0.86%
Ratio of net investment
income to average net
assets* 4.34% 4.54%(c) 4.92% 4.82% 4.91% 5.45% 5.61%
Portfolio turnover(d) 17.39% 16.72% 28.00% 24.00% 25.00% 32.00% 35.00%
</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) Upon reorganizing as a fund of The One Group, the Paragon
Louisiana Tax-Free Fund became the Louisiana Municipal Bond Fund. Financial
highlights for the periods prior to March 26, 1996 represents the Paragon
Louisiana Tax-Free Fund. The per share data for the periods prior to March 26,
1996 have been restated to reflect the impact of restatement of net asset
value from $10.67 to $10.00 effective March 26, 1996. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 73
16
THE ONE GROUP(R) LOUISIANA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SEVEN
YEAR MONTHS Year September 16,
ENDED ENDED ended 1994 through
JUNE 30, JUNE 30, November 30, November 30,
CLASS B 1997 1996(a) 1995 1994(b)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.93 $ 10.09 $ 9.36 $ 9.73
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.40 0.21 0.42 0.08
Net realized and unrealized gains (losses) from
investments 0.17 (0.16) 0.73 (0.37)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.57 0.05 1.15 (0.29)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.40) (0.21) (0.42) (0.08)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.40) (0.21) (0.42) (0.08)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.10 $ 9.93 $ 10.09 $ 9.36
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 5.87% 0.48%(c) 12.52% 2.94%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $3,835 $3,223 $2,115 $204
Ratio of expenses to average net assets 1.51% 1.50%(d) 1.37% 1.41%(d)
Ratio of net investment income to average net assets 4.02% 3.98%(d) 4.27% 4.45%(d)
Ratio of expenses to average net assets* 1.85% 1.70%(d) 1.52% 1.56%(d)
Ratio of net investment income to average net assets* 3.68% 3.78%(d) 4.12% 4.30%(d)
Portfolio turnover(e) 17.39% 16.72% 28.00% 24.00%
</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) Upon reorganizing as a fund of The One Group, the Paragon
Louisiana Tax-Free Fund became the Louisiana Municipal Bond Fund. Financial
highlights for the periods prior to March 26, 1996 represents the Paragon
Louisiana Tax-Free Fund. The per share data for the periods prior to March 26,
1996 have been restated to reflect the impact of restatement of net asset
value from $10.70 to $10.00 effective March 26, 1996. (b) Class B Shares
commenced offering on September 16, 1994. (c) Not
annualized. (d) Annualized. (e) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 74
17
THE ONE GROUP(R)
OHIO MUNICIPAL BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified fund that seeks current income exempt from Federal
income tax and Ohio personal income tax, consistent with the preservation of
principal.
[ICON] INVESTMENT STRATEGY
The Fund invests in debt securities issued by or on behalf of Ohio and its
respective authorities, political subdivisions, agencies and instrumentalities,
the interest on which, in the opinion of issuer's counsel, is exempt from
Federal income tax and Ohio personal income tax ("Ohio Municipal Securities").
Generally, the Fund's average weighted maturity will be between five and twenty
years, although the Fund may invest in securities of any maturity.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its total assets in Ohio Municipal Securities.
This is a fundamental policy. The Fund also may invest up to 20% of its total
assets in bonds and notes of states (other than Ohio) as well as of territories
and possessions of the United States, including the District of Columbia, and
their respective authorities, agencies, instrumentalities, and political
subdivisions, the interest on which, in the opinion of issuer's counsel, is
exempt from Federal income tax ("Municipal Securities"). The securities in which
the Fund invests may have fixed rates of return or floating or variable rates.
For a list of all securities in which the Fund may invest, please read
"Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in Ohio Municipal Securities, which may be impacted by economic
and political developments in Ohio. The Ohio Municipal Securities also include
fixed-income investments. The value of these securities will change in response
to interest rate changes and other factors. Before you invest, please read "More
About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in Ohio Municipal Securities and
Municipal Securities the interest on which is subject to Federal alternative
minimum tax. Shareholders who are subject to the Federal alternative minimum tax
may have all or a portion of their income from the Fund subject to Federal
income tax. In addition, corporate shareholders will be required to take the
interest on Municipal Securities and Ohio Municipal Securities into account in
determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
David M. Sivinski, CFA, has served as the manager of the Fund since May, 1994.
Since 1994, Mr. Sivinski also has managed the Kentucky Municipal Bond Fund. Mr.
Sivinski began managing the Louisiana Municipal Bond Fund in 1996 and the West
Virginia Municipal Bond Fund in 1997. Mr. Sivinski has been with Banc One
Investment Advisors or its affiliates since 1975, working primarily in fixed
income portfolio management and mortgage/asset-backed research.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .30% .30% .30% .30%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee
waivers) (6) .87% 1.52% 1.52% .62%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.27% for Class A shares, 1.92% for Class B
shares, 1.92% for Class C shares and .92% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 57 $ 83 $ 112 $191
Class B $ 65 $ 78 $ 103 $164
Class B (without fee waivers) $ 69 $ 90 $ 124 $207
Class C $ 25 $ 48 $ 83 $181
Class C (without fee waivers) $ 29 $ 60 $ 104 $224
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 9 $ 29 $ 51 $113
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 57 $ 83 $ 112 $191
Class B $ 15 $ 48 $ 83 $164
Class B (without fee waivers) $ 19 $ 60 $ 104 $207
Class C $ 15 $ 48 $ 83 $181
Class C (without fee waivers) $ 19 $ 60 $ 104 $224
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 9 $ 29 $ 51 $113
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 75
18
THE ONE GROUP(R) OHIO MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.69 $ 10.65 $ 10.58 $ 11.11 $ 10.48 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.56 0.56 0.55 0.51 0.54 0.56
Net realized and unrealized gains
(losses) from investments 0.19 0.04 0.07 (0.50) 0.62 0.47
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.75 0.60 0.62 0.01 1.16 1.03
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.56) (0.56) (0.55) (0.52) (0.53) (0.55)
In excess of net realized gains -- -- -- (0.02) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.56) (0.56) (0.55) (0.54) (0.53) (0.55)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.88 $ 10.69 $ 10.65 $ 10.58 $ 11.11 $ 10.48
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 7.22% 5.69% 6.07% 0.07% 11.43% 10.64%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $133,172 $80,611 $79,993 $93,261 $74,792 $45,199
Ratio of expenses to average net
assets 0.54% 0.57% 0.58% 0.53% 0.55% 0.63%(b)
Ratio of net investment income to
average net assets 5.24% 5.17% 5.29% 4.76% 5.14% 5.61%(b)
Ratio of expenses to average net
assets* 0.84% 0.95% 0.91% 0.86% 0.94% 1.21%(b)
Ratio of net investment income to
average net assets* 4.94% 4.79% 4.96% 4.43% 4.75% 5.03%(b)
Portfolio turnover(a) 7.45% 24.61% 77.69% 16.77% 26.67% 9.78%
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) Fund commenced operation on July 2, 1991.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.72 $ 10.68 $ 10.61 $ 11.13 $ 10.48 $ 10.29
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.54 0.55 0.53 0.50 0.52 0.20
Net realized and unrealized gains
(losses) from investments 0.19 0.03 0.07 (0.48) 0.64 0.21
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.73 0.58 0.60 0.02 1.16 0.41
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.54) (0.54) (0.51) (0.50) (0.51) (0.22)
In excess of net investment income -- -- (0.02) (0.02) -- --
In excess of net realized gains -- -- -- (0.02) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.54) (0.54) (0.53) (0.54) (0.51) (0.22)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.91 $ 10.72 $ 10.68 $ 10.61 $ 11.13 $ 10.48
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.95% 5.44% 5.79% (0.05)% 11.40% 10.85%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $16,114 $16,507 $12,006 $14,883 $13,092 $41
Ratio of expenses to average net
assets 0.79% 0.82% 0.82% 0.78% 0.77% 1.01%(b)
Ratio of net investment income to
average net assets 4.96% 4.92% 5.01% 4.63% 4.85% 5.16%(b)
Ratio of expenses to average net
assets* 1.19% 1.30% 1.25% 1.21% 1.25% 1.40%(b)
Ratio of net investment income to
average net assets* 4.56% 4.44% 4.58% 4.20% 4.37% 4.77%(b)
Portfolio turnover(a) 7.45% 24.61% 77.69% 16.77% 26.67% 9.78%
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) Class A Shares commenced offering on February
18, 1992.
<PAGE> 76
19
THE ONE GROUP(R) OHIO MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.79 $ 10.75 $ 10.68 $ 11.31
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.47 0.48 0.43 0.17
Net realized and unrealized gains (losses) from investments 0.19 0.03 0.07 (0.62)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.66 0.51 0.50 (0.45)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.47) (0.47) (0.43) (0.17)
In excess of net investment income -- -- -- (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.47) (0.43) (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.98 $ 10.79 $ 10.75 $ 10.68
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.26% 4.79% 5.17% (4.02)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $14,316 $8,854 $3,209 $2,043
Ratio of expenses to average net assets 1.44% 1.47% 1.48% 1.28%(c)
Ratio of net investment income to average net assets 4.33% 4.27% 4.40% 4.23%(c)
Ratio of expenses to average net assets* 1.84% 1.95% 1.91% 1.68%(c)
Ratio of net investment income to average net assets* 3.93% 3.79% 3.97% 3.83%(c)
Portfolio turnover(d) 7.45% 24.61% 77.69% 16.77%
</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 Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE> 77
20
THE ONE GROUP(R)
KENTUCKY MUNICIPAL BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified fund that seeks current income exempt from Federal
income tax and Kentucky personal income tax, consistent with the preservation of
principal.
[ICON] INVESTMENT STRATEGY
The Fund invests in debt securities issued by or on behalf of Kentucky and its
respective authorities, political subdivisions, agencies and instrumentalities,
the interest on which, in the opinion of issuer's counsel, is exempt from
Kentucky personal income tax ("Kentucky Municipal Securities"), as well as debt
securities that, in the opinion of issuer's counsel, produce interest that is
exempt from Federal income tax ("Municipal Securities"). Generally, the Fund's
average weighted maturity will be between five and twenty years, although the
Fund may invest in securities of any maturity.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its total assets in Municipal Securities.
Alternatively, the Fund invests its assets so that at least 80% of its annual
interest income is exempt from Federal income tax. The Fund invests at least 65%
of its total assets in Kentucky Municipal Securities. Each of these investment
policies are fundamental. The Fund may also invest up to 35% of its total assets
in bonds and notes of states (other than Kentucky) as well as of territories and
possessions of the United States, including the District of Columbia, and their
respective authorities, agencies, instrumentalities, and political subdivisions,
the interest on which is exempt from Federal income tax. The securities in which
the Fund invests may have fixed rates of return or floating or variable rates.
For a list of all securities in which the Fund may invest, please read
"Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in Kentucky Municipal Securities, which may be impacted by
economic and political developments in Kentucky. The Fund's investments also
include fixed-income investments. The value of these securities will change in
response to interest rate changes and other factors. Before you invest, please
read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in Kentucky Municipal Securities
and Municipal Securities the interest on which is subject to Federal alternative
minimum tax. Shareholders who are subject to the Federal alternative minimum tax
may have all or a portion of their income from the Fund subject to Federal
income tax. In addition, corporate shareholders will be required to take the
interest on Municipal Securities and Kentucky Municipal Securities into account
in determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
David M. Sivinski, CFA, has served as the manager of the Fund since December,
1994. Mr. Sivinski also has managed the Ohio Municipal Bond Fund since 1994. Mr.
Sivinski has managed the West Virginia Municipal Bond Fund since 1997 and the
Louisiana Municipal Bond Fund since 1996. Mr. Sivinski has been with Banc One
Investment Advisors or its affiliates since 1975, working primarily in fixed
income portfolio management and mortgage/asset-backed research.
As of November, 1997 Thomas S. Albright has served as co-manager of the Fund.
From 1981 until its acquisition by BANC ONE CORPORATION in 1994, Mr. Albright
served as an investment officer and portfolio manager for individual client
portfolios and other investment accounts with Liberty National Bank and Trust
Company of Kentucky or its affiliates. Since 1994, Mr. Albright has been
employed by Banc One Investment Advisors where he has been responsible for the
management of individual client portfolios.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee
waivers) (6) .97% 1.62% 1.62% .72%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense Information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .45% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.12% for Class A shares, 1.77% for Class B
shares, 1.77% for Class C shares and .77% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 66 $ 81 $ 108 $175
Class B (without fee waivers) $ 68 $ 86 $ 116 $191
Class C $ 26 $ 51 $ 88 $192
Class C (without fee waivers) $ 28 $ 56 $ 96 $207
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 16 $ 51 $ 88 $175
Class B (without fee waivers) $ 18 $ 56 $ 96 $191
Class C $ 16 $ 51 $ 88 $192
Class C (without fee waivers) $ 18 $ 56 $ 96 $208
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 78
21
THE ONE GROUP(R) KENTUCKY MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. Certain information reflects financial results for a single Fund share.
The total returns in the table represent the rate a shareholder would have
earned on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR YEAR JANUARY 20, FEBRUARY 1, MARCH 12,
ENDED ENDED 1995 TO 1994, TO 1993, TO
JUNE 30, JUNE 30, JUNE 30, JANUARY 19, JANUARY 31,
FIDUCIARY 1997 1996 1995(a) 1995(b) 1994(b)(c)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.04 $ 9.92 $ 9.49 $ 10.45 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.50 0.50 0.20 0.41 0.36
Net realized and unrealized gains (losses)
from investments 0.16 0.12 0.43 (0.95) 0.43
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.66 0.62 0.63 (0.54) 0.79
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.50) (0.50) (0.20) (0.42) (0.34)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.50) (0.50) (0.20) (0.42) (0.34)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.20 $ 10.04 $ 9.92 $ 9.49 $ 10.45
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 6.74% 6.35% 6.56%(d) (5.17)%(d) 8.05%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $116,830 $30,300 $32,520 $41,953 $64,663
Ratio of expenses to average net assets 0.59% 0.68% 0.65%(e) 1.03%(e) 0.70%(e)
Ratio of net investment income to average net
assets 5.12% 4.60% 4.70%(e) 4.27%(e) 4.19%(e)
Ratio of expenses to average net assets* 0.72% 1.02% 0.97%(e) 1.05%(e) 0.91%(e)
Ratio of net investment income to average net
assets* 4.99% 4.26% 4.38%(e) 4.25%(e) 3.98%(e)
Portfolio turnover(f) 13.30% 16.78% 19.75% 10.00% 5.00%
</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) Period from date reorganized as a fund of The One
Group. (b) Prior to reorganizing as a fund of The One Group, the Fund offered
only one class of shares. (c) Period from commencement of
operations. (d) Not annualized. (e) Annualized. (f) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<TABLE>
<CAPTION>
YEAR YEAR JANUARY 20,
ENDED ENDED 1995 TO
JUNE 30, JUNE 30, JUNE 30,
CLASS A 1997 1996 1995(a)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.05 $ 9.93 $ 9.49
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.48 0.44 0.19
Net realized and unrealized gains from investments 0.16 0.12 0.44
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.64 0.56 0.63
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.48) (0.44) (0.19)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.48) (0.44) (0.19)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.21 $ 10.05 $ 9.93
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.46% 5.70% 5.66%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 5,554 $ 8,178 $8,818
Ratio of expenses to average net assets 0.84% 0.93% 0.90%(c)
Ratio of net investment income to average net assets 4.66% 4.35% 4.44%(c)
Ratio of expenses to average net assets* 1.04% 1.37% 1.33%(c)
Ratio of net investment income to average net assets* 4.46% 3.91% 4.01%(c)
Portfolio turnover(d) 13.30% 16.78% 19.75%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from date reorganized as a fund of The One
Group. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE> 79
22
THE ONE GROUP(R) KENTUCKY MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR YEAR MARCH 16,
ENDED ENDED 1995 TO
JUNE 30, JUNE 30, JUNE 30,
CLASS B 1997 1996 1995(a)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.99 $ 9.87 $ 9.75
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.41 0.38 0.14
Net realized and unrealized gains from investments 0.16 0.13 0.12
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.57 0.51 0.26
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.41) (0.39) (0.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.41) (0.39) (0.14)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.15 $ 9.99 $ 9.87
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 5.81% 5.16% 2.63%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $2,399 $1,457 $79
Ratio of expenses to average net assets 1.47% 1.58% 1.58%(c)
Ratio of net investment income to average net assets 4.05% 3.70% 3.89%(c)
Ratio of expenses to average net assets* 1.70% 2.02% 2.21%(c)
Ratio of net investment income to average net assets* 3.82% 3.26% 3.25%(c)
Portfolio turnover(d) 13.30% 16.78% 19.75%
</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 Shares commenced offering on March 16, 1995. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 80
MORE ABOUT THE FUNDS
23
WHEN THE PROSPECTUS REFERS TO "BONDS", WHAT TYPES OF INVESTMENTS ARE INCLUDED?
"Bonds" include debt instruments issued by the U.S. Treasury, U.S. Government
agencies, mortgage related securities, municipalities and zero coupon
obligations as well as debt instruments issued by states and their respective
authorities, political subdivisions, agencies and instrumentalities.
PORTFOLIO QUALITY
- ----------------------------------------------------
The Funds only purchase securities that meet certain rating criteria:
- - Municipal Securities that are bonds must be rated as investment grade.
- - Arizona Municipal Securities, West Virginia Municipal Securities, Louisiana
Municipal Securities, Ohio Municipal Securities, and Kentucky Municipal
Securities that are bonds must be rated as investment grade.
- - Other securities such as tax-exempt commercial paper, notes, and variable
demand obligations must be rated in one of the two highest investment grade
categories.
- - The Louisiana Municipal Bond Fund may also invest in short-term tax-exempt
municipal securities rated at least MIG3 (VMIG3) by Moody's or SP-2 by S&P.
These securities may have speculative characteristics.
If the securities are unrated, Banc One Investment Advisors must determine that
they are of comparable quality to rated securities. Banc One Investment Advisors
will look at a security's rating at the time of investment. For more information
about ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
- ----------------------------------------------------
Each Fund may invest up to 15% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK
CONSIDERATIONS
- ----------------------------------------------------
FIXED INCOME SECURITIES: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually, changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
DERIVATIVES: Some of the Funds invest in securities that are considered to be
derivatives. These securities may be more volatile than other investments. These
include:
- - options
- - futures contracts
- - options on futures contracts
- - mortgage-backed securities, including collateralized mortgage obligations and
Real Estate Mortgage Investment Conduits (CMOs and REMICs) and stripped
mortgage-backed securities (IOs and POs)
- - structured instruments
- - swaps, caps and floors
- - new financial products
- - inverse floating rate instruments
Derivatives may be riskier than traditional investments.
NON-DIVERSIFIED FUNDS: All of the Funds (except the Intermediate Tax-Free Bond
Fund and the Municipal Income Fund) are "non-diversified" funds. This means that
the Funds may invest a more significant portion of their assets in the
securities of a single issuer than can a "diversified" fund. In addition, the
Funds' investments are concentrated geographically. These concentrations
increase the risk of loss to the Funds if an issuer fails to make interest or
principal payments or if the market value of a security declines.
MUNICIPAL SECURITIES: Because the Arizona Municipal Bond Fund, the West Virginia
Municipal Bond Fund, the Louisiana Municipal Bond Fund, the Ohio Municipal Bond
Fund, and the Kentucky Municipal Bond Fund are not diversified and because they
concentrate in securities of Arizona, West Virginia, Louisiana, Ohio and
Kentucky issuers, respectively, certain factors may have a disproportionate
negative effect on the Funds' investments. These factors may include certain
economic conditions, constitutional amendments, legislative measures, executive
orders, administrative regulations and voter initiatives. For instance, the Ohio
economy relies to a significant degree on manufacturing. As a result, economic
activity in Ohio tends to be cyclical, which may affect the market value of Ohio
Municipal Securities or the ability of issuers to make timely payments of
interest and principal. Similarly, coal mining and related industries are an
important part of the West Virginia economy. Increased government regulation
<PAGE> 81
HOW TO DO BUSINESS WITH THE ONE GROUP
24
and a reduced demand for coal has adversely affected that industry. The
Louisiana economy, like that of West Virginia, is heavily dependent on a single
industry, in this case energy (oil and gas). Louisiana continues to recover from
the oil price declines of the mid-1980's, although its debt burden is well above
that of other states, while wealth and income indicators are below the national
average. Both West Virginia and Louisiana post unemployment rates above the
national average.
Arizona's population growth continues to outpace the national average. However,
this growth is expensive and Arizona's economic outlook depends on its ability
to match long-term revenues with expenditures. In addition, Arizona's continued
growth depends to some extent on its ability to manage its water resources.
Unlike the municipal securities of most states, nearly all Kentucky Municipal
Securities are not general obligations of the issuer; rather, payment depends on
revenues generated by the property financed by the security.
For a more complete description of the risks of investing in state specific
securities, please see the Statement of Additional Information.
PURCHASING
FUND SHARES
- ----------------------------------------------------
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
- - The One Group Services Company, and
- - Shareholder Servicing Agents. These include investment advisors, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased this way will be held for
you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
- - Purchases may be made on any business day. This includes any day that the
Funds are open for business, other than weekends and the following holidays:
New Years Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.
- - Purchase requests received by The One Group Services Company before 4 p.m.
EST, will be effective that day.
- - Purchase orders may be cancelled by the Fund's Custodian, State Street Bank
and Trust Company, if it does not receive "federal funds" by 4:00 p.m. EST (i)
on the business day after the order is placed if you are buying Fiduciary
Class shares, and (ii) on the third business day if you are purchasing Class
A, Class B or Class C shares.
- - If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase or
redemption order to the Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption requests.
- - The One Group Services Company can reject a purchase order if it does not
think that it is in the best interests of a Fund and/or its shareholders to
accept the order.
- - Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
The One Group offers the following classes of shares:
- - Class A, Class B and Class C shares are available to the general public.
- - Fiduciary Class shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or agency
capacity. We will refer to these entities as "Intermediaries."
- - If you intend to hold your shares six or more years, Class B shares may be
appropriate for you. If you intend to hold your shares for less than six
years, you may want to consider Class A or Class C shares.
HOW MUCH DO SHARES COST?
- - Shares are sold at net asset value ("NAV") plus a sales charge, if any.
- - Each class of shares in each Fund has a different NAV. This is primarily
because each class has different distribution expenses.
- - NAV per share is calculated by dividing the total market value of a Fund's
investments and other assets allocable to a class (minus class expenses) by
the number of outstanding shares in that class.
- - A Fund's NAV changes every day. NAV is calculated each business day at 4:00
p.m. EST.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most appropriate
for you.
2. Decide how much you want to invest.
- The minimum initial investment is $1,000 ($100 for employees of BANC ONE
CORPORATION and its affiliates).
- Subsequent investments must be at least $100 ($25 for employees of BANC ONE
CORPORATION and its affiliates).
- You may purchase no more than $250,000 of Class B shares at one time.
<PAGE> 82
25
- The One Group Services Company may waive these minimums.
3. Complete the Account Application Form. Be sure to sign up for all of the
Account privileges that you plan to take advantage of. Doing so now means
that you will not have to complete additional paperwork later.
4. Send the completed application and a personal check (unless you choose to pay
by wire or bank transfer) payable to "The One Group" to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions from a Fund will not be permitted for ten (10) calendar
days if purchases are made by check or under the Systematic Investment Plan
(see below).
6. If you purchase shares through a Shareholder Servicing Agent, you may be
required to complete additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent regarding purchases,
exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or call
The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
- - Contact your Shareholder Servicing Agent or The One Group Services Company at
1-800-480-4111 to relay your purchase instructions.
- - Send a personal check made payable to "The One Group" to State Street Bank and
Trust Company (see address above), authorize a bank transfer or initiate a
wire transfer.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - You may revoke your right to make purchases over the telephone by sending a
letter to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CAN I AUTOMATICALLY INVEST ON A
SYSTEMATIC BASIS?
Yes. After your Account is established, you may purchase additional Class A,
Class B and Class C shares by making automatic monthly investments from your
bank account. The minimum initial investment is still $1,000, but minimum
automatic additions are only $25. The One Group Services Company may waive these
minimums. To establish a Systematic Investment Plan:
- - Select the "Systematic Investment Plan" option on the Account Application
Form.
- - Provide the necessary information about the bank account from which your
investments will be made.
- - Shares purchased under a Systematic Investment Plan may not be redeemed for
ten (10) calendar days.
- - The One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for debiting your
bank account.
- - You may revoke your right to make systematic investments by sending a letter
to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CONVERSION FEATURE
Your Class B shares automatically convert to Class A shares after eight years
(measured from the end of the month in which they were purchased).
- - After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Class A shares
- - You will not be assessed any sales charges or fees for conversion of shares,
nor will you be subject to any tax.
- - Because the share price of the Class A shares may be higher than that of the
Class B shares at the time of conversion, you may receive fewer Class A
shares; however, the dollar value will be the same.
- - If you have exchanged Class B shares of one Fund for Class B shares of
another, the time you held the shares in each Fund will be added together.
SALES CHARGES
- ----------------------------------------------------
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of The One Group. Compensation comes from: sales charges, 12b-1 fees and
payments by The One Group Services Company from its own resources. The One Group
Services Company, at its own expense, also will provide promotional incentives
in the form of travel expenses, lodging and bonuses to licensed individuals who
sell shares of the Funds, as well as vacation trips (including lodging at luxury
resorts), tickets to entertainment events, and merchandise.
<PAGE> 83
26
CLASS A SHARES
This table shows the amount of sales charge you pay and the commissions paid to
<TABLE>
<CAPTION>
Shareholder Servicing Agents.
SALES CHARGE AS A %
OF THE OFFERING SALES CHARGE AS A % COMMISSION AS A %
AMOUNT OF PURCHASE PRICE OF YOUR INVESTMENT OF OFFERING PRICE
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.05%
$100,000-$249,999 3.50% 3.63% 3.05%
$250,000-$499,999 2.50% 2.56% 2.05%
$500,000-$999,999 2.00% 2.04% 1.60%
$1,000,000* 0.00% 0.00% 0.00%
</TABLE>
* If you purchase $1 million or more of Class A shares and are not assessed a
sales charge at the time of purchase, you will be charged the equivalent of
1% of the purchase price if you redeem any or all of the Class A shares
within one year of purchase.
CLASS B SHARES
Class B shares are offered at NAV, without any up-front sales charges. However,
if you redeem these shares within six years of the purchase date, you will be
assessed a Contingent Deferred Sales Charge ("CDSC") according to the following
<TABLE>
<CAPTION>
schedule:
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 0.00%
</TABLE>
The One Group Services Company pays a commission of 4.00% of the original
purchase price to Shareholder Servicing Agents who sell Class B shares.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
<TABLE>
<CAPTION>
assessed a CDSC as follows:
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 1.00%
After first year None
</TABLE>
Shareholder Servicing Agents selling Class C shares receive a commission of
1.00% of the original purchase price from The One Group Services Company.
How the CDSC is Calculated
- - The Fund assumes that all purchases made in a given month were made on the
first day of the month.
- - The CDSC is based on the current market value or the original cost of the
shares, whichever is less.
- - A sales charge is not imposed on increases in NAV above the initial purchase
price, nor is a sales charge assessed on shares acquired through reinvestment
of dividends or capital gains distributions.
- - To keep your CDSC as low as possible, the Fund first will redeem any shares in
your account that carry no CDSC, starting with Class A shares. After that, the
Fund will redeem the shares you have held for the longest time and thus have
the lowest CDSC.
<PAGE> 84
27
12B-1 FEES
12b-1 fees are paid by The One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to Shareholder Servicing Agents that sell
shares of The One Group.
- - The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .35% of the average daily net assets of
the Fund, which is currently being waived to .25%.
2. Class B and Class C shares pay a 12b-1 fee of 1.00% of the average daily
net assets of the Fund, which is currently being waived to .90%. This will
cause expenses for Class B and Class C shares to be higher and dividends
to be lower than for Class A shares.
3. There are no 12b-1 fees for Fiduciary Class shares.
- - 12b-1 fees, together with the CDSC, help The One Group Services Company sell
Class B and Class C shares without an "up-front" sales charge by defraying the
costs of advancing brokerage commissions and other expenses paid to
Shareholder Servicing Agents.
- - The One Group Services Company may use up to .25% of the fees for shareholder
servicing and up to .75% for distribution. During the last fiscal year, The
One Group Services Company received 12b-1 fees totaling .25% and 1.00% of the
average daily net assets of Class A and Class B shares, respectively.
- - The One Group Services Company may pay 12b-1 fees to its affiliates and to
Banc One Investment Advisors and its affiliates (or any sub-advisor) for
brokerage and other agency transactions.
SALES CHARGE
REDUCTIONS
AND WAIVERS
- ----------------------------------------------------
REDUCING YOUR CLASS A SALES CHARGES
There are several ways you can reduce the sales charges you pay on Class A
shares:
1. Right of Accumulation: You may add the market value of any Class A, Class B
or Class C shares of a Fund (except a money market fund) that you (and your
spouse and minor children) already own of any One Group Fund (except a money
market fund) to the amount of your next Class A purchase for purposes of
calculating the sales charge. An Intermediary also may take advantage of this
option.
2. Letter of Intent: With an initial investment of $2,000, you may purchase
Class A shares of one or more Funds over the next 13 months and pay the same
sales charge that you would have paid if all shares were purchased at once. A
percentage of your investment will be held in escrow until the full amount
covered by the Letter of Intent has been invested.
To take advantage of the accumulation privilege or letter of intent, complete
the appropriate section of your fund application, or contact your Shareholder
Servicing Agent. To determine if you are eligible for the accumulation
privilege, contact The One Group Services Company at 1-800-480-4111. These
programs may be terminated or amended at any time.
WAIVER OF THE CLASS A SALES CHARGE
No sales charge is imposed on Class A shares of the Funds if the shares were:
1. Bought with the reinvestment of dividends and capital gains distributions.
2. Acquired in exchange for other Fund shares if a comparable sales charge has
been paid for the exchanged shares.
3. Bought by officers, directors or trustees, retirees and employees (and their
spouses and immediate family members) of:
- The One Group.
- BANC ONE CORPORATION and its subsidiaries and affiliates.
- The One Group Services Company and its subsidiaries and affiliates.
- State Street Bank and Trust Company and its subsidiaries and affiliates.
- Broker/dealers who have entered into dealer agreements with The One Group
and their subsidiaries and affiliates.
- An investment sub-advisor of a fund of The One Group and such sub-advisor's
subsidiaries and affiliates.
4. Bought by:
- Affiliates of BANC ONE CORPORATION and certain accounts (other than IRA
Accounts) for which an Intermediary acts in a fiduciary, advisory, agency,
custodial or similar capacity.
- Accounts as to which a bank or broker-dealer charges an asset allocation
fee, provided the bank or broker-dealer has an agreement with The One Group
Services Company.
- Retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to, those defined in Sections 401(a),
403(b) or 457 of the Internal Revenue Code and "rabbi trusts."
<PAGE> 85
28
- Shareholder Servicing Agents who have a dealer arrangement with The One
Group Services Company, who place trades for their own accounts or for the
accounts of their clients and who charge a management, consulting or other
fee for their services, as well as clients of such Shareholder Servicing
Agents who place trades their own accounts if the accounts are linked to
the master account of such Shareholder Servicing Agent.
5. Bought with proceeds from the sale of Fiduciary Class shares of a Fund of The
One Group or acquired in an exchange of Fiduciary Class shares of a Fund for
Class A shares of the same Fund, but only if the purchase is made within 60
days of the sale or distribution.
6. Bought with proceeds from the sale of shares of a mutual fund (other than a
fund of The One Group) for which a sales charge was paid, but only if the
purchase is made within 60 days of the sale or distribution.
7. Bought in an IRA with the proceeds of a distribution from an employee benefit
plan, but only if the purchase is made within 60 days of the sale or
distribution and, at the time of the distribution, the employee benefit plan
had plan assets invested in a Fund of The One Group.
8. Bought with assets of The One Group.
9. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
The waivers described in (5), (6) and (7) above will not continue indefinitely
and may be discontinued at any time without notice.
WAIVER OF THE CLASS B SALES CHARGE
No sales charge is imposed on redemptions of Class B shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class B shares of other Funds of The One Group.
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class C shares of other Funds of The One Group.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance. To see if you qualify, contact The One Group Services
Company at 1-800-480-4111 or your Shareholder Servicing Agent.
EXCHANGING
FUND SHARES
- ----------------------------------------------------
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
- - Fiduciary Class shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group.
- - Class A shares of a Fund may be exchanged for Fiduciary Class shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group, but only if you are eligible to purchase those shares.
- - Class B shares of a Fund may be exchanged for Class B shares of another Fund
of The One Group.
- - Class C shares of a Fund may be exchanged for Class C shares of another Fund
of The One Group.
The One Group does not charge a fee for this privilege. In addition, The One
Group may change the terms and conditions of your exchange privileges upon 60
days written notice.
<PAGE> 86
29
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
- - State Street Bank and Trust Company receives the request by 4:00 p.m. EST.
- - You have provided The One Group with all of the information necessary to
process the exchange.
- - You have received a current prospectus of the Fund or Funds in which you wish
to invest.
- - You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
- - You will pay a sales charge if you own Fiduciary Class shares of a Fund and
you want to exchange those shares for Class A shares, unless you qualify for a
sales charge waiver (see above).
- - You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange them for
shares of a Fund that does, in which case you would pay the sales charge
applicable to the Fund into which you are exchanging.
2. That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that Fund's
sales charge and all other sales charges you have already paid.
- - If you exchange Class B or Class C shares of a Fund, you will not pay a sales
charge at the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC of
either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C shares is
carried over to your new shares.
ARE EXCHANGES TAXABLE?
Generally:
- - An exchange between classes of shares of the same Fund is not taxable.
- - An exchange between Funds is considered a sale and generally results in a
capital gain or loss for Federal income tax purposes.
- - You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short-term movements in the market. Therefore:
- - To prevent disruptions in the management of the Funds, The One Group limits
excessive exchange activity.
- - Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- - In addition, The One Group reserves the right to reject any exchange request
(even those that are not excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or otherwise adversely
affect other shareholders.
REDEEMING
FUND SHARES
- ----------------------------------------------------
WHEN CAN I REDEEM SHARES?
- - You may redeem all or some of your shares on any day that the Funds are open
for business.
- - Redemption requests received by The One Group Services Company before 4 p.m.
EST will be effective that day.
HOW DO I REDEEM SHARES?
- - Unless you have selected the telephone option on your Account Application
Form, you must send a written redemption request to your Shareholder Servicing
Agent, if applicable, or State Street Bank and Trust Company at the following
address:
The One Group
c/o State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
- - All requests for redemptions from IRA accounts must be in writing.
- - You may request redemption forms by calling The One Group Services Company at
1-800-480-4111.
- - State Street Bank and Trust Company may require that the signature on your
redemption request be guaranteed by a commercial bank, a member of a domestic
stock exchange, or a member of the Securities Transfer Association Medallion
Program or the Stock Exchange Medallion Program, unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record; and
3. the redemption check is mailed to the shareholder at the record address.
<PAGE> 87
30
- - On the Account Application Form you may elect to have the redemption proceeds
mailed or wired to:
1. a designated commercial bank; or
2. State Street Bank and Trust Company or your Shareholder Servicing Agent.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - Your redemption proceeds will be paid within seven days after receipt of the
redemption request.
WHAT WILL MY SHARES BE WORTH?
- - If you own Class A and Fiduciary Class shares and the Fund receives your
redemption request by 4:00 p.m. EST, you will receive that day's NAV.
- - If you own Class B or Class C shares and the Fund receives your redemption
request by 4:00 p.m. EST, you will receive that day's NAV, minus the amount of
any applicable CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
- - Call your Shareholder Servicing Agent or State Street Bank and Trust Company
at 1-800-480-4111 to relay your redemption request.
- - Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000 you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
- - Select the "Systematic Withdrawal Plan" option on the Account Application
Form.
- - Specify the amount you wish to receive and the frequency of the payments.
- - You may designate a person other than yourself as the payee.
- - There is no charge for this service.
- - If you select this option, please keep in mind that:
1. It may not be in your best interest to buy additional Class A shares while
participating in a Systematic Withdrawal Plan. This is because Class A
shares have an up-front sales charge.
2. If you own Class B or Class C shares, you or your designated payee may
receive systematic payments provided the payments are limited to no more
than 10% of your account value annually, measured from the date the
redemption request is received.
3. If the amount of the systematic payment exceeds the income earned by your
account since the previous payment under the Systematic Withdrawal Plan,
payments will be made by redeeming some of your shares. This will reduce
the amount of your investment.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
- - All redemptions will be for cash.
- - If you redeem shares for which you paid by check, and The One Group has not
yet received payment on the check, The One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been collected from
your bank.
- - Because of the high cost of handling small investments, The One Group will
automatically redeem shares in accounts which, because of shareholder
redemptions, have values of less than $1,000. No sales charges will be
assessed and you will be given 60 days to make additional investments in the
Fund to increase the value of your account to at least $1,000.
- - The One Group may suspend your ability to redeem, or will redeem your shares
involuntarily, when it seems appropriate to do so in light of its
responsibilities under the Federal securities laws. The Statement of
Additional Information offers more details about this process.
<PAGE> 88
SHAREHOLDER INFORMATION
31
VOTING RIGHTS
- ----------------------------------------------------
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
BANC ONE CORPORATION (100 East Broad Street, Columbus, Ohio, 43271), through its
affiliates, may be deemed for purposes of the Investment Company Act of 1940 to
control the Funds. This is because as of August 5, 1997, BANC ONE CORPORATION or
its affiliates possessed the power to vote substantially all of the Fiduciary
Class shares of the Funds.
On that same date, the following shareholders owned 25% or more of Class A,
Class B and Class C shares of the Funds. As a consequence, they are considered
<TABLE>
<CAPTION>
to be controlling persons of these classes of the Funds.
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
<S> <C> <C> <C>
Dean Witter Reynolds Arizona Municipal Bond Fund 32.61% Record
FBO Theodore Cesarano Class A
4617 E. Bernell Drive
Phoenix, AZ 85028-5520
The One Group Services Company Arizona Municipal Bond Fund 50.00% Record
Fund Administration Class B
3435 Stelzer Road
Columbus, Ohio 43219-6004
Dean Witter Funds Processing Account Arizona Municipal Bond Fund 50.00% Record
5 World Trade Center 6th Floor Class C
New York, NY 10048-0205
Dean Witter for the Benefit of West Virginia Municipal Bond Fund 61.58% Record
Stephen A. Lewis Class A
3720 Noves Ave.
5 World Trade Center 6th Floor
New York, NY 10048-0205
</TABLE>
DIVIDEND POLICIES
- ----------------------------------------------------
DIVIDENDS
The Funds generally declare dividends daily. Dividends are distributed on the
first business day of each month. Capital gains, if any, for all Funds are
distributed at least annually.
The Funds pay dividends and distributions on a per-share basis. This means that
the value of your shares will be reduced by the amount of the payment. If you
purchase shares shortly before the record date for a dividend or the
distribution of capital gains, you will pay the full price for the shares and
receive some portion of the price back as a taxable dividend or distribution.
Dividends payable on Fiduciary Class shares will be more than those payable on
other classes of shares. This is because Class A, Class B and Class C shares
have higher distribution expenses.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8500, Boston, MA
02266-8500, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street.
SPECIAL DIVIDEND RULES FOR CLASS B SHARES
Class B shares received as dividends and capital gains distributions will be
accounted for separately. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of the Class B shares in
the sub-account will also convert to Class A shares. (See "Conversion Feature.")
<PAGE> 89
32
TAX TREATMENT
OF THE FUNDS
- ----------------------------------------------------
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT
OF SHAREHOLDERS
- ----------------------------------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares generally will produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
FEDERAL TAXATION OF DISTRIBUTIONS
EXEMPT-INTEREST DIVIDENDS. If, at the close of each quarter of its taxable year,
at least 50% of the value of a Fund's assets consists of obligations the
interest on which is excludable from gross income, the Fund may pay
"exempt-interest dividends" to you. Generally, exempt-interest dividends are
excludable from gross income. However:
1. If you receive Social Security or Railroad Retirement benefits, you may be
taxed on a portion of such benefits if you receive exempt-interest dividends
from the Funds.
2. Receipt of exempt-interest dividends may result in liability for Federal
alternative minimum tax and for state and local taxes, both for individual
and corporate shareholders.
INTEREST ON PRIVATE ACTIVITY BONDS: The Municipal Income Fund, the Arizona
Municipal Bond Fund, the West Virginia Municipal Bond Fund, the Kentucky
Municipal Bond Fund, the Louisiana Municipal Bond Fund and the Ohio Municipal
Bond Fund may invest as much as 100% of their assets in municipal securities
issued to finance private activities the interest on which is a tax preference
item for purposes of the Federal alternative minimum tax ("Private Activity
Bonds"). The Intermediate Tax-Free Bond Fund may invest as much as 20% of its
assets in such Private Activity Bonds. As a result, Fund shareholders who are
subject to the Federal alternative minimum tax may have all or a portion of
their income from those Funds subject to Federal income tax. Additionally,
corporate shareholders will be required to take the interest on municipal
securities (including municipal securities of each Fund's respective state) into
account in determining their alternative minimum taxable income. Persons who are
substantial users of facilities financed by private activity bonds or who are
"related persons" of such substantial users should consult their tax advisors
before investing in the Funds.
INVESTMENT INCOME AND CAPITAL GAINS DIVIDENDS. Each Fund will distribute
substantially all of its net investment income (including net short-term capital
gains) on at least an annual basis. Dividends you receive from a Fund, other
than "exempt-interest dividends," will be taxable to you, whether reinvested or
received in cash. Dividends from a Fund's net investment income, if any, will be
taxable as ordinary income and capital gains dividends will be taxable to you as
such, regardless of how long you have held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid the previous December.
STATE AND LOCAL TAXATION OF DISTRIBUTIONS: Dividends that are derived from the
Funds' investments in U.S. government obligations may not be entitled to the
exemptions from state and local taxes that would be available if you purchased
U.S. government obligations directly.
The funds will notify you annually of the percentage of income and distributions
derived from U.S. government obligations. Unless otherwise discussed below,
investment income and capital gains dividends may be subject to state and local
taxes.
LOUISIANA TAXES: Distributions from the Louisiana Municipal Bond Fund, which are
derived from interest on tax-exempt obligations of the State of Louisiana or its
political subdivisions and certain obligations of the United States or its
territories, are exempt from Louisiana income tax.
ARIZONA TAXES: Exempt-interest dividends from the Arizona Municipal Bond Fund,
which are derived from interest on tax-exempt obligations of the State of
Arizona and its political subdivisions are exempt from Arizona income tax. Other
distributions from the Fund, including those related to long-term and short-term
capital gains, will be subject to Arizona income tax. Arizona law does not
permit a deduction for interest paid or accrued on indebtedness incurred or
continued to purchase or carry obligations, the interest on which is exempt from
Arizona income tax.
WEST VIRGINIA TAXES: Distributions from the West Virginia Bond Fund, which are
derived from interest or dividends on obligations or a securities of a West
Virginia state or local governmental body, generally are exempt from West
Virginia income tax. In addition, you will not pay that tax on the portion of
your income from the Fund which represents interest or dividends received from
the
<PAGE> 90
33
Fund on obligations or securities of the United States and some of its
authorities, commissions or instrumentalities.
KENTUCKY TAXES: Dividends received from the Kentucky Municipal Bond Fund which
are derived from interest on Kentucky Municipal Securities are exempt from the
Kentucky individual income tax. Dividends paid from interest earned on
securities that are merely guaranteed by the Federal government, repurchase
agreements collateralized by U.S. government obligations, or from interest
earned on obligations of other states are not exempt from Kentucky individual
income tax. Any distributions of net short-term and net long-term capital gain
earned by the Fund are includable in each Shareholder's Kentucky adjusted gross
income as dividend income and long-term capital gain, respectively, and are both
taxed at ordinary income tax rates.
OHIO TAXES: Dividends received from the Ohio Municipal Bond Fund which are
derived from interest on Ohio Municipal Securities are exempt from the Ohio
personal income tax. In addition, gain from the sale or transfer of certain Ohio
Municipal Securities is also exempt from Ohio income tax. Certain Ohio
municipalities may have retained the right to tax dividends from the Fund.
Corporate investors must include the Fund shares in the corporation's tax base
for purposes of the Ohio franchise tax net worth computation, but not for the
net income computation.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
SHAREHOLDER INQUIRIES
- ----------------------------------------------------
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In March and September you will receive a financial report from The One
Group. In addition, The One Group will periodically send you proxy
statements and other reports.
<PAGE> 91
ORGANIZATION AND MANAGEMENT OF THE FUNDS
FUND NAME
34
THE FUNDS
Each Fund is a series of The One Group, an open-end management investment
company. The One Group currently consists of 40 separate Funds. Seven of the
Funds are described in this prospectus; the other Funds are described in
separate prospectuses. Two of the Funds described in this prospectus are
diversified, and five of the Funds described in this prospectus are
non-diversified. Each Fund is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of The One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to The
One Group since 1993. Prior to that time, The One Group was advised by
affiliates of Banc One Investment Advisors. In addition to The One Group, Banc
One Investment Advisors serves as investment advisor to other mutual funds and
individual, corporate, charitable and retirement accounts. As of June 30, 1997,
Banc One Investment Advisors, an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, managed over $47 billion in assets.
For the fiscal year ended June 30, 1997, the Funds paid investment advisory fees
<TABLE>
<CAPTION>
at the following rates:
Annual Rate As Percentage
of Average Daily Net Assets
<S> <C> <C>
The One Group(R) Intermediate Tax-Free Bond
Fund .39%
The One Group(R) Municipal Income Fund .35%
The One Group(R) Arizona Municipal Bond Fund .34%
The One Group(R) West Virginia Municipal Bond
Fund .29%
The One Group(R) Louisiana Municipal Bond Fund .37%
The One Group(R) Ohio Municipal Bond Fund .30%
The One Group(R) Kentucky Municipal Fund .36%
</TABLE>
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory reporting and
compliance. For these services, The One Group Services Company receives a fee
based on the total assets of The One Group. For the first $1.5 billion in One
Group assets, The One Group Services Company receives an annual fee of .20% of
each Fund's average daily net assets. The annual rate declines to .18% on assets
up to $2 billion, and to .16% when assets exceed $2 billion. The fee is
calculated daily and paid monthly. Some Funds are not included in the
calculations. Banc One Investment Advisors, the Sub-Administrator, provides
office space, equipment, and facilities, as well as legal and regulatory
support.
THE TRANSFER AGENT, CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500 or
your Shareholder Servicing Agent, if appropriate, handles shareholder
recordkeeping and statements, distributes dividends, and processes buy and sell
requests. As the Funds' custodian, State Street holds the Funds' assets, settles
all portfolio trades and assists in calculating the Funds' net asset values.
Bank One Trust Company, N.A. serves as sub-custodian in connection with the
Funds' securities lending activities under an agreement with State Street Bank
and Trust company and Bank One Trust Company, N.A. Bank One Trust Company, N.A.
is paid a fee by the Funds for this service.
<PAGE> 92
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
35
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Fixed income securities are primarily influenced by
market, credit and prepayment risks, although certain securities may be subject
to additional risks. For a more complete discussion, see the Statement of
Additional Information. Following the table is a more complete discussion of
risk.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
<S> <C> <C>
The One Group(R) Intermediate Tax-Free Bond
Fund 1
The One Group(R) Municipal Income Fund 2
The One Group(R) Arizona Municipal Bond Fund 3
The One Group(R) West Virginia Municipal Bond
Fund 4
The One Group(R) Louisiana Municipal Bond Fund 5
The One Group(R) Ohio Municipal Bond Fund 6
The One Group(R) Kentucky Municipal Fund 7
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, bonds, STRIPS, and 1-7 Market
CUBES.
TREASURY RECEIPTS: TRS, TIGRS, and CATS. 1-7 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies 1-7 Market
and instrumentalities of the U.S. Government. These include Credit
Ginnie Mae, Fannie Mae and Freddie Mac.
CERTIFICATES OF DEPOSIT: Negotiable instruments with a stated 1-7 Market
maturity. Credit
Liquidity
TIME DEPOSITS: Non-negotiable receipts issued by a bank in 1-7 Liquidity
exchange for the deposit of funds. Credit
Market
REPURCHASE AGREEMENTS: The purchase of a security and the 1-7 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
REVERSE REPURCHASE AGREEMENT: The sale of a security and the 1-7 Market
simultaneous commitment to buy the security back at an agreed Leverage
upon price on an agreed upon date. This is treated as a
borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33% of the securities 1-7 Credit
owned by a Fund. In return the Fund will receive cash and/or Market
other securities as collateral. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Purchase or 1-7 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
INVESTMENT COMPANY SECURITIES: Shares of other mutual funds, 1-7 Market
including money market funds of The One Group and shares of
other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. Banc One
Investment Advisors will waive certain fees when investing in
funds for which it serves as investment advisor.
CALL AND PUT OPTIONS: A call option gives the buyer the right to 1-7 Management
buy, and obligates the seller of the option to sell, a security Liquidity
at a specified price. A put option gives the buyer the right to Credit
sell, and obligates the seller of the option to buy, a security Market
at a specified price. The Funds will sell only covered call and Leverage
secured put options.
FUTURES AND RELATED OPTIONS: A contract providing for the future 1-7 Management
sale and purchase of a specified amount of a specified security, Market
class of securities, or an index at a specified time in the Credit
future and at a specified price. Liquidity
Leverage
</TABLE>
<PAGE> 93
36
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
BANKERS' ACCEPTANCES: Bills of exchange or time drafts drawn on 1-7 Credit
and accepted by a commercial bank. Maturities are generally six Liquidity
months or less. Market
COMMERCIAL PAPER: Secured and unsecured short-term promissory 1-7 Credit
notes issued by corporations and other entities. Maturities Liquidity
generally vary from a few days to nine months. Market
RESTRICTED SECURITIES: Securities not registered under the 1-7 Liquidity
Securities Act of 1933, such as privately placed commercial Market
paper and Rule 144A securities.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1-7 Market
interest rates which are reset daily, weekly, quarterly or some Credit
other period and which may be payable to the Fund on demand. Liquidity
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real 1-7 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs"), and Real Estate Mortgage Credit
Investment Conduits ("REMICs"). Regulatory
DEMAND FEATURES: Securities that are subject to puts and standby 1-7 Market
commitments to purchase the securities at a fixed price (usually Liquidity
with accrued interest) within a fixed period of time following Management
demand by a Fund.
MORTGAGE DOLLAR ROLLS: A transaction in which a Fund sells 1-7 Pre-payment
securities for delivery in a current month and simultaneously Market
contracts with the same party to repurchase similar but not Regulatory
identical securities on a specified future date.
SWAPS, CAPS AND FLOORS: A Fund may enter into these transactions 1-7 Management
to manage its exposure to changing interest rates and other Credit
factors. Swaps involve an exchange of obligations by two Liquidity
parties. Caps and floors entitle a purchaser to a principal Market
amount from the seller of the cap or floor to the extent that a
specified index exceeds or falls below a predetermined interest.
NEW FINANCIAL PRODUCTS: New options and futures contracts and 1-7 Management
other financial products continue to be developed and the Fund Credit
may invest in such options, contracts and products. Market
Liquidity
STRUCTURED INSTRUMENTS: Debt securities issued by agencies and 1-7 Market
instrumentalities of the U.S. government, banks, municipalities, Liquidity
corporations and other businesses whose interest and/or Management
principal payments are indexed to foreign currency exchange Credit
rates, interest rates, or one or more other references indices. Foreign Investment
MUNICIPAL SECURITIES: Securities issued by a state or political 1-7 Credit
subdivision to obtain funds for various public purposes. Political
Municipal securities include private activity bonds and Tax
industrial development bonds, as well as General Obligation Market
Notes, Anticipation Notes, Bond Tax Anticipation Notes, Revenue
Anticipation Notes, Project Notes, other short-term tax-exempt
obligations, municipal leases, participations in pools of
municipal securities, and obligations of municipal housing
authorities and single family revenue bonds.
STRIPPED MORTGAGE-BACKED SECURITIES: Derivative multi-class 1-7 Pre-payment
mortgage securities which are usually structured with two Market
classes of shares that receive different proportions of the Credit
interest and principal from a pool of mortgage assets. These Regulatory
include IO's and PO's.
ASSET-BACKED SECURITIES: Securities secured by company 1-7 Pre-payment
receivables, home equity loans, truck and auto loans, leases, Market
credit card receivables and other securities backed by other Credit
types of receivables or other assets.
ZERO-COUPON DEBT SECURITIES: Bonds and other debt that pay no 1-7 Credit
interest, but are issued at a discount from their value at Market
maturity. When held to maturity, their entire return equals the
differences between their issue price and their maturity value.
INVERSE FLOATING RATE INSTRUMENTS: Leveraged floating rate debt 1-7 Credit
instruments with interest rates that reset in the opposite Market
direction from the market rate of interest to which the inverse Leverage
floater is indexed.
LOAN PARTICIPATIONS AND ASSIGNMENTS: Participations in, or 1-7 Market
assignments of municipal securities, including municipal leases. Credit
Political
Liquidity
Tax
</TABLE>
<PAGE> 94
37
INVESTMENT RISKS
- ----------------------------------------------------
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Funds may fluctuate, as will the value of
your investment in the Funds. Certain investments are more susceptible to these
risks than others.
- - CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise be unable to honor a financial obligation.
Credit risk is generally higher for non-investment grade securities. The price
of a security can be adversely affected prior to actual default as its credit
status deteriorates and the probability of default rises.
- - LEVERAGE RISK. The risk associated with securities or practices that multiply
small index or market movements into large changes in value. Leverage is often
associated with investments in derivatives, but also may be embedded directly
in the characteristics of other securities.
- HEDGED. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Hedges are sometimes subject to imperfect matching between
the derivative and underlying security, and there can be no assurance that
a Fund's hedging transactions will be effective.
- SPECULATIVE. To the extent that a derivative is not used as a hedge, the
fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater
than the derivative's original cost.
- - LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that normally prevails in the
market. The seller may have to lower the price, sell other securities instead
or forego an investment opportunity, any of which could have a negative effect
on fund management or performance. This includes the risk of missing out on an
investment opportunity because the assets necessary to take advantage of it
are tied up in less advantageous investments.
- - MANAGEMENT RISK. The risk that a strategy used by a fund's management may fail
to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than
it was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. There is also the
risk that the current interest rate may not accurately reflect existing market
rates. For fixed income securities, market risk is largely, but not
exclusively, influenced by changes in interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Finally, key information about a security or market may be
inaccurate or unavailable. This is particularly relevant to investments in
foreign securities.
- - POLITICAL RISK. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
- - FOREIGN INVESTMENT RISK. Risk associated with higher transaction costs,
delayed settlements, currency controls and adverse economic developments. This
also includes the risk that fluctuations in the exchange rates between the
U.S. dollar and foreign currencies may negatively affect an investment.
Adverse changes in exchange rates may erode or reverse any gains produced by
foreign currency denominated investments and may widen any losses. Exchange
rate volatility also may affect the ability of an issuer to repay U.S. dollar
denominated debt, thereby increasing credit risk.
- - PRE-PAYMENT RISK. The risk that the principal repayment of a security will
occur at an unexpected time, especially that the repayment of a mortgage or
asset-backed security occurs either significantly sooner or later than
expected. Changes in pre-payment rates can result in greater price and yield
volatility. Pre-payments generally accelerate when interest rates decline.
<PAGE> 95
38
When mortgage and other obligations are pre-paid, a Fund may have to reinvest
in securities with a lower yield. Further, with early prepayment, a Fund may
fail to recover any premium paid, resulting in an unexpected capital loss.
- - TAX RISK. The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
- - REGULATORY RISK. The risk associated with Federal and state laws which may
restrict the remedies that a mortgage lender has when a borrower defaults on
mortgage loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor relief laws,
restrictions on "due on sale" clauses, and state usury laws.
INVESTMENT POLICIES
- ----------------------------------------------------
Each Fund's investment objective and the following investment policies
summarized below are fundamental. This means that they cannot be changed without
the consent of a majority of the outstanding shares of the Funds. In addition to
the fundamental policies mentioned earlier, the following fundamental policies
apply to each Fund as specified. The full text of the fundamental policies can
be found in the Statement of Additional Information.
INVESTMENT POLICIES FOR SPECIFIC FUNDS
The Intermediate Tax-Free Bond Fund and the Municipal Income Fund may not:
1. Purchase the securities of an issuer if as a result more than 5% of its total
assets would be invested in the securities of that issuer, or the Fund would
own more than 10% of the outstanding voting securities of that issuer. This
does not include securities issued or guaranteed by the United States, its
agencies or instrumentalities, and repurchase agreements involving these
securities. This restriction applies to 75% of a Fund's total assets.
2. Concentrate in a particular industry or group of industries. This does not
include Municipal Securities or governmental guarantees of Municipal
Securities, and with respect to the Municipal Income Fund, housing authority
obligations. Private activity bonds that are backed only by the assets and
revenues of a non-governmental issuer are not Municipal Securities for
purposes of this restriction.
The Arizona Municipal Bond Fund, the West Virginia Municipal Bond Fund, the
Louisiana Municipal Bond Fund, the Ohio Municipal Bond Fund and the Kentucky
Municipal Bond Fund may not:
1. Purchase the securities of an issuer if as a result more than 25% of its
total assets would be invested in the securities of that issuer. This
restriction applies with respect to 50% of a Fund's total assets. With
respect to the remaining 50% of its total assets, a Fund may not purchase the
securities of an issuer if as a result more than 5% of its total assets would
be invested in the securities of that issuer. This restriction does not apply
to securities issued or guaranteed by the United States, its agencies, or
instrumentalities, securities of regulated investment companies, and
repurchase agreement involving such securities.
2. Concentrate their investment in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include:
- Obligations issued or guaranteed by the U.S. government or its agencies and
instrumentalities and repurchase agreements involving such securities;
- Municipal Securities; and
- Ohio Municipal Securities, Kentucky Municipal Securities, Arizona Municipal
Securities, West Virginia Municipal Securities, and Louisiana Municipal
Securities or governmental guarantees of such securities. With respect to
the Arizona Municipal Bond Fund and the West Virginia Municipal Bond Fund,
private activity bonds that are backed only by the assets and revenues of a
non-governmental issuer are not Arizona Municipal Securities or West
Virginia Municipal Securities for purposes of this restriction.
INVESTMENT POLICIES FOR ALL FUNDS
None of the Funds may 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.
Additional investment policies are set forth in the Statement of Additional
Information.
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes, each Fund may invest up to 100% of its assets
in money market instruments and may hold a portion of its assets in cash for
liquidity purposes.
<PAGE> 96
39
The Arizona Municipal Bond Fund, the West Virginia Municipal Bond Fund, the
Louisiana Municipal Bond Fund and the Ohio Municipal Bond Fund also may invest
up to 20% of their total assets in securities other than Arizona, West Virginia,
Louisiana and Ohio Municipal Securities, respectively. The Kentucky Municipal
Bond Fund may invest up to 35% of its total assets in securities other than
Kentucky Municipal Securities.
While the Funds are engaged in a temporary defensive position, they will not be
pursuing their investment objectives. Therefore, the Funds will pursue a
temporary defensive position only when market conditions warrant.
PORTFOLIO TURNOVER
Portfolio turnover may vary greatly from year to year, as well as within a
particular year.
Higher portfolio turnover rates will likely result in higher transaction costs
to the Funds and may result in additional tax consequences to you. The portfolio
turnover rate for each Fund for the fiscal year ended June 30, 1997 is shown on
the Financial Highlights.
<PAGE> 97
APPENDIX
40
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free U.S. Treasury
obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet financial
commitment is strong. Obligations designated with a plus sign (+)
indicate that capacity to meet financial commitment is extremely
strong.
A-2 Issues somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than obligations in higher rating
categories. However, the capacity to meet financial commitments is
satisfactory.
FITCH'S INVESTORS SERVICE, L.P. ("FITCH")
F-1+ Exceptionally strong credit quality. Strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Assurance of timely payment is only
slightly less in degree than issues rated F-1+.
F-2 Good credit quality. Satisfactory degree of assurance for timely
payment, but the margin of safety is not as good as for issues assigned
F-1+ and F-1 ratings.
IBCA LIMITED ("IBCA")
A1 Highest capacity for timely repayment. Those issues rated A1+ possess a
particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such capacity may
be susceptible to adverse changes in business, economic or financial
conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
<PAGE> 98
41
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
AAA The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
AAA Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
AA These insurance companies offer excellent financial security. Together
with the Aaa group, they constitute what are generally known as high
grade companies. They are rated lower than Aaa companies because
long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
DESCRIPTION OF MUNICIPAL BOND RATINGS
(including mortgage and asset-backed securities)
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong capacity to
meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's capacity
to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories. However, capacity to meet its financial commitment on
the obligations is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligations.
Speculative Grade
BB Less vulnerable to non-payment than other speculative issues. However,
these bonds face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet financial commitment on the obligation.
B More vulnerable to non-payment than obligations rated BB, but currently
has the capacity to meet its financial commitment on the obligation.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to meet its financial commitment on the
obligation.
CCC Currently vulnerable to non-payment, and is dependent upon favorable
business, financial, and economic conditions to meet its financial
commitment on the
<PAGE> 99
42
obligation. In the event of adverse business, financial, or economic
conditions, they are not likely to have the capacity to meet its
financial commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments
on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
Investment Grade
AAA Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large, or an exceptionally stable, margin and principal is secure.
AA High quality by all standards. Margins of protection may not be as
large as in Aaa securities, fluctuation of protective elements may be
greater, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
BAA These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
BA These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may be
small).
CAA Bonds in this category have poor standing and may be in default. These
bonds carry an element of danger with respect to principal and interest
payments.
CA Speculative to a high degree and could be in default or have other
marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S
MIG1 & VMIG1
Short-term municipal securities rated MIG1 or VMIG1 are of the best
quality. They have strong protection from established cash flows,
superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2 & VMIG2
These Short-term municipal securities rated MIG2 or VMIG2 are of high
quality. Margins of protection are ample although not so large as in
the preceding group.
MIG3 & VMIG3
Favorable quality. All security elements are accounted for, but the
undeniable strength of the preceding grades is lacking. Liquidity and
cash flow protection may be narrow and marketing access for
refinancing is likely to be less well established.
S&P
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
<PAGE> 100
43
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
AAA Top-quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within the
universe of preferred stocks.
AA High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
A Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
BAA Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues
rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock obligations.
Whereas the issuer normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest will be paid
on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal and
interest is strong, the relative degree is not as high as for issues
rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to adverse
developments than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
<PAGE> 101
Investment Advisor and Sub-Administrator
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Distributor
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES COMPANY AT 3435
STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL INFORMATION IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS A WEB SITE
(WWW.SEC.COM) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIALS
INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING THE ONE GROUP(R).
TOG-F-121
<PAGE> 102
THE ONE GROUP(R) FAMILY OF MUTUAL FUNDS
BOND FUNDS
COMBINED PROSPECTUS
NOVEMBER 1, 1997
THE ONE GROUP(R) INTERMEDIATE BOND FUND
THE ONE GROUP(R) INCOME BOND FUND
THE ONE GROUP(R) GOVERNMENT BOND FUND
THE ONE GROUP(R) ULTRA SHORT-TERM INCOME FUND
THE ONE GROUP(R) LIMITED VOLATILITY BOND FUND
THE ONE GROUP(R) TREASURY & AGENCY FUND
This prospectus describes six mutual funds with a variety of
investment objectives, including income, capital preservation, tax-exempt
income, and low volatility. The information in this prospectus is
important.
Please read it carefully before you invest, and save it
for future reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: O ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY BANC ONE CORPORATION OR ITS AFFILIATES; O ARE
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
BY ANY FEDERAL OR STATE GOVERNMENTAL AGENCY; O
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 103
TABLE OF CONTENTS
<TABLE>
<S> <C>
A BRIEF PREVIEW OF THE FUNDS............................ 1
ABOUT THE FUNDS......................................... 2
The One Group(R) Intermediate Bond Fund.............. 2
The One Group(R) Income Bond Fund.................... 5
The One Group(R) Government Bond Fund................ 8
The One Group(R) Ultra Short-Term Income Fund........ 11
The One Group(R) Limited Volatility Bond Fund........ 14
The One Group(R) Treasury & Agency Fund.............. 17
MORE ABOUT THE FUNDS.................................... 20
HOW TO DO BUSINESS WITH THE ONE GROUP................... 22
Purchasing Fund Shares............................... 22
Sales Charges........................................ 23
Sales Charge Reductions and Waivers.................. 26
Exchanging Fund Shares............................... 28
Redeeming Fund Shares................................ 28
SHAREHOLDER INFORMATION................................. 31
Voting Rights........................................ 31
Dividend Policies.................................... 31
Tax Treatment of the Funds........................... 32
Tax Treatment of Shareholders........................ 32
Shareholder Inquiries................................ 32
ORGANIZATION AND MANAGEMENT OF THE FUNDS................ 33
The Funds............................................ 33
The Board of Trustees................................ 33
The Advisor.......................................... 33
The Distributor...................................... 33
The Administrator and Sub-Administrator.............. 33
The Transfer Agent, Custodian and Sub-Custodian...... 33
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND
POLICIES.............................................. 34
Investment Practices................................. 34
Investment Risks..................................... 37
Investment Policies.................................. 38
APPENDIX: DESCRIPTION OF RATINGS........................ 39
</TABLE>
<PAGE> 104
1
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE ONE GROUP BOND FUNDS?
The Funds are designed for a variety of investment objectives,
including current income consistent with the preservation of
capital, current income with a primary focus on income that is
exempt from state income taxes, and current income consistent
with low volatility of principal. Each Fund pursues a
different objective and involves different risks. Please read
about each Fund before investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Intermediate Bond Fund, the Limited Volatility Bond Fund,
the Ultra Short-Term Income Fund and the Income Bond Fund
invest in high and medium grade debt securities of all types
with average maturities ranging from one to fifteen years. The
Income Bond Fund also may invest in lower grade debt
securities, although it will limit its investments in such
securities to no more than 30% of its total assets. The
Government Bond Fund and the Treasury & Agency Fund invest in
obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities. Several of the Funds may
invest in preferred stock.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
The Funds invest in fixed-income investments that are subject
to market fluctuations as a result of changes in interest
rates. As a result, the value of investments in the Funds may
decrease during periods of rising interest rates and increase
during periods of declining interest rates. In addition, some
of the Funds invest in mortgage-related securities which have
significantly greater price and yield volatility than
traditional fixed-income securities. Also, the Income Bond
Fund may invest up to 30% of its total assets in securities in
ANY rating category, some of which are regarded as
predominately speculative. For more information about risks,
please read "More About the Funds" and "Investment Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
The Funds currently offer four classes of Shares: Class A,
Class B, Class C and Fiduciary Class. Class A, Class B and
Class C 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. Fiduciary Class shares are
not available to Individual Retirement Accounts ("IRA"). The
section called "How To Do Business With The One Group" will
provide more information.
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the
Funds are open for business. Class C shares are not available
for purchase in all of the funds. Purchase and redemption
procedures are explained in greater detail in "How To Do
Business With The One Group." For additional information, call
The One Group Services Company at 1-800-480-4111.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on each business day and are
distributed on the first business day of each month. Any
capital gains are distributed at least annually. Distributions
are paid in additional shares of the same class unless you
elect to take the payment in cash. For a more detailed
discussion of dividends, see "Dividend Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors"), an indirect subsidiary of BANC ONE CORPORATION,
serves as the advisor of the Funds. Banc One Investment
Advisors is paid a fee for its services. A more detailed
discussion regarding Banc One Investment Advisors, its
services and compensation can be found in the Prospectus under
the headings "The Advisor" and "Expense Summary."
<PAGE> 105
2
THE ONE GROUP(R)
INTERMEDIATE BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks current income consistent with the preservation of capital by
investing in high and medium-grade fixed-income securities with intermediate
maturities.
[ICON] INVESTMENT STRATEGY
Generally, the Fund invests in debt securities of all types including bonds,
notes, U.S. Government obligations, and taxable and tax-exempt municipal
securities rated as investment grade at the time of investment, (or, if unrated,
determined by Banc One Investment Advisors, to be of comparable quality). The
fund's average weighted maturity will ordinarily range between three and ten
years, taking into account expected prepayment of principal on certain
investments, although the Fund may shorten the weighted average maturity to as
little as one year for temporary defensive purposes.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 80% of its total assets in debt securities.
Debt securities include bonds, notes and other obligations. As a matter of
fundamental policy, at least 65% of the Fund's total assets will consist of
bonds and at least 50% of total assets will consist of obligations issued by the
U.S. Government or its agencies and instrumentalities, some of which may be
subject to repurchase agreements. However, the Fund intends to hold at least 65%
of its total assets in such government obligations. Up to 20% of the Fund's
total assets may be invested in preferred stock. For a list of all the
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund may invest in debt securities that are rated in the lowest investment
grade category. Such investments are considered to have speculative
characteristics. In addition, the Fund invests in fixed-income securities. The
value of these securities will change in response to interest rate changes and
other factors. This is especially true to the extent the Fund invests in debt
securities in the lowest investment grade category. The Fund also invests in
mortgage-related securities which may have greater price and yield volatility
than traditional fixed income securities. Before you invest, please read "More
About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
James A. Sexton, CFA, has served as the manager of the Fund since its inception
in January 1994. Since 1994, Mr. Sexton also has served as Managing Director of
Fixed Income Mutual Funds. Mr. Sexton has been employed by Banc One Investment
Advisors or its affiliates as an analyst and portfolio manager since 1980.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .22% .22% .22% .22%
Total Fund Operating Expenses (after fee
waivers) (6) .87% 1.52% 1.52% .62%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.17% for Class A shares, 1.82% for Class B
shares, 1.82% for Class C shares and .82% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 56 $ 80 $ 106 $181
Class B $ 65 $ 78 $ 103 $164
Class B (without fee waivers) $ 68 $ 87 $ 119 $197
Class C $ 25 $ 48 $ 83 $181
Class C (without fee waivers) $ 28 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 56 $ 80 $ 106 $181
Class B $ 15 $ 48 $ 83 $164
Class B (without fee waivers) $ 18 $ 57 $ 99 $197
Class C $ 15 $ 48 $ 83 $181
Class C (without fee waivers) $ 18 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 106
3
THE ONE GROUP(R) INTERMEDIATE BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(e) 1992(c)(e)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.84 $ 10.01 $ 9.72 $ 10.51 $ 10.09 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.65 0.66 0.66 0.60 0.63 0.22
Net realized and unrealized gains (losses)
from investments and futures 0.08 (0.17) 0.29 (0.67) 0.42 0.08
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.73 0.49 0.95 (0.07) 1.05 0.30
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.65) (0.66) (0.66) (0.60) (0.63) (0.21)
In excess of net investment income -- -- -- (0.02) -- --
Net realized gains -- -- -- (0.10) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.65) (0.66) (0.66) (0.72) (0.63) (0.21)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.92 $ 9.84 $ 10.01 $ 9.72 $ 10.51 $ 10.09
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 7.68% 4.95% 10.15% (0.74)% 10.67% 3.00%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $522,423 $230,812 $191,216 $98,483 $44,252 $23,457
Ratio of expenses to average net assets 0.54% 0.54% 0.56% 0.32% 0.39% 0.36%(b)
Ratio of net investment income to average
net assets 6.63% 6.56% 6.88% 6.04% 6.14% 6.99%(b)
Ratio of expenses to average net assets* 0.81% 0.87% 0.99% 0.87% 1.17% 1.33%(b)
Ratio of net investment income to average
net assets* 6.36% 6.23% 6.45% 5.49% 5.36% 6.02%(b)
Portfolio Turnover (a) 55.91% 101.06% 99.71% 85.62% 21.51% 11.74%
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) The Fund commenced operations February 28,
1992. (d) Not annualized. (e) Audited by other auditors.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
--------------------------------------
CLASS A 1997 1996 1995(A)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.87 $ 10.04 $ 9.45
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.63 0.64 0.37
Net realized and unrealized gains (losses) from investments and futures 0.08 (0.17) 0.59
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.71 0.47 0.96
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.63) (0.64) (0.37)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.63) (0.64) (0.37)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.95 $ 9.87 $ 10.04
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.40% 4.77% 10.29%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $18,763 $13,706 $4,941
Ratio of expenses to average net assets 0.78% 0.79% 0.83%(c)
Ratio of net investment income to average net assets 6.35% 6.31% 6.64%(c)
Ratio of expenses to average net assets* 1.16% 1.22% 1.66%(c)
Ratio of net investment income to average net assets* 5.97% 5.88% 5.81%(c)
Portfolio Turnover (d) 55.91% 101.06% 99.71%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class A Shares commenced operations November 30,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE> 107
4
THE ONE GROUP(R) INTERMEDIATE BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------
CLASS B 1997 1996 1995(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.83 $ 10.01 $ 9.45
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.56 0.58 0.23
Net realized and unrealized gains (losses) from investments and futures 0.09 (0.18) 0.56
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.65 0.40 0.79
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.56) (0.58) (0.23)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.56) (0.58) (0.23)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.92 $ 9.83 $ 10.01
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.83% 4.10% 8.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $10,152 $6,077 $ 266
Ratio of expenses to average net assets 1.44% 1.44% 1.51%(c)
Ratio of net investment income to average net assets 5.71% 5.66% 6.15%(c)
Ratio of expenses to average net assets* 1.81% 1.87% 2.34%(c)
Ratio of net investment income to average net assets* 5.34% 5.23% 5.31%(c)
Portfolio Turnover (d) 55.91% 101.06% 99.71%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced operations on November 30, 1994. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 108
5
THE ONE GROUP(R)
INCOME BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks a high level of current income by investing primarily in a
diversified portfolio of high, medium and low grade debt securities.
[ICON] INVESTMENT STRATEGY
The Fund invests in all types of debt securities rated as investment grade or
below investment grade, as well as convertible securities, preferred stock, and
loan participations. The Fund's average weighted maturity will normally range
between five and twenty years, although the Fund may shorten its weighted
average to as little as two years if deemed appropriate for temporary defensive
purposes.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 70% of its total assets in debt securities of all
types rated as investment grade at the time of investment or, if unrated,
determined to be of comparable quality by Banc One Investment Advisors. In
addition, up to 30% of the Fund's total assets may be invested in convertible
securities, preferred stock, loan participations and debt securities rated below
investment grade or, if unrated, determined by Banc One Investment Advisors to
be of comparable quality. Securities rated below investment grade are called
"high yield bonds," "non-investment grade bonds" and "junk bonds." These
securities are rated in the fifth or lower rating categories (for example, BB or
lower by Standard & Poor's Corporation and Ba or lower by Moody's Investors
Service, Inc.), and are considered to be speculative. Even though it may invest
in debt securities in all rating categories, the Fund will not invest more than
20% of its total assets in securities rated below the fifth rating category. As
a matter of fundamental policy, at least 65% of the Fund's total assets will
consist of bonds. The Fund also may purchase taxable or tax-exempt municipal
securities. For a list of all the securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in debt securities rated below investment grade that are
considered speculative. While these securities generally provide a higher yield
than higher rated debt securities, they are subject to a greater degree of risk.
Issuers of these securities may include smaller, less creditworthy companies or
highly indebted firms. The credit quality of securities in the high yield bond
market can change suddenly and unexpectedly. Before you invest, please read
"More About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Roger A. Craig has been the manager of the Fund since 1993. Mr. Craig has served
as a fixed income manager for Banc One Investment Advisors and its affiliates
since 1986.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .22% .22% .22% .22%
Total Fund Operating Expenses (after fee
waiver) (6) .87% 1.52% 1.52% .62%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.17% for Class A shares, 1.82% for Class B
shares, 1.82% for Class C shares and .82% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 56 $ 80 $ 106 $181
Class B $ 65 $ 78 $ 103 $164
Class B (without fee waivers) $ 68 $ 87 $ 119 $197
Class C $ 25 $ 48 $ 83 $181
Class C (without fee waivers) $ 28 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 56 $ 80 $ 106 $181
Class B $ 15 $ 48 $ 83 $164
Class B (without fee waivers) $ 18 $ 57 $ 99 $197
Class C $ 15 $ 48 $ 83 $181
Class C (without fee waivers) $ 18 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 109
6
THE ONE GROUP(R) INCOME BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 9.33 $ 9.54 $ 9.23 $ 10.43 $ 10.18 $ 9.59 $ 9.49
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.64 0.65 0.64 0.54 0.66 0.71 0.79
Net realized and unrealized
gains (losses) from
investments and futures 0.09 (0.21) 0.35 (0.74) 0.38 0.59 0.06
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.73 0.44 0.99 (0.20) 1.04 1.30 0.85
- --------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.64) (0.65) (0.64) (0.57) (0.66) (0.71) (0.75)
Net realized gains -- -- (0.04) (0.43) (0.13) -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.64) (0.65) (0.68) (1.00) (0.79) (0.71) (0.75)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.42 $ 9.33 $ 9.54 $ 9.23 $ 10.43 $ 10.18 $ 9.59
- --------------------------------------------------------------------------------------------------------------------------
Total Return 8.10% 4.62% 11.29% (2.54)% 10.62% 13.85% 9.20%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $730,754 $520,239 $474,124 $560,071 $483,291 $376,898 $269,856
Ratio of expenses to average
net assets 0.60% 0.59% 0.59% 0.53% 0.56% 0.49% 0.29%
Ratio of net investment income
to average net assets 6.85% 6.76% 6.94% 5.35% 6.44% 7.18% 7.88%
Ratio of expenses to average
net assets* 0.80% 0.81% 0.86% 0.85% 0.90% 1.04% 0.89%
Ratio of net investment income
to average net assets* 6.65% 6.54% 6.67% 5.03% 6.10% 6.63% 7.28%
Portfolio Turnover (a) 55.18% 95.52% 262.25% 131.04% 143.52% 32.50% 39.63%
<CAPTION>
-------------------------------------
FIDUCIARY 1990 1989 1988(c)
- ----------------------------------------------------------------------
<S> <<C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 9.92 $ 9.88 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.80 0.64 0.54
Net realized and unrealized
gains (losses) from
investments and futures (0.20) 0.04 (0.12)
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.60 0.68 0.42
- --------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.80) (0.64) (0.54)
Net realized gains (0.23) -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.03) (0.64) (0.54)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.49 $ 9.92 $ 9.88(b)
- --------------------------------------------------------------------------------------------------------------------------
Total Return 6.37% 7.32% 4.00%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $57,308 $49,128 $998
Ratio of expenses to average
net assets 0.40% 0.45% 1.96%(b)
Ratio of net investment income
to average net assets 8.27% 8.66% 5.88%(b)
Ratio of expenses to average
net assets* 1.00% 1.06% 2.78%(b)
Ratio of net investment income
to average net assets* 7.67% 8.05% 5.08%(b)
Portfolio Turnover (a) 119.23% 194.19% 0.00%
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) The Fund commenced operations on July 2, 1987;
at that time, the Fund did not offer multiple classes of shares. Subsequently,
all shares of the Fund were redesignated as Fiduciary Class shares.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.32 $ 9.54 $ 9.22 $ 10.43 $ 10.16 $ 10.06
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.62 0.63 0.61 0.52 0.63 0.26
Net realized and unrealized gains (losses) from
investments and futures 0.09 (0.23) 0.36 (0.75) 0.41 0.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.71 0.40 0.97 (0.23) 1.04 0.37
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.62) (0.62) (0.60) (0.55) (0.64) (0.27)
In excess of net investment income -- -- (0.01) -- -- --
Net realized gains -- -- (0.04) (0.43) (0.13) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.62) (0.62) (0.65) (0.98) (0.77) (0.27)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.41 $ 9.32 $ 9.54 $ 9.22 $ 10.43 $ 10.16
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.85% 4.26% 10.90% (2.33)% 10.58% 10.16%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $14,325 $10,127 $6,796 $5,347 $7,064 $188
Ratio of expenses to average net assets 0.85% 0.84% 1.01% 0.78% 0.77% 0.97%(b)
Ratio of net investment income to average net
assets 6.59% 6.51% 6.57% 5.25% 6.12% 6.58%(b)
Ratio of expenses to average net assets* 1.15% 1.16% 1.38% 1.20% 1.26% 1.27%(b)
Ratio of net investment income to average net
assets* 6.29% 6.19% 6.20% 4.83% 5.63% 6.28%(b)
Portfolio Turnover (a) 55.18% 95.52% 262.25% 131.04% 143.52% 32.50%
</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) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) Class A Shares commenced offering on February
18, 1992.
<PAGE> 110
7
THE ONE GROUP(R) INCOME BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.40 $ 9.62 $ 9.29 $ 9.97
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.56 0.56 0.56 0.17
Net realized and unrealized gains (losses) from investments and
futures 0.09 (0.21) 0.38 (0.70)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.65 0.35 0.94 (0.53)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.56) (0.57) (0.57) (0.15)
Net realized gains -- -- (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.56) (0.57) (0.61) (0.15)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.49 $ 9.40 $ 9.62 $ 9.29
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.15% 3.65% 10.63% (5.29)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $10,873 $6,110 $1,887 $723
Ratio of expenses to average net assets 1.50% 1.49% 1.49% 1.45%(c)
Ratio of net investment income to average net assets 5.95% 5.86% 6.16% 5.20%(c)
Ratio of expenses to average net assets* 1.80% 1.81% 1.86% 1.84%(c)
Ratio of net investment income to average net assets* 5.65% 5.54% 5.80% 4.81%(c)
Portfolio Turnover(d) 55.18% 95.52% 262.25% 131.04%
</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 Shares commenced offering on January 17,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE> 111
8
THE ONE GROUP(R)
GOVERNMENT BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks a high level of current income with liquidity and safety of
principal.
[ICON] INVESTMENT STRATEGY
The Fund limits its investments to securities issued by the U.S. Government and
its agencies and instrumentalities or related to securities issued by the U.S.
Government and its agencies and instrumentalities. The Fund's average weighted
remaining maturity will ordinarily range between three and fifteen years, taking
into account expected prepayment of principal on certain investments. However,
the Fund's average weighted remaining maturity may be outside this range if
warranted by market conditions.
[ICON] PORTFOLIO SECURITIES
At least 65% of the Fund's total assets will be invested in debt instruments
with principal and interest guaranteed 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 secured by mortgages that
are issued or guaranteed by certain U.S. government agencies or
instrumentalities. For a list of all the securities in which the Fund may
invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund's ability to achieve higher income is not as great as that of funds
that invest in lower-quality instruments. In addition, the Fund invests in
fixed-income securities. The value of these securities will change in response
to interest rate changes and other factors. The Fund also invests in
mortgage-related securities which may have greater price and yield volatility
than traditional fixed income securities. Before you invest, please read "More
About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Thomas E. Donne, CFA, has been a Manager of the Fund since January, 1995. Since
1988, Mr. Donne has held various portfolio management positions with Banc One
Investment Advisors and its affiliates.
Michael J. Sais, CFA, is head of mortgage research for Banc One Investment
Advisors and has been a Manager of the Fund since November, 1996. Mr. Sais also
has managed the Ultra Short-Term Fund since 1995. Before joining Banc One
Investment Advisors in 1995, Mr. Sais was a Eurodollar trader with Citibank, a
senior portfolio manager for Valley National Bank of Arizona (now Bank One,
Arizona, N.A.), and head portfolio manager for PRIMERIT Bank FSB. Mr. Sais has
nine years of investment management experience.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .45% .45% .45% .45%
12b-1 Fees (after fee waiver) (4) .25% .90% .90% none
Other Expenses .24% .24% .24% .24%
Total Fund Operating Expenses (after fee
waiver) (5) .94% 1.59% 1.59% .69%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current expenses.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.04% for Class A shares and 1.69% for Class B shares and Class C
shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 95 $155
Class A (without fee waiver) $ 55 $ 77 $ 100 $166
Class B $ 66 $ 80 $ 107 $172
Class B (without fee waiver) $ 67 $ 83 $ 112 $183
Class C $ 26 $ 50 $ 87 $189
Class C (without fee waiver) $ 27 $ 53 $ 92 $200
Fiduciary Class $ 7 $ 22 $ 38 $ 86
Fiduciary Class (without fee waiver) $ 7 $ 22 $ 38 $ 86
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 54 $ 74 $ 95 $155
Class A (without fee waiver) $ 55 $ 77 $ 100 $166
Class B $ 16 $ 50 $ 87 $172
Class B (without fee waiver) $ 17 $ 53 $ 92 $183
Class C $ 16 $ 50 $ 87 $189
Class C (without fee waiver) $ 17 $ 53 $ 92 $200
Fiduciary Class $ 7 $ 22 $ 38 $ 86
Fiduciary Class (without fee waiver) $ 7 $ 22 $ 38 $ 86
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 112
9
THE ONE GROUP(R) GOVERNMENT BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.56 $ 9.81 $ 9.35 $ 10.15 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.62 0.62 0.62 0.51 0.20
Net realized and unrealized gains (losses) from
investments and futures 0.13 (0.25) 0.46 (0.77) 0.15
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.75 0.37 1.08 (0.26) 0.35
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.62) (0.62) (0.61) (0.50) (0.20)
In excess of net investment income -- -- (0.01) (0.02) --
In excess of net realized gains -- -- -- (0.02) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.62) (0.62) (0.62) (0.54) (0.20)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.69 $ 9.56 $ 9.81 $ 9.35 $ 10.15
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 8.10% 3.81% 12.04% (2.73)% 9.03%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 724,423 $ 677,326 $ 379,826 $ 209,692 $ 52,152
Ratio of expenses to average net assets 0.62% 0.68% 0.71% 0.68% 0.69%(b)
Ratio of net investment income to average net assets 6.45% 6.34% 6.65% 5.13% 5.43%(b)
Ratio of expenses to average net assets* 0.68% 0.69% 0.73% 0.71% 1.05%(b)
Ratio of net investment income to average net
assets* 6.39% 6.33% 6.63% 5.10% 5.07%(b)
Portfolio Turnover(c) 60.53% 62.70% 106.14% 377.78% 139.24%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced offering on February 8, 1993. (b) Annualized. (c) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.56 $ 9.81 $ 9.35 $ 10.17 $ 10.22
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.60 0.60 0.61 0.48 0.17
Net realized and unrealized gains (losses) from
investments and futures 0.13 (0.25) 0.45 (0.79) (0.05)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.73 0.35 1.06 (0.31) 0.12
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.60) (0.60) (0.59) (0.47) (0.17)
In excess of net investment income -- -- (0.01) (0.02) --
In excess of net realized gains -- -- -- (0.02) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.60) (0.60) (0.60) (0.51) (0.17)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.69 $ 9.56 $ 9.81 $ 9.35 $ 10.17
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.83% 3.58% 11.84% (3.16)% 5.35%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 34,727 $ 38,800 $ 8,130 $ 1,690 $ 840
Ratio of expenses to average net assets 0.87% 0.93% 0.97% 0.92% 0.95%(b)
Ratio of net investment income to average net assets 6.20% 6.09% 6.46% 4.84% 5.56%(b)
Ratio of expenses to average net assets* 1.03% 1.04% 1.09% 1.05% 1.44%(b)
Ratio of net investment income to average net
assets* 6.04% 5.98% 6.34% 4.71% 5.07%(b)
Portfolio Turnover(c) 60.53% 62.70% 106.14% 377.78% 139.24%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class A Shares commenced offering on March 6,
1993. (b) Annualized. (c) Portfolio turnover is calculated on the basis of
the Fund as a whole without distinguishing among the classes of shares issued.
<PAGE> 113
10
THE ONE GROUP(R) GOVERNMENT BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.56 $ 9.81 $ 9.35 $ 10.04
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.54 0.54 0.55 0.18
Net realized and unrealized gains (losses) from investments and
futures 0.13 (0.25) 0.46 (0.69)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.67 0.29 1.01 (0.51)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.54) (0.54) (0.55) (0.16)
In excess of net investment income -- -- -- (0.02)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.54) (0.54) (0.55) (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.69 $ 9.56 $ 9.81 $ 9.35
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.14% 2.95% 11.20% (4.99)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $11,729 $10,782 $2,513 $ 656
Ratio of expenses to average net assets 1.52% 1.58% 1.62% 1.52%(c)
Ratio of net investment income to average net assets 5.55% 5.44% 5.76% 4.60%(c)
Ratio of expenses to average net assets* 1.68% 1.69% 1.74% 1.63%(c)
Ratio of net investment income to average net assets* 5.39% 5.33% 5.64% 4.49%(c)
Portfolio Turnover(d) 60.53% 62.70% 106.14% 377.78%
</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 Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE> 114
11
THE ONE GROUP(R)
ULTRA SHORT-TERM INCOME FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks a high level of current income consistent with low volatility of
principal by investing in a diversified portfolio of short-term investment grade
securities.
[ICON] INVESTMENT STRATEGY
The Fund invests in all types of debt securities, including money market
instruments, adjustable rate mortgage backed securities and taxable and
tax-exempt municipal securities. The Fund will maintain a maximum duration
approximately equal to that of a two-year U.S. Treasury security, although the
Fund's actual duration is expected to be approximately equal to that of a one
year U.S. Treasury security.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 80% of its total assets in debt securities.
In addition, up to 20% of the Fund's total assets may be invested in other
securities, including preferred stock. The Fund will invest in adjustable rate
mortgage pass-through securities and other securities representing an interest
in or secured by mortgages with periodic interest rate resets (some of which may
be subject to repurchase agreements). These securities often are issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. However,
the Fund may also purchase mortgage-backed securities that are issued by
non-governmental entities. Such securities may or may not have private insurer
guarantees of timely payments. For a list of all the securities in which the
Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in fixed-income investments that are subject to market
fluctuations as a result of changes in interest rates. As a result, the value of
investments in the Fund may decrease during periods of rising interest rates. In
addition, the Fund invests in mortgage-related securities which may have greater
price and yield volatility than traditional fixed-income securities. The Fund
also uses investment management hedging techniques that may expose the Fund to
special risks. Before you invest, please read "More About the Funds" and
"Investment Risks."
[ICON] FUND MANAGEMENT
Michael J. Sais, CFA, is head of mortgage research for Banc One Investment
Advisors and has been a Manager of the Fund since 1995. Before joining Banc One
Investment Advisors in 1995, Mr. Sais was a Eurodollar trader with Citibank, a
senior portfolio manager for Valley National Bank of Arizona (now Bank One,
Arizona, N.A.), and head portfolio manager for PRIMERIT Bank FSB. Mr. Sais has
nine years of investment management experience.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 3.00% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 3.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net
assets) (4)
Investment Advisory Fees (after fee
waiver) (4) .30% .30% .30% .30%
12b-1 Fees (after fee waiver) (5) .25% .75% .75% none
Other Expenses (6) .25% .25% .25% .25%
Total Fund Operating Expenses (after fee
waivers) (7) .80% 1.30% 1.30% .55%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .55% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the fee waiver, Other Expenses would be .31% for all classes of
shares.
(7) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.21% for Class A shares, 1.80% for Class B
shares, 1.80% for Class C shares, and .86% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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
Class A (without fee waivers) $ 42 $ 67 $ 95 $172
Class B $ 43 $ 61 $ 71 $130
Class B (without fee waivers) $ 48 $ 77 $ 97 $182
Class C $ 23 $ 41 $ 71 $157
Class C (without fee waivers) $ 28 $ 57 $ 97 $212
Fiduciary Class $ 6 $ 18 $ 31 $ 69
Fiduciary Class (without fee waiver) $ 9 $ 27 $ 48 $106
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 38 $ 55 $ 73 $126
Class A (without fee waivers) $ 42 $ 67 $ 95 $172
Class B $ 13 $ 41 $ 71 $130
Class B (without fee waivers) $ 18 $ 57 $ 97 $182
Class C $ 13 $ 41 $ 71 $157
Class C (without fee waivers) $ 18 $ 57 $ 97 $212
Fiduciary Class $ 6 $ 18 $ 31 $ 69
Fiduciary Class (without fee waiver) $ 9 $ 27 $ 48 $106
</TABLE>
Class B shares automatically convert to Class A shares after six (6) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 115
12
THE ONE GROUP(R) ULTRA SHORT-TERM INCOME FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.79 $ 9.84 $ 9.85 $ 10.03 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.62 0.62 0.55 0.36 0.17
Net realized and unrealized gains (losses) from
investments and futures 0.05 (0.07) (0.05) (0.15) 0.03
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.67 0.55 0.50 0.21 0.20
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.59) (0.60) (0.48) (0.37) (0.17)
In excess of net investment income -- -- (0.03) (0.02) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.59) (0.60) (0.51) (0.39) (0.17)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.87 $ 9.79 $ 9.84 $ 9.85 $ 10.03
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 7.14% 5.71% 5.14% 2.16% 4.93%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $114,413 $57,276 $51,050 $139,593 $154,413
Ratio of expenses to average net assets 0.35% 0.45% 0.61% 0.65% 0.58%(b)
Ratio of net investment income to average net assets 6.02% 6.20% 5.18% 3.70% 4.71%(b)
Ratio of expenses to average net assets* 0.81% 1.06% 1.01% 0.81% 1.03%(b)
Ratio of net investment income to average net
assets* 5.56% 5.59% 4.78% 3.54% 4.26%(b)
Portfolio Turnover(c) 70.36% 67.65% 2.91% 242.20% 109.96%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced operations on February 2, 1993. (b) Annualized. (c) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.78 $ 9.83 $ 9.84 $ 10.03 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.58 0.58 0.52 0.36 0.14
Net realized and unrealized gains (losses) from
investments and futures 0.09 (0.06) (0.06) (0.17) 0.03
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.67 0.52 0.46 0.19 0.17
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.58) (0.57) (0.46) (0.34) (0.14)
In excess of net investment income -- -- (0.01) (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.58) (0.57) (0.47) (0.38) (0.14)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.87 $ 9.78 $ 9.83 $ 9.84 $ 10.03
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.00% 5.42% 4.84% 1.95% 4.78%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $29,643 $3,969 $4,631 $19,053 $3,106
Ratio of expenses to average net assets 0.61% 0.70% 0.86% 0.89% 0.81%(b)
Ratio of net investment income to average net assets 5.78% 5.95% 4.88% 3.54% 4.47%(b)
Ratio of expenses to average net asset* 1.17% 1.41% 1.36% 1.14% 1.34%(b)
Ratio of net investment income to average net asset* 5.22% 5.24% 4.38% 3.29% 3.95%(b)
Portfolio Turnover(c) 70.36% 67.65% 2.91% 242.20% 109.96%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced offering on March 10, 1993. (b) Annualized. (c) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
<PAGE> 116
13
THE ONE GROUP(R) ULTRA SHORT-TERM INCOME FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.76 $ 9.84 $ 9.86 $ 9.98
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.54 0.52 0.47 0.12
Net realized and unrealized gains (losses) from investments and
futures 0.05 (0.07) (0.04) (0.11)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.59 0.45 0.43 0.01
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.54) (0.53) (0.45) (0.12)
In excess of net investment income -- -- -- (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.54) (0.53) (0.45) (0.13)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.81 $ 9.76 $ 9.84 $ 9.86
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.22% 4.63% 4.77% (0.09)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 2,818 $ 1,144 $ 160 $ 15
Ratio of expenses to average net assets 1.07% 1.20% 1.31% 1.41%(c)
Ratio of net investment income to average net assets 5.18% 5.45% 4.91% 3.49%(c)
Ratio of expenses to average net assets* 1.81% 2.06% 1.96% 1.83%(c)
Ratio of net investment income to average net assets* 4.44% 4.59% 4.26% 3.07%(c)
Portfolio Turnover(d) 70.36% 67.65% 2.91% 242.20%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced offering on January 14, 1994. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 117
14
THE ONE GROUP(R)
LIMITED VOLATILITY BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks current income consistent with preservation of capital through
investment in high and medium-grade fixed-income securities.
[ICON] INVESTMENT STRATEGY
The Fund invests in all types of debt securities with short to intermediate
maturities. The Fund's average weighted maturity will ordinarily range between
one and five years taking into account expected prepayment of principal on
certain investments, although the Fund may shorten the weighted average maturity
to as little as 90 days for temporary defensive purposes.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its total assets in debt securities with short
to intermediate maturities. At least 65% of the Fund's total assets will consist
of bonds and at least 65% of total assets will consist of obligations issued by
the U.S. Government, its agencies, or instrumentalities (some of which may be
subject to repurchase agreements). The Fund also may purchase taxable or
tax-exempt municipal securities. Up to 20% the total assets may be invested in
preferred stock. For a list of all the securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in fixed-income securities. The value of these securities will
change in response to interest rate changes and other factors. In addition, the
Fund invests in mortgage-related securities which may have greater price and
yield volatility than traditional fixed-income securities. Before you invest,
please read "More About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Roger A. Craig has been the manager of the Fund since November, 1996. Mr. Craig
has served as a fixed income manager for Banc One Investment Advisors and its
affiliates since 1986.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 3.00% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 3.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .75% .75% none
Other Expenses .22% .22% .22% .22%
Total Fund Operating Expenses (after fee
waiver) (6) .87% 1.37% 1.37% .62%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.17% for Class A shares, 1.82% for Class B
shares, 1.82% for Class C shares and .82% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 39 $ 57 $ 77 $134
Class A (without fee waivers) $ 42 $ 66 $ 92 $168
Class B $ 44 $ 63 $ 75 $138
Class B (without fee waivers) $ 48 $ 77 $ 99 $181
Class C $ 24 $ 43 $ 75 $165
Class C (without fee waivers) $ 28 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 39 $ 57 $ 77 $134
Class A (without fee waivers) $ 42 $ 66 $ 92 $168
Class B $ 14 $ 43 $ 75 $138
Class B (without fee waivers) $ 18 $ 57 $ 99 $181
Class C $ 14 $ 43 $ 75 $165
Class C (without fee waivers) $ 18 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Class B shares automatically convert to Class A shares after six (6) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 118
15
THE ONE GROUP(R) LIMITED VOLATILITY BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 10.42 $ 10.53 $ 10.33 $ 10.87 $ 10.72 $ 10.26 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.63 0.64 0.60 0.54 0.61 0.70 0.58
Net realized and unrealized
gains (losses) from
investments and futures 0.05 (0.11) 0.19 (0.45) 0.25 0.47 0.25
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.68 0.53 0.79 0.09 0.86 1.17 0.83
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.63) (0.64) (0.59) (0.55) (0.62) (0.70) (0.57)
In excess of net investment
income -- -- -- (0.02) -- -- --
Net realized gains -- -- -- (0.06) (0.09) (0.01) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.63) (0.64) (0.59) (0.63) (0.71) (0.71) (0.57)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.47 $ 10.42 $ 10.53 $ 10.33 $ 10.87 $ 10.72 $ 10.26
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 6.75% 5.13% 7.96% 0.79% 8.27% 11.75% 9.76%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $563,979 $604,916 $410,746 $447,394 $397,820 $301,907 $154,991
Ratio of expenses to average net
assets 0.51% 0.51% 0.52% 0.50% 0.56% 0.52% 0.32%(b)
Ratio of net investment income
to average net assets 6.06% 6.06% 5.82% 5.10% 5.70% 6.63% 7.49%(b)
Ratio of expenses to average net
assets* 0.81% 0.82% 0.85% 0.85% 0.90% 1.04% 0.92%(b)
Ratio of net investment income
to average net assets* 5.76% 5.75% 5.49% 4.75% 5.36% 6.11% 6.89%(b)
Portfolio Turnover(a) 66.61% 75.20% 76.43% 30.61% 40.28% 43.87% 24.69%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.41 $ 10.52 $ 10.32 $ 10.87 $ 10.72 $ 10.61
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.61 0.63 0.56 0.52 0.59 0.24
Net realized and unrealized gains (losses)
from investments and futures 0.05 (0.13) 0.21 (0.46) 0.24 0.13
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.66 0.50 0.77 0.06 0.83 0.37
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.61) (0.61) (0.56) (0.51) (0.59) (0.26)
In excess of net investment income -- -- (0.01) (0.04) -- --
Net realized gains -- -- -- (0.06) (0.09) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.61) (0.61) (0.57) (0.61) (0.68) (0.26)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.46 $ 10.41 $ 10.52 $ 10.32 $ 10.87 $ 10.72
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.47% 4.86% 7.67% 0.49% 8.04% 9.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $20,055 $21,343 $12,516 $15,216 $15,719 $ 161
Ratio of expenses to average net assets 0.76% 0.76% 0.77% 0.75% 0.76% 0.99%(b)
Ratio of net investment income to average net
assets 5.81% 5.81% 5.57% 4.92% 5.35% 5.95%(b)
Ratio of expenses to average net assets* 1.16% 1.17% 1.20% 1.20% 1.27% 1.29%(b)
Ratio of net investment income to average net
assets* 5.41% 5.40% 5.14% 4.47% 4.84% 5.65%(b)
Portfolio Turnover(a) 66.61% 75.20% 76.43% 30.61% 40.28% 43.87%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) Class A Shares commenced offering on February
18, 1992.
<PAGE> 119
16
THE ONE GROUP(R) LIMITED VOLATILITY BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.49 $ 10.60 $ 10.40 $ 10.78
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.55 0.55 0.53 0.17
Net realized and unrealized gains (losses) from investments and
futures 0.04 (0.10) 0.19 (0.37)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.59 0.45 0.72 (0.20)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.55) (0.56) (0.52) (0.15)
In excess of net realized gains -- -- -- (0.03)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.55) (0.56) (0.52) (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.53 $ 10.49 $ 10.60 $ 10.40
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 5.74% 4.28% 7.18% (1.81)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $4,920 $4,923 $2,906 $1,974
Ratio of expenses to average net assets 1.20% 1.26% 1.28% 1.26%(c)
Ratio of net investment income to average net assets 5.21% 5.31% 5.10% 4.39%(c)
Ratio of expenses to average net assets* 1.81% 1.82% 1.86% 1.86%(c)
Ratio of net investment income to average net assets* 4.60% 4.75% 4.52% 3.79%(c)
Portfolio Turnover(d) 66.61% 75.20% 76.43% 30.61%
</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 Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE> 120
17
THE ONE GROUP(R)
TREASURY & AGENCY FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks a high level of current income by investing in U.S. Treasury and
other U.S. Agency obligations with a primary, but not exclusive, focus on issues
that produce income exempt from state income taxes.
[ICON] INVESTMENT STRATEGY
The Fund invests in U.S. Treasury and other U.S. Agency obligations including
fixed-income securities and mortgage-related securities. Normally, the Fund's
average weighted maturity will range between two and five years.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in U.S. Treasury
bills, notes and other obligations issued or guaranteed by the U.S. Treasury
("Treasury Obligations") and securities issued or guaranteed by U.S. Government
agencies and instrumentalities. Treasury Obligations may include Separately
Traded Registered Interest and Principal Securities ("STRIPS"), Coupon Under
Book Entry Safekeeping ("CUBES"), and securities of other government-only
investment companies, including other funds of The One Group. The Fund also may
invest in government mortgage-backed securities and government adjustable rate
mortgage loans ("ARMs"), as well as engage in securities lending. For a list of
all the securities in which the Fund may invest, please read "Investment
Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in fixed-income securities. The value of these securities will
change in response to interest rate changes and other factors. Before you
invest, please read "More About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Scott Grimshaw has been a manager of the Fund since 1996. Mr. Grimshaw is also
head of Derivatives Research for Banc One Investment Advisors and Manager of the
fixed income portion of the Asset Allocation Fund, having served in that
position since November 1994. Mr. Grimshaw served as the Senior Investment
Officer in the Quantitative and Analysis Group for BANC ONE CORPORATION prior to
his current position. Mr. Grimshaw has been employed by BANC ONE CORPORATION or
its affiliates since 1988.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 3.00% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 3.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .20% .20% .20% .20%
12b-1 Fees (after fee waiver) (5) .25% .75% .75% none
Other Expenses (6) .25% .25% .25% .25%
Total Fund Operating Expenses (after fee
waiver) (7) .70% 1.20% 1.20% .45%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .40% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction, Other Expenses would be .36% for all
classes of shares.
(7) Without the voluntary reduction of fees, Total Operating Expenses would be
1.11% for Class A shares, 1.76% for Class B shares, 1.76% for Class C shares
and .76% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 37 $ 52 $ 68 $114
Class A (without fee waivers) $ 41 $ 64 $ 89 $161
Class B $ 42 $ 58 $ 66 $119
Class B (without fee waivers) $ 48 $ 75 $ 95 $174
Class C $ 22 $ 38 $ 66 $145
Class C (without fee waivers) $ 28 $ 55 $ 95 $207
Fiduciary Class $ 5 $ 14 $ 25 $ 57
Fiduciary Class (without fee waivers) $ 8 $ 24 $ 42 $ 94
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 37 $ 52 $ 68 $114
Class A (without fee waivers) $ 41 $ 64 $ 89 $161
Class B $ 12 $ 38 $ 66 $119
Class B (without fee waivers) $ 18 $ 55 $ 95 $174
Class C $ 12 $ 38 $ 66 $145
Class C (without fee waivers) $ 18 $ 55 $ 95 $207
Fiduciary Class $ 5 $ 14 $ 25 $ 57
Fiduciary Class (without fee waivers) $ 8 $ 24 $ 42 $ 94
</TABLE>
Class B shares automatically convert to Class A shares after six (6) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 121
18
THE ONE GROUP(R) TREASURY & AGENCY FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
FIDUCIARY JUNE 30, 1997(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.28
Net realized and unrealized gains (losses) from investments and futures (0.01)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.27
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.28)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.99
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge)(b) 2.78%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 110,084
Ratio of expenses to average net assets(c) 0.45%
Ratio of net investment income to average net assets(c) 6.44%
Ratio of expenses to average net assets*(c) 0.78%
Ratio of net investment income to average net assets*(c) 6.11%
Portfolio Turnover (d) 54.44%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
CLASS A JUNE 30, 1997(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.29
Net realized and unrealized gains (losses) from investments and futures (0.02)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.27
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.29)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.98
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge)(b) 2.78%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 94
Ratio of expenses to average net assets(c) 0.71%
Ratio of net investment income to average net assets(c) 6.47%
Ratio of expenses to average net assets*(c) 1.15%
Ratio of net investment income to average net assets*(c) 6.03%
Portfolio Turnover(d) 54.44%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 122
19
THE ONE GROUP(R) TREASURY & AGENCY FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
CLASS B JUNE 30, 1997(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.26
Net realized and unrealized gains (losses) from investments and futures (0.01)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.25
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.26)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.99
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) (b) 2.58%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 80
Ratio of expenses to average net assets (c) 1.23%
Ratio of net investment income to average net assets (c) 6.30%
Ratio of expenses to average net assets* (c) 1.81%
Ratio of net investment income to average net assets* (c) 5.72%
Portfolio Turnover (d) 54.44%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 123
MORE ABOUT THE FUNDS
20
WHEN THE PROSPECTUS REFERS TO "BONDS," WHAT TYPES OF INVESTMENTS ARE INCLUDED?
"Bonds" include debt instruments issued by the U.S. Treasury, U.S. Government
agencies, corporations, municipalities and foreign entities, mortgage-related
securities, asset-backed securities, stripped government securities and zero
coupon obligations.
PORTFOLIO QUALITY
- ----------------------------------------------------
The Funds only purchase securities that meet the following criteria.
DEBT SECURITIES
- - The Limited Volatility Bond Fund, the Government Bond Fund and the Treasury &
Agency Fund may invest in debt securities rated in any of the three highest
investment grade rating categories.
- - The Ultra Short-Term Income Fund and the Intermediate Bond Fund may invest in
debt securities rated in any of the four investment grade rating categories.
- - The Income Bond Fund may purchase securities in ANY rating category. Please
read "Special Risk Considerations" and "High Yield/Junk Bonds" for more
information about the Income Bond Fund.
PREFERRED STOCK
- - The Ultra Short-Term Income Fund and the Intermediate Bond Fund may only
invest in preferred stock rated in one of the four highest rating categories.
- - Preferred stock purchased by the Limited Volatility Bond Fund must be rated in
one of the three highest rating categories.
- - The Income Bond Fund may invest in preferred stock in ANY rating category.
MUNICIPAL SECURITIES
- - The Intermediate Bond Fund and the Ultra Short-Term Income Fund may only
invest in municipal bonds rated in one of the four highest rating categories.
- - Municipal bonds purchased by the Limited Volatility Bond Fund must be rated in
one of the three highest rating categories.
- - The Intermediate Bond Fund and the Ultra Short-Term Income Fund may only
invest in other municipal securities, such as tax-exempt commercial paper,
notes and variable rate demand obligations that are rated in the highest or
second highest rating categories. The Limited Volatility Bond Fund may invest
in such securities only if they are rated in the highest rating category.
- - The Income Bond Fund may invest in municipal securities rated in ANY category.
If the securities are unrated, Banc One Investment Advisors must determine that
they are of comparable quality to rated securities. Banc One Investment Advisors
will look at a security's rating at the time of investment. For more information
about ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
- ----------------------------------------------------
Each Fund may invest up to 15% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK
CONSIDERATIONS
- ----------------------------------------------------
FIXED INCOME SECURITIES: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually, changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
DERIVATIVES: Some of the Funds invest in securities that are considered to be
derivatives. These securities may be more volatile than other investments. These
include:
- - options, futures contracts, and options on futures contracts
- - mortgage-backed securities, including collateralized mortgage obligations and
Real Estate Mortgage Investment Conduits (CMOs and REMICs) and stripped
mortgage-backed securities (IOs and POs)
- - asset-backed securities
- - swap, cap and floor transactions
- - new financial products
- - structured instruments
- - inverse floating rate instruments
<PAGE> 124
21
Derivatives may be riskier than traditional investments.
LOWER RATED SECURITIES: The Intermediate Bond Fund, the Ultra Short-Term Income
Fund and the Income Bond Fund may invest in debt securities rated in the lowest
investment grade category. Securities in this rating category are considered to
have speculative characteristics. Changes in economic conditions or other
circumstances may have a greater effect on the ability of issuers of these
securities to make principal and interest payments than they do on issuers of
higher grade securities.
HIGH YIELD/JUNK BONDS: The Income Bond Fund may invest in debt securities rated
below investment grade. These securities are regarded as predominately
speculative. Lower rated securities generally provide a higher yield than higher
rated debt securities of similar maturity, but are subject to a greater degree
of risk that the issuer may not be able to make principal and interest payments.
Issuers of these securities may not be as strong financially as those issuing
higher rated securities. Such high yield issuers may include smaller, less
creditworthy companies or highly indebted firms.
The market value of high yield securities may fluctuate more than the market
value of higher rated securities, since high yield securities tend to reflect
short-term corporate and market developments to a greater extent than higher
rated securities. Thus, periods of economic uncertainty and change can result in
the increased volatility of market prices of high yield bonds and of the
investment company's net asset value. Additional risks of high yield securities
include limited liquidity and secondary market support. As a result, the prices
of high yield securities may decline rapidly in the event that a significant
number of holders decide to sell. Issuers of high yield securities also are more
vulnerable to real or perceived economic changes, political changes or adverse
developments specific to the issuer. A projection of an economic downturn, for
example, could cause the price of these securities to decline because a
recession could lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. In the event of a
default, the Income Bond Fund would experience a decrease in income and a
decline in the market value of its investments. In addition, a long-term track
record on bond default rates, such as that for investment grade corporate bonds,
does not exist for the high yield market. It may be that future default rates on
high-yield bonds will be more widespread and higher than in the past, especially
during periods of deteriorating economic conditions.
Finally, the market prices of debt securities generally fluctuate with changes
in interest rates so that the Income Bond Fund's net asset value can be expected
to decrease as long-term interest rates rise and to increase as long-term rates
fall. The market prices of high yield securities structured as zero coupon or
pay-in-kind securities are generally affected to a greater extent by interest
rate changes and tend to be more volatile than securities which pay interest
periodically.
Credit quality in the high yield bond market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, the
Income Bond Fund will not rely solely on ratings issued by established credit
rating agencies, but will use such ratings in conjunction with Banc One
Investment Advisors' independent and ongoing review of credit quality.
Because investments in lower rated securities involve greater investment risk,
achievement of the Income Bond Fund's investment objectives may be more
dependent on Banc One Advisor's credit analysis than would be the case if the
Income Bond Fund were investing in higher rated securities. The Income Bond Fund
may seek to hedge investments through transactions in options, futures contracts
and related options. The Income Bond Fund also may use swap agreements to
further manage exposure to lower rated securities.
<PAGE> 125
HOW TO DO BUSINESS WITH THE ONE GROUP
22
PURCHASING
FUND SHARES
- ----------------------------------------------------
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
- - The One Group Services Company, and
- - Shareholder Servicing Agents. These include investment advisors, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased this way will be held for
you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
- - Purchases may be made on any business day. This includes any day that the
Funds are open for business, other than weekends and the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.
- - Purchase requests received by The One Group Services Company before 4 p.m.
Eastern Standard Time ("EST"), will be effective that day.
- - Purchase orders may be canceled by the Fund's Custodian, State Street Bank and
Trust Company, if it does not receive "federal funds" by 4:00 p.m. EST (i) on
the business day after the order is placed if you are buying Fiduciary Class
shares, and (ii) on the third business day if you are purchasing Class A,
Class B or Class C shares.
- - If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase or
redemption order to the Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption requests.
- - The One Group Services Company can reject a purchase order if it does not
think that it is in the best interests of a Fund and/or its shareholders to
accept the order.
- - Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
The One Group offers the following classes of shares:
- - Class A, Class B and Class C shares are available to the general public.
- - Fiduciary Class shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or agency
capacity. We will refer to these entities as "Intermediaries."
- - If you intend to hold your shares six or more years, Class B shares may be
appropriate for you. If you intend to hold your shares for less than six
years, you may want to consider Class A or Class C shares.
The One Group Fund Direct IRA. The One Group offers a retirement plan and, in
1998, will offer an education plan. These plans allow participants to defer
taxes while their retirement and education savings grow. The education IRA
requires a minimum investment of $500. Call The One Group Services Company at
1-800-480-4111 for an Adoption Agreement.
HOW MUCH DO SHARES COST?
- - Shares are sold at net asset value ("NAV") plus a sales charge, if any.
- - Each class of shares in each Fund has a different NAV. This is primarily
because each class has different distribution expenses.
- - NAV per share is calculated by dividing the total market value of a Fund's
investments and other assets allocable to a class (minus class expenses) by
the number of outstanding shares in that class.
- - A Fund's NAV changes every day. NAV is calculated each business day at 4:00
p.m. EST.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most appropriate
for you.
2. Decide how much you want to invest.
- The minimum initial investment for all Funds except the Treasury & Agency
Fund is $1,000 ($100 for employees of BANC ONE CORPORATION and its
affiliates). The minimum initial investment for the Treasury & Agency Fund
is $50,000.
- Subsequent investments for all Funds except the Treasury & Agency Fund must
be at least $100 ($25 for employees of BANC ONE CORPORATION and its
affiliates). Subsequent investments for the Treasury & Agency Fund must be
at least $1,000.
- You may purchase no more than $250,000 of Class B shares at one time.
- The One Group Services Company may waive these minimums.
3. Complete the Account Application Form. Be sure to sign up for all of the
Account privileges that you plan to take advantage of. Doing so now means
that you will not have to complete additional paperwork later.
4. Send the completed application and a personal check (unless you choose to pay
by wire or bank transfer) payable to "The One Group" to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
Contributions to Fund Direct IRAs should be made payable to "State Street
Bank and Trust Company for the Benefit of (your name)."
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions
<PAGE> 126
23
from a Fund will not be permitted for ten (10) calendar days if purchases are
made by check or under the Systematic Investment Plan (see below).
6. If you purchase shares through a Shareholder Servicing Agent, you may be
required to complete additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent regarding purchases,
exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or call
The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes, simply select this option on your Account Application Form and then:
- - Contact your Shareholder Servicing Agent or The One Group Services Company at
1-800-480-4111 to relay your purchase instructions.
- - Send a personal check made payable to "The One Group" to State Street Bank and
Trust Company (see address above), to authorize a bank transfer or initiate a
wire transfer.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - You may revoke your right to make purchases over the telephone by sending a
letter to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CAN I AUTOMATICALLY INVEST ON A
SYSTEMATIC BASIS?
Yes, except for The Treasury & Agency Fund. After your Account is established,
you may purchase additional Class A, Class B and Class C shares by making
automatic monthly investments from your bank account. The minimum initial
investment is still $1,000, but minimum automatic additions are only $25. The
One Group Services Company may waive these minimums. To establish a Systematic
Investment Plan:
- - Select the "Systematic Investment Plan" option on the Account Application
Form.
- - Provide the necessary information about the bank account from which your
investments will be made.
- - Shares purchased under a Systematic Investment Plan may not be redeemed for
ten (10) calendar days.
- - The One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for debiting your
bank account.
- - You may revoke your right to make systematic investments by sending a letter
to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CONVERSION FEATURE
- - Your Class B shares automatically convert to Class A shares. Class B shares of
the Intermediate Bond Fund, the Income Bond Fund, and the Government Bond Fund
automatically convert to Class A shares after eight years.
- - Class B shares of the Ultra Short-Term Income Fund, the Limited Volatility
Bond Fund, and the Treasury & Agency Fund automatically convert to Class A
shares after six years.
- - Conversion periods are measured from the end of the month in which the Class B
shares were purchased.
- - After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Class A shares.
- - You will not be assessed any sales charges or fees for conversion of shares,
nor will you be subject to any tax.
- - Because the share price of the Class A shares may be higher than that of the
Class B shares at the time of conversion, you may receive fewer Class A
shares; however, the dollar value will be the same.
- - If you have exchanged Class B shares of one Fund for Class B shares of
another, the time you held the shares in each Fund will be added together for
purposes of calculating the six and eight year time periods.
SALES CHARGES
- ----------------------------------------------------
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of The One Group. Compensation comes from: sales charges, 12b-1 fees and
payments by The One Group Services Company from its own resources. The One Group
Services Company, at its own expense, also will provide promotional incentives
in the form of travel expenses, lodging and bonuses to licensed individuals who
sell shares of the Funds, as well as vacation trips, (including lodging at
luxury resorts), tickets to entertainment events, and merchandise.
<PAGE> 127
24
CLASS A SHARES
If you buy Class A shares of THE LIMITED VOLATILITY BOND FUND, THE ULTRA
SHORT-TERM INCOME FUND and THE TREASURY & AGENCY FUND, the following table shows
the amount of sales charge and the commissions paid to Shareholder Servicing
Agents.
<TABLE>
<CAPTION>
SALES CHARGE AS A %
OF THE OFFERING SALES CHARGE AS A % COMMISSION AS A %
AMOUNT OF PURCHASE PRICE OF YOUR INVESTMENT OF OFFERING PRICE
<S> <C> <C> <C>
Less than $100,000 3.00% 3.09% 2.70%
$100,000-$249,999 2.50% 2.56% 2.18%
$250,000-$499,999 2.00% 2.04% 1.64%
$500,000-$999,999 1.50% 1.52% 1.20%
$1,000,000* 0.00% 0.00% 0.00%
</TABLE>
If you buy Class A shares of THE INTERMEDIATE BOND FUND, THE INCOME BOND FUND,
and THE GOVERNMENT BOND FUND, the following table shows the amount of sales
charge and the commissions paid to Shareholder Servicing Agents.
<TABLE>
<CAPTION>
SALES CHARGE AS A %
OF THE OFFERING SALES CHARGE AS A % COMMISSION AS A %
AMOUNT OF PURCHASE PRICE OF YOUR INVESTMENT OF OFFERING PRICE
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.05%
$100,000-$249,999 3.50% 3.63% 3.05%
$250,000-$499,999 2.50% 2.56% 2.05%
$500,000-$999,999 2.00% 2.04% 1.60%
$1,000,000* 0.00% 0.00% 0.00%
</TABLE>
* If you purchase $1 million or more of Class A shares and are not assessed a
sales charge at the time of purchase, you will be charged the equivalent of
1% of the purchase price if you redeem any or all of the Class A shares
within one year of purchase.
CLASS B SHARES
Class B shares are offered at NAV, without any up-front sales charges. However,
if you redeem Class B shares of the INTERMEDIATE BOND FUND, THE INCOME BOND FUND
OR THE GOVERNMENT BOND FUND before the sixth anniversary of purchase, you will
be assessed a Contingent Deferred Sales Charge ("CDSC") according to the
following schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 None
</TABLE>
<PAGE> 128
25
Or if you redeem Class B shares of the ULTRA SHORT-TERM INCOME FUND, THE LIMITED
VOLATILITY BOND FUND OR THE TREASURY & AGENCY FUND prior to the fourth
anniversary of purchase, you will be assessed a CDSC according to the following
schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 3.00%
1-2 3.00%
2-3 2.00%
3-4 1.00%
more than 4 None
</TABLE>
The One Group Services Company pays a commission of 4.00% of the original
purchase to Shareholder Servicing Agents who sell Class B shares of the
Intermediate Bond Fund, the Income Bond Fund and the Government Bond Fund.
Shareholder Servicing Agents who sell Class B shares of the Ultra Short-Term
Income Fund, the Limited Volatility Bond Fund and the Treasury & Agency Fund
receive a commission of 2.75% from The One Group Services Company.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
assessed a CDSC as follows:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 1.00%
After first year None
</TABLE>
Shareholder Servicing Agents selling Class C shares receive a commission of
1.00% of the original purchase price from The One Group Services Company.
How the CDSC is Calculated
- - The Fund assumes that all purchases made in a given month were made on the
first day of the month.
- - The CDSC is based on the current market value or the original cost of the
shares, whichever is less.
- - A sales charge is not imposed on increases in NAV above the initial purchase
price, nor is a sales charge assessed on shares acquired through reinvestment
of dividends or capital gains distributions.
- - To keep your CDSC as low as possible, the Fund first will redeem any shares in
your account that carry no CDSC, starting with Class A shares. After that, the
Fund will redeem the shares you have held for the longest time and thus have
the lowest CDSC.
<PAGE> 129
26
12B-1 FEES
12b-1 fees are paid by The One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to Shareholder Servicing Agents that sell
shares of The One Group.
- - The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .35% of the average daily net assets of
the Fund, which is currently being waived to .25%.
2. Class B and Class C shares pay a 12b-1 fee of 1.00% of the average daily
net assets of the Fund, which is currently being waived to .90% for the
Intermediate Bond Fund, the Income Bond Fund, and the Government Bond Fund
and to .75% for the Limited Volatility Bond Fund, the Ultra Short-Term
Income Fund, and the Treasury & Agency Fund. This will cause expenses for
Class B and Class C shares to be higher and dividends to be lower than for
Class A shares.
3. There are no 12b-1 fees for Fiduciary Class shares.
- - 12b-1 fees, together with the CDSC, help The One Group Services Company sell
Class B and Class C shares without an "up-front" sales charge by defraying the
costs of advancing brokerage commissions and other expenses paid to
Shareholder Servicing Agents.
- - The One Group Services Company may use up to .25% of the fees for shareholder
servicing and up to .75% for distribution. During the last fiscal year, The
One Group Services Company received 12b-1 fees totaling .25% of the average
daily net assets of the Class A shares of the Funds. In addition, The One
Group Services Company received 12b-1 fees totaling .90% of the average daily
net assets of the Class B shares of the Intermediate Bond Fund, the Income
Bond Fund, and the Government Bond Fund, and .75% for Class B shares of the
Limited Volatility Bond Fund, the Ultra Short-Term Income Fund, and the
Treasury & Agency Fund.
- - The One Group Services Company may pay
12b-1 fees to its affiliates and to Banc One Investment Advisors and its
affiliates (or any sub-advisor) for brokerage and other agency transactions.
SALES CHARGE
REDUCTIONS
AND WAIVERS
- ----------------------------------------------------
REDUCING YOUR CLASS A SALES CHARGES
There are several ways you can reduce the sales charges you pay on Class A
shares:
1. Right of Accumulation: You may add the market value of any Class A, Class B
or Class C shares of a Fund (except a money market fund) that you (and your
spouse and minor children) already own to the amount of your next Class A
purchase for purposes of calculating the sales charge. An Intermediary also
may take advantage of this option.
2. Letter of Intent: With an initial investment of $2,000, you may purchase
Class A shares of one or more Funds over the next 13 months and pay the same
sales charge that you would have paid if all shares were purchased at once. A
percentage of your investment will be held in escrow until the full amount
covered by the Letter of Intent has been invested.
To take advantage of the accumulation privilege or letter of intent, complete
the appropriate section of your fund application, or contact your Shareholder
Servicing Agent. To determine if you are eligible for the accumulation
privilege, contact The One Group Services Company at 1-800-480-4111. These
programs may be terminated or amended at any time.
WAIVER OF THE CLASS A SALES CHARGE
No sales charge is imposed on Class A shares of the Funds if the shares were:
1. Bought with the reinvestment of dividends and capital gains distributions.
2. Acquired in exchange for other Fund shares if a comparable sales charge has
been paid for the exchanged shares.
3. Bought by officers, directors or trustees, retirees and employees (and their
spouses and immediate family members) of:
- The One Group.
- BANC ONE CORPORATION and its subsidiaries and affiliates.
- The One Group Services Company and its subsidiaries and affiliates.
- State Street Bank and Trust Company and its subsidiaries and affiliates.
- Broker/dealers who have entered into dealer agreements with The One Group
and their subsidiaries and affiliates.
<PAGE> 130
27
- An investment sub-advisor of a fund of The One Group and such sub-advisor's
subsidiaries and affiliates.
4. Bought by:
- Affiliates of BANC ONE CORPORATION and certain accounts (other than IRA
Accounts) for which an Intermediary acts in a fiduciary, advisory, agency,
custodial or similar capacity.
- Accounts as to which a bank or broker-dealer charges an asset allocation
fee, provided the bank or broker-dealer has an agreement with The One Group
Services Company.
- Retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to, those defined in sections 401(a),
403(b) or 457 of the Internal Revenue Code and "rabbi trusts."
- Shareholder Servicing Agents who have a dealer arrangement with The One
Group Services Company, who place trades for their own accounts or for the
accounts of their clients and who charge a management, consulting or other
fee for their services, as well as clients of such Shareholder Servicing
Agents who place trades for their own accounts if the accounts are linked
to the master account of such Shareholder Servicing Agent.
5. Bought with proceeds from the sale of Fiduciary Class shares of a Fund of The
One Group or acquired in an exchange of Fiduciary Class shares of a Fund for
Class A shares of the same Fund, but only if the purchase is made within 60
days of the sale or distribution.
6. Bought with proceeds from the sale of shares of a mutual fund (other than a
fund of The One Group) for which a sales charge was paid, but only if the
purchase is made within 60 days of the sale or distribution.
7. Bought in an IRA with the proceeds of a distribution from an employee benefit
plan, but only if the purchase is made within 60 days of the sale or
distribution and, at the time of the distribution, the employee benefit plan
had plan assets invested in a Fund of The One Group.
8. Bought with assets of The One Group.
9. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
The waivers described in (5), (6) and (7) above will not continue indefinitely
and may be discontinued at any time without notice.
WAIVER OF THE CLASS B SALES CHARGE
No sales charge is imposed on redemptions of Class B shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class B shares of other Funds of The One Group.
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class C shares of other Funds of The One Group.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance of the purchase. To see if you qualify, contact The One
Group Services Company at 1-800-480-4111 or your Shareholder Servicing Agent.
<PAGE> 131
28
EXCHANGING
FUND SHARES
- ----------------------------------------------------
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
- - Fiduciary Class shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group.
- - Class A shares of a Fund may be exchanged for Fiduciary Class shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group, but only if you are eligible to purchase those shares.
- - Class B shares of a Fund may be exchanged for Class B shares of another Fund
of The One Group.
- - Class C shares of a Fund may be exchanged for Class C shares of another Fund
of The One Group.
The One Group does not charge a fee for this privilege. In addition, The One
Group may change the terms and conditions of your exchange privileges upon 60
days written notice.
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
- - State Street Bank and Trust Company receives the request by 4:00 p.m., EST.
- - You have provided The One Group with all of the information necessary to
process the exchange.
- - You have received a current prospectus of the Fund or Funds in which you wish
to invest.
- - You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
- - You will pay a sales charge if you own Fiduciary Class shares of a Fund and
you want to exchange those shares for Class A shares, unless you qualify for a
sales charge waiver (see above).
- - You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange them for
shares of a Fund that does, in which case you would pay the sales charge
applicable to the Fund into which you are exchanging.
2. That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that Fund's
sales charge and all other sales charges you have already paid.
- - If you exchange Class B or Class C shares of a Fund, you will not pay a sales
charge the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC of
either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C shares is
carried over to your new shares.
ARE EXCHANGES TAXABLE?
Generally:
- - An exchange between classes of shares of the same Fund is not taxable.
- - An exchange between Funds is considered a sale and generally results in a
capital gain or loss for Federal income tax purposes.
- - You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short-term movements in the market. Therefore:
- - To prevent disruptions in the management of the Funds, The One Group limits
excessive exchange activity.
- - Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- - In addition, The One Group reserves the right to reject any exchange request
(even those that are not excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or otherwise adversely
affect other shareholders.
REDEEMING
FUND SHARES
- ----------------------------------------------------
WHEN CAN I REDEEM SHARES?
- - You may redeem all or some of your shares on any day that the Funds are open
for business.
- - Redemption requests received by The One Group Services Company before 4 p.m.
EST, will be effective that day.
<PAGE> 132
29
HOW DO I REDEEM SHARES?
- - Unless you have selected the telephone option on your Account Application
Form, you must send a written redemption request to your Shareholder Servicing
Agent, if applicable, or State Street Bank and Trust Company at the following
address:
The One Group
c/o State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
- - All requests for redemptions from IRA accounts must be in writing.
- - You may request redemption forms by calling The One Group Services Company at
(800) 480-4111.
- - State Street Bank and Trust Company may require that the signature on your
redemption request be guaranteed by a commercial bank, a member of a domestic
stock exchange, or a member of the Securities Transfer Association Medallion
Program or the Stock Exchange Medallion Program, unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record; and
3. the redemption check is mailed to the shareholder at the record address.
- - On the Account Application Form, you may elect to have the redemption proceeds
mailed or wired to:
1. a designated commercial bank; or
2. State Street Bank and Trust Company or your Shareholder Servicing Agent.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00
- - Your redemption proceeds will be paid within seven days after receipt of the
redemption request.
WHAT WILL MY SHARES BE WORTH?
- - If you own Class A and Fiduciary Class shares and the Fund receives your
redemption request by 4:00 p.m. EST, you will receive that day's NAV.
- - If you own Class B or Class C shares and the Fund receives your redemption
request by 4:00 p.m. EST, you will receive that day's NAV, minus the amount of
any applicable CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
- - Call your Shareholder Servicing Agent or State Street Bank and Trust Company
at 1-800-480-4111 to relay your redemption request.
- - Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - REDEMPTIONS FROM YOUR IRA ACCOUNT MAY NOT BE MADE BY TELEPHONE.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000 you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
- - Select the "Systematic Withdrawal Plan" option on the Account Application
Form.
- - Specify the amount you wish to receive and the frequency of the payments.
- - You may designate a person other than yourself as the payee.
- - There is no charge for this service.
- - If you select this option, please keep in mind that:
1. It may not be in your best interest to buy additional Class A shares while
participating in a Systematic Withdrawal Plan. This is because Class A
shares have an up-front sales charge.
2. If you own Class B or Class C shares, you or your designated payee may
receive systematic payments provided the payments are limited to no more
than 10% of your account value annually, measured from the date the
redemption request is received.
3. If you are age 70 1/2, you may elect to receive payments to the extent
that the payment represents a minimum required distribution from an IRA or
other qualifying retirement plan. These payments may be less than $100
each.
4. If the amount of the systematic payment exceeds the income earned by your
account since the previous payment under the Systematic Withdrawal Plan,
payments will be
<PAGE> 133
30
made by redeeming some of your shares. This will reduce the amount of your
investment.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
- - All redemptions will be for cash.
- - If you redeem shares for which you paid by check, and The One Group has not
yet received payment on the check, The One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been collected from
your bank.
- - Because of the high cost of handling small investments, The One Group will
automatically redeem shares in accounts which, because of shareholder
redemptions, have values of less than $1,000. No sales charges will be
assessed and you will be given 60 days to make additional investments in the
Fund to increase the value of your account to at least $1,000.
- - The One Group may suspend your ability to redeem, or will redeem your shares
involuntarily, when it seems appropriate to do so in light of its
responsibilities under the Federal securities laws. The Statement of
Additional Information offers more details about this process.
<PAGE> 134
SHAREHOLDER INFORMATION
31
VOTING RIGHTS
- ----------------------------------------------------
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
BANC ONE CORPORATION (100 East Broad Street, Columbus, Ohio, 43271), through its
affiliates, may be deemed for purposes of the Investment Company Act of 1940 to
control the Funds. This is because as of August 5, 1997, BANC ONE CORPORATION or
its affiliates possessed the power to vote substantially all of the Fiduciary
Class shares of the Funds.
On the same date, the following shareholders owned 25% or more of Class A or
Class B shares of the Fund. As a consequence, they are considered to be
controlling persons of these classes of the Fund listed below.
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
<S> <C> <C> <C>
Dean Witter FBO City of Montgomery Treasury & Agency Fund 83.57% Record
10101 Montgomery Road Class A
Church St Station -- P.O. Box 250
New York, NY 10013-0250
Dean Witter FBO Helen D Johnson Treasury & Agency Fund 31.02% Record
Rt 2 Box 118 Class B
Church St Station- P.O. Box 250
New York, NY 10277-0001
Dean Witter for the Benefit of Ultra Short-Term 25.34% Record
St. Joseph Hospital Income Fund
Attn: Rick West Class A
5 World Trade Center, 6th Floor
New York, NY 10048-0205
</TABLE>
DIVIDEND POLICIES
- ----------------------------------------------------
DIVIDENDS
The Funds generally declare dividends on each business day. Dividends are
distributed on the first business day of each month. Capital gains, if any, for
all Funds are distributed at least annually. To maintain a relatively even rate
of distributions from the Treasury & Agency Fund, the monthly distributions for
that Fund may be fixed from time to time at rates consistent with Banc One
Investment Advisors' long-term earnings expectations.
Dividends payable on Fiduciary Class shares will be more than those payable on
other classes of shares. This is because Class A, Class B and Class C shares
have higher distribution expenses.
The Funds pay dividends and distributions on a per-share basis. This means that
the value of your shares will be reduced by the amount of the payment. If you
purchase shares shortly before the record date for a dividend or the
distribution of capital gains, you will pay the full price for the shares and
receive some portion of the price back as a taxable dividend or distribution.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8500, Boston, MA
02266-8500, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street.
<PAGE> 135
32
SPECIAL DIVIDEND RULES FOR CLASS B SHARES
Class B shares received as dividends and capital gains distributions will be
accounted for separately. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of the Class B shares in
the sub-account will also convert to Class A shares. (See "Conversion Feature.")
TAX TREATMENT
OF THE FUNDS
- ----------------------------------------------------
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT
OF SHAREHOLDERS
- ----------------------------------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares generally will produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
TAXATION OF DISTRIBUTIONS
Each Fund will distribute substantially all of its net investment income
(including net short-term capital gains) on at least an annual basis. Dividends
you receive from a Fund, whether reinvested or received in cash, will be taxable
to you. Dividends from a Fund's net investment income will be taxable as
ordinary income and dividends from a Fund's long-term capital gains will be
taxable to you as such, regardless of how long you have held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid the previous December.
TAXATION OF RETIREMENT PLANS
Distributions by the Funds to qualified retirement plans will not be taxable.
However, if shares are held by a plan that ceases to qualify for tax-exempt
treatment or by an individual who has received the shares as a distribution from
a retirement plan, the distributions will be taxable to the plan or individual
as described in "Taxation of Distributions." If you are considering purchasing
shares with qualified retirement plan assets, you should consult your tax
advisor for a more complete explanation of the Federal, state, local and (if
applicable) foreign tax consequences of making such an investment.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
SHAREHOLDER INQUIRIES
- ----------------------------------------------------
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In September and March you will receive a financial report from The One
Group. In addition, The One Group will periodically send you proxy
statements and other reports.
<PAGE> 136
ORGANIZATION AND MANAGEMENT OF THE FUNDS
33
THE FUNDS
Each Fund is a series of The One Group, an open-end management investment
company. The One Group currently consists of 40 separate Funds. Each Fund
described in this prospectus is diversified. Six of the Funds are described in
this prospectus; the other Funds are described in separate prospectuses. Each
Fund is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of The One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to The
One Group since 1993. Prior to that time, The One Group was advised by
affiliates of Banc One Investment Advisors. In addition to The One Group, Banc
One Investment Advisors serves as investment advisor to other mutual funds and
individual, corporate, charitable Banc One Investment Advisors makes the
day-to-day investment decisions for the Funds and continuously and retirement
accounts. As of June 30, 1997, Banc One Investment Advisors, an indirect,
wholly-owned subsidiary of BANC ONE CORPORATION, managed over $47 billion in
assets.
For the fiscal year ended June 30, 1997, the Funds paid investment advisory
fees at the following rates:
<TABLE>
<CAPTION>
ANNUAL RATE AS PERCENTAGE
FUND NAME OF AVERAGE DAILY NET ASSETS
<S> <C> <C>
The One Group(R) Intermediate Bond Fund .33%
The One Group(R) Income Bond Fund .40%
The One Group(R) Government Bond Fund .41%
The One Group(R) Ultra Short-Term Income
Fund .20%
The One Group(R) Limited Volatility Bond
Fund .30%
The One Group(R) Treasury & Agency Fund .20%
</TABLE>
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory reporting and
compliances. For these services, The One Group Services Company receives a fee
based on the total assets of The One Group. For the first $1.5 billion in One
Group assets, The One Group Services Company receives an annual fee of .20% of
each Fund's average daily net assets. The annual rate declines to .18% on assets
up to $2 billion, and to .16% when assets exceed $2 billion. The fee is
calculated daily and paid monthly. Some Funds are not included in the
calculations.
Banc One Investment Advisors, the Sub-Administrator, provides office space,
equipment and facilities, as well as legal and regulatory support.
THE TRANSFER AGENT, CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500, or
your Shareholder Servicing Agent if appropriate, handles shareholder
recordkeeping and statements, distributes dividends, and processes buy and sell
requests. As the Funds' custodian, State Street holds the Funds' assets, settles
all portfolio trades and assists in calculating the Funds' net asset values.
Bank One Trust Company, N.A. serves as sub-custodian in connection with the
Funds' securities lending activities under an agreement with State Street Bank
and Trust Company, Bank One Trust Company, N.A. is paid a fee paid by the Funds
for this service.
<PAGE> 137
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
34
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Fixed income securities are primarily influenced by
market, credit and prepayment risks, although certain securities may be subject
to additional risks. For a more complete discussion, see the Statement of
Additional Information. Following the table is a more complete discussion of
risk.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
<S> <C> <C>
The One Group(R) Intermediate Bond Fund 1
The One Group(R) Income Bond Fund 2
The One Group(R) Government Bond Fund 3
The One Group(R) Ultra Short-Term Income Fund 4
The One Group(R) Limited Volatility Bond Fund 5
The One Group(R) Treasury & Agency Fund 6
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, bonds, STRIPS, and 1-6 Market
CUBES.
TREASURY RECEIPTS: TRS, TIGRS, and CATS. 1-5 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies 1-6 Market
and instrumentalities of the U.S. Government. These include Credit
Ginnie Mae, Fannie Mae, and Freddie Mac.
CERTIFICATES OF DEPOSIT: Negotiable instruments with a stated 1, 2, 4, 5 Credit
maturity. Market
Liquidity
TIME DEPOSITS: Non-negotiable receipts issued by a bank in 1, 2, 4, 5 Market
exchange for the deposit of funds. Liquidity
Credit
REPURCHASE AGREEMENTS: The purchase of a security and the 1-5 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
REVERSE REPURCHASE AGREEMENT: The sale of a security and the 1-5 Market
simultaneous commitment to buy the security back at an agreed Leverage
upon price on an agreed upon date. This is treated as a
borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33% of the securities 1-6 Credit
owned by a Fund. In return the Fund will receive cash and/or Market
other securities as collateral. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Purchase or 1-5 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
INVESTMENT COMPANY SECURITIES: Shares of other mutual funds, 1, 2, 4-6 Market
including money market funds of The One Group and shares of
other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. The
Treasury & Agency Fund will only purchase shares of investment
companies which invest exclusively in U.S. Treasury and other
U.S. Agency obligations. Banc One Investment Advisors will waive
certain fees when investing in funds for which it serves as
investment advisor.
CONVERTIBLE SECURITIES: Bonds or preferred stock that convert to 1, 2, 4 Market
common stock. Credit
CALL AND PUT OPTIONS: A call option gives the buyer the right to 1-4 Management
buy, and obligates the seller of the option to sell, a security Liquidity
at a specified price. A put option gives the buyer the right to Credit
sell, and obligates the seller of the option to buy, a security Market
at a specified price. The Funds will sell covered call and Leverage
secured put options.
</TABLE>
<PAGE> 138
35
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
FUTURES AND RELATED OPTIONS: A contract providing for the future 1-4 Management
sale and purchase of a specified amount of a specified security, Market
class of securities, or an index at a specified time in the Credit
future and at a specified price. Liquidity
Leverage
REAL ESTATE INVESTMENT TRUSTS ("REITS"): Pooled investment 1-6 Liquidity
vehicles which invest primarily in income producing real estate Management
or real estate related loans or interest. Market
Pre-payment
Tax
Regulatory
BANKERS' ACCEPTANCES: Bills of exchange or time drafts drawn on 1, 2, 4, 5 Credit
and accepted by a commercial bank. Maturities are generally six Liquidity
months or less. Market
COMMERCIAL PAPER: Secured and unsecured short-term promissory 1, 2, 4, 5 Credit
notes issued by corporations and other entities. Maturities Liquidity
generally vary from a few days to nine months. Market
FOREIGN SECURITIES: Debt issued by foreign governments, foreign 1, 2, 4, 5 Market
corporations, domestic subsidiaries of foreign corporations, and Political
foreign banks, as well as commercial paper of foreign issuers Liquidity
and obligations of foreign banks and overseas branches of U.S. Foreign Investment
banks and of foreign issuers and supranational entities.
RESTRICTED SECURITIES: Securities not registered under the 1, 2, 4, 5 Liquidity
Securities Act of 1933, such privately placed commercial paper Market
and Rule 144A securities.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1-6 Market
interest rates which are reset daily, weekly, quarterly or some Credit
other period and which may be payable to the Fund on demand. The Liquidity
Treasury & Agency Fund will invest in these securities only if
they are issued by the U.S. Treasury or another U.S. Government
Agency.
WARRANTS: Securities, typically issued with preferred stock or 2 Market
bonds that give the holder the right to buy a proportionate Credit
amount of common stock at a specified price.
PREFERRED STOCK: A class of stock that generally pays a dividend 1, 2, 4, 5 Market
at a specified rate and has preference over common stock in the
payment of dividends and in liquidation.
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real 1-6 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs") and Real Estate Mortgage Credit
Investment Conduits ("REMICs"). Regulatory
CORPORATE DEBT SECURITIES: Corporate bonds and non-convertible 1, 2, 4, 5 Market
debt securities. Credit
DEMAND FEATURES: Securities that are subject to puts and standby 1, 2, 4, 5 Market
commitments to purchase the securities at a fixed price (usually Liquidity
with accrued interest) within a fixed period of time following Management
demand by a Fund.
ASSET-BACKED SECURITIES: Securities secured by company 1, 2, 4, 5 Pre-payment
receivables, home equity loans truck and auto loans, leases, Market
credit card receivables and other securities backed by other Credit
types of receivables or other assets.
MORTGAGE DOLLAR ROLLS: A transaction in which a Fund sells 1-5 Pre-payment
securities for delivery in a current month and simultaneously Market
contracts with the same party to repurchase similar but not Regulatory
identical securities on a specified future date.
ADJUSTABLE RATE MORTGAGE LOANS ("ARMS"): Loans in a mortgage 1-6 Pre-payment
pool which provide for a fixed initial mortgage interest rate Market
for a specified period of time, after which the rate may be Credit
subject to periodic adjustments. The Treasury & Agency Fund will Regulatory
only buy Government ARMs.
SWAPS, CAPS AND FLOORS: A Fund may enter into these transactions 1-4 Management
to manage its exposure to changing interest rates and other Credit
factors. Swaps involve an exchange of obligations by two Liquidity
parties. Caps and floors entitle a purchaser to a principal Market
amount from the seller of the cap or floor to the extent that a
specified index exceeds or falls below a predetermined interest
rate or amount.
</TABLE>
<PAGE> 139
36
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
NEW FINANCIAL PRODUCTS: New options and futures contracts and 1-4 Management
other financial products continue to be developed and the Fund Credit
may invest in such options, contracts and products. Market
Liquidity
STRUCTURED INSTRUMENTS: Debt securities issued by agencies and 1-4 Market
instrumentalities of the U.S. government, banks, municipalities, Liquidity
corporations and other businesses whose interest and/or Management
principal payments are indexed to foreign currency exchange Credit
rates, interest rates, or one or more other references indices. Foreign Investment
MUNICIPAL SECURITIES: Securities issued by a state or political 1, 2, 4, 5 Credit
subdivision to obtain funds for various public purposes. Political
Municipal securities include private activity bonds and Tax
industrial development bonds, as well as General Obligation Market
Notes, Anticipation Notes, Bond Tax Anticipation Notes, Revenue
Anticipation Notes, Project Notes, other short-term tax-exempt
obligations, municipal leases, and obligations of municipal
housing authorities and single family revenue bonds.
ZERO COUPON DEBT SECURITIES: Bonds and other debt that pay no 1, 2, 4, 5 Credit
interest, but are issued at a discount from their value at Market
maturity. When held to maturity, their entire return equals the
difference between their issue price and their maturity value.
ZERO-FIXED-COUPON DEBT SECURITIES: Zero coupon debt securities 1, 2, 4, 5 Credit
which convert on a specified date to interest bearing debt Market
securities.
STRIPPED MORTGAGE-BACKED SECURITIES: Derivative multi-class 1-4 Pre-payment
mortgage securities which are usually structured with two Market
classes of shares that receive different proportions of the Credit
interest and principal from a pool of mortgage assets. These Regulatory
include IOs and POs. The Funds only invest in Stripped
Mortgage-Backed Securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
INVERSE FLOATING RATE INSTRUMENTS: Leveraged floating rate debt 1-4 Market
instruments with interest rates that reset in the opposite Leverage
direction from the market rate of interest to which the inverse Credit
floater is indexed.
LOAN PARTICIPATIONS AND ASSIGNMENTS: Participations in, or 1, 2, 4, 5 Credit
assignments of all or a portion of loans to corporations or to Political
governments, including governments of the less developed Liquidity
countries ("LDC's"). Foreign Investment
Market
FIXED RATE MORTGAGE LOANS: Investments in fixed rate mortgage 1, 2, 4, 5 Credit
loans or mortgage pools which bear simple interest at fixed Pre-payment
annual rates and have original terms ranging from 5 to 40 years. Regulatory
Market
SHORT-TERM FUNDING AGREEMENTS: Investments in short-term funding 1, 2, 4, 5 Credit
agreements issued by banks and highly rated U.S. insurance Liquidity
companies such as Guaranteed Investment Contracts ("GIC's") and Market
Bank Investment Contracts ("BIC's").
</TABLE>
<PAGE> 140
37
INVESTMENT RISKS
- ----------------------------------------------------
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Funds may fluctuate, as will the value of
your investment in the Funds. Certain investments are more susceptible to these
risk than others.
- - CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default
rises.
- - LEVERAGE RISK. The risk associated with securities or practices (such as
borrowing) that multiply small index or market movements into large changes in
value. Leverage is often associated with investments in derivatives, but also
may be embedded directly in the characteristics of other securities.
- HEDGED. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Hedges are sometimes subject to imperfect matching between
the derivative and underlying security, and there can be no assurance that
a Fund's hedging transactions will be effective.
- SPECULATIVE. To the extent that a derivative is not used as a hedge, the
fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater
than the derivative's original cost.
- - LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that would normally prevail in
the market. The seller may have to lower the price, sell other securities
instead or forego an investment opportunity, any of which could have a
negative effect on fund management or performance. This includes the risk of
missing out on an investment opportunity because the assets necessary to take
advantage of it are tied up in less advantageous investments.
- - MANAGEMENT RISK. The risk that a strategy used by a fund's management may fail
to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than
it was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. There is also the
risk that the current interest rate may not accurately reflect existing market
rates. For fixed income securities, market risk is largely, but not
exclusively, influenced by changes in interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Finally, key information about a security or market may be
inaccurate or unavailable. This is particularly relevant to investments in
foreign securities.
- - POLITICAL RISK. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
- - FOREIGN INVESTMENT RISK. Associated with higher transaction costs, delayed
settlements, currency controls and adverse economic developments. This
includes the risk that fluctuations in the exchange rates between the U.S.
dollar and foreign currencies may negatively affect an investment. Adverse
changes in exchange rates may erode or reverse any gains produced by foreign
currency denominated investments and may widen any losses. Exchange rate
volatility also may affect the ability of an issuer to repay U.S. dollar
denominated debt, thereby increasing credit risk.
- - PRE-PAYMENT RISK. The risk that the principal repayment of a security will
occur at an unexpected time, especially that the repayment of a mortgage or
asset-backed security occurs either significantly sooner or later than
expected. Changes in pre-payment rates can result in
<PAGE> 141
38
greater price and yield volatility. When mortgage and other obligations are
pre-paid, a Fund may have to reinvest in securities with a lower yield.
Further, with early prepayment, a Fund may fail to recover any premium paid,
resulting in an unexpected capital loss.
- - TAX RISK. The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
- - REGULATORY RISK. The risk associated with Federal and state laws which may
restrict the remedies that a mortgage lender has when a borrower defaults on
mortgage loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor relief laws,
restrictions on "due on sale" clauses, and state usury laws.
INVESTMENT POLICIES
- ----------------------------------------------------
Each Fund's investment objective and the following investment policies
summarized below are fundamental. This means that they cannot be changed without
the consent of a majority of the outstanding shares of the Funds. In addition to
the fundamental policies mentioned earlier, the following fundamental policies
apply to each Fund as specified. The full text of the fundamental policies can
be found in the Statement of Additional Information.
Each Fund may not:
1. Purchase the securities of an issuer if as a result more than 5% of its total
assets would be invested in the securities of that issuer or the Fund would
own more than 10% of the outstanding voting securities of that issuer. This
does not include securities issued or guaranteed by the United States, its
agencies or instrumentalities, securities of registered investment companies,
and repurchase agreements involving these securities. This restriction
applies with respect to 75% of a Fund's total assets.
2. Concentrate their investment in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities and repurchase
agreements involving such securities.
3. 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.
Additional investment policies are set forth in the Statement of Additional
Information.
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes as determined by Banc One Investment Advisors,
the Funds may invest up to 100% of their assets in money market instruments, and
may hold a portion of their assets in cash for liquidity purposes. While the
Funds are engaged in a temporary defensive position, they will not be pursuing
their investment objectives. Therefore, the Funds will pursue a temporary
defensive position only when market conditions warrant.
PORTFOLIO TURNOVER
Portfolio turnover may vary greatly from year to year, as well as within a
particular year.
Higher portfolio turnover rates will likely result in higher transaction costs
to the Funds and may result in additional tax consequences to you. The portfolio
turnover rate for each Fund for the fiscal year ended June 30, 1997 is shown on
the Financial Highlights.
<PAGE> 142
APPENDIX
39
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free U.S. Treasury
obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet financial
commitment is strong. Obligations designated with a plus sign (+)
indicate that capacity to meet financial commitment is extremely
strong.
A-2 Issues somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than obligations in higher rating
categories. However, the capacity to meet financial commitments is
satisfactory.
FITCH'S INVESTORS SERVICE, L.P. ("FITCH")
F-1+ Exceptionally strong credit quality. Strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Assurance of timely payment is only
slightly less in degree than issues rated F-1+.
F-2 Good credit quality. Satisfactory degree of assurance for timely
payment, but the margin of safety is not as good as for issues assigned
F-1+ and F-1 ratings.
IBCA LIMITED ("IBCA")
A1 Highest capacity for timely repayment. Those issues rated A1+ possess a
particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such capacity may
be susceptible to adverse changes in business, economic or financial
conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
<PAGE> 143
40
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
AAA The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
Aa These insurance companies offer excellent financial security. Together
with the Aaa group, they constitute what are generally known as high
grade companies. They are rated lower than Aaa companies because
long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
DESCRIPTION OF MUNICIPAL BOND RATINGS
(including foreign, mortgage and asset-backed securities)
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong capacity to
meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's capacity
to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories. However, capacity to meet its financial commitment on
the obligation is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligations.
Speculative Grade
BB Less vulnerable to non-payment than other speculative issues. However,
these bonds face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet financial commitment on the obligations.
B More vulnerable to non-payment than obligations rated BB, but currently
has the capacity to meet its financial commitment on the obligation.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to meet its financial commitment on the
obligation.
CCC Currently vulnerable to non-payment, and is dependent upon favorable
business, financial, and economic conditions to meet its financial
commitment on the
<PAGE> 144
41
obligation. In the event of adverse business, financial, or economic
conditions, they are not likely to have the capacity to meet its
financial commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments
on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
Investment Grade
Aaa Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large, or an exceptionally stable, margin and principal is secure.
Aa High quality by all standards. Margins of protection may not be as
large as in Aaa securities, fluctuation of protective elements may be
greater, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
Baa These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
Ba These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may be
small).
Caa Bonds in this category have poor standing and may be in default. These
bonds carry an element of danger with respect to principal and interest
payments.
Ca Speculative to a high degree and could be in default or have other
marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S
MIG1 & Short-term municipal securities rated MIG1 or VMIG1 are of the best
VMIG1 quality. They have strong protection from established cash flows,
superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2 & These Short-term municipal securities are of high quality. Margins of
VMIG2 protection are ample although not so large as in the preceding group.
MIG3 & Favorable quality. All security elements are accounted for, but the
VMIG3 undeniable strength of the preceding grades is lacking. Liquidity and
cash flow protection may be narrow and marketing access for
refinancing is likely to be less well established.
S&P
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
<PAGE> 145
42
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
aaa Top-quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within the
universe of preferred stocks.
aa High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
a Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues
rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock obligations.
Whereas the issuer normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest will be paid
on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal and
interest is strong, the relative degree is not as high as for issues
rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to adverse
developments than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
<PAGE> 146
Investment Advisor and Sub-Administrator
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Distributor
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES COMPANY AT 3435
STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL INFORMATION IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS A WEB SITE
(WWW.SEC.COM) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIALS
INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING THE ONE GROUP(R).
TOG-F-122
<PAGE> 147
THE ONE GROUP(R) FAMILY OF MUTUAL FUNDS
MONEY MARKET FUNDS
COMBINED PROSPECTUS
NOVEMBER 1, 1997
THE ONE GROUP(R) PRIME MONEY MARKET FUND
THE ONE GROUP(R) MUNICIPAL MONEY MARKET FUND
THE ONE GROUP(R) OHIO MUNICIPAL MONEY MARKET FUND
THE ONE GROUP(R) U.S. TREASURY SECURITIES MONEY MARKET FUND
This prospectus describes four money market mutual funds with a variety of
investment objectives, including current income, interest
income exempt from Federal Income Tax, and interest income exempt from
Federal Income Tax and Ohio Personal Income Tax.
The information in this prospectus is important. Please read it carefully
before you invest, and save it for future reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: o ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY BANC ONE CORPORATION OR ITS AFFILIATES; o ARE
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
BY ANY FEDERAL OR STATE GOVERNMENTAL AGENCY; o
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THE ONE GROUP OHIO MUNICIPAL MONEY MARKET FUND MAY INVEST A
SIGNIFICANT PORTION OF ITS ASSETS IN THE SECURITIES OF A SINGLE
ISSUER. AS A RESULT, AN INVESTMENT IN THE FUND MAY ENTAIL MORE RISKS
THAN AN INVESTMENT IN ANOTHER TYPE OF MONEY MARKET FUND.
THERE IS NO ASSURANCE THAT THE FUNDS WILL MEET THEIR
INVESTMENT OBJECTIVES OR BE ABLE TO MAINTAIN A NET
ASSET VALUE OF $1.00 PER SHARE ON A CONTINUOUS BASIS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 148
TABLE OF CONTENTS
<TABLE>
<S> <C>
A BRIEF PREVIEW OF THE FUNDS.............................. 1
ABOUT THE FUNDS........................................... 2
The One Group(R) Prime Money Market Fund............... 2
The One Group(R) Municipal Money Market Fund........... 5
The One Group(R) Ohio Municipal Money Market Fund...... 7
The One Group(R) U.S. Treasury Securities Money Market
Fund................................................. 9
MORE ABOUT THE FUNDS...................................... 12
HOW TO DO BUSINESS WITH THE ONE GROUP..................... 13
Purchasing Fund Shares................................. 13
Sales Charges.......................................... 15
Sales Charge Reductions and Waivers.................... 16
Exchanging Fund Shares................................. 16
Redeeming Fund Shares.................................. 17
SHAREHOLDER INFORMATION................................... 20
Voting Rights.......................................... 20
Dividend Policies...................................... 20
Tax Treatment of the Funds............................. 21
Tax Treatment of Shareholders.......................... 21
Shareholder Inquiries.................................. 22
ORGANIZATION AND MANAGEMENT OF THE FUNDS.................. 23
The Funds.............................................. 23
The Board of Trustees.................................. 23
The Advisor............................................ 23
The Distributor........................................ 23
The Administrator and Sub-Administrator................ 23
The Transfer Agent, Custodian and Sub-Custodian........ 23
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND
POLICIES................................................ 24
Investment Practices................................... 24
Investment Risks....................................... 26
Investment Policies.................................... 27
APPENDIX: DESCRIPTION OF RATINGS.......................... 29
</TABLE>
<PAGE> 149
1
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE ONE GROUP MONEY MARKET FUNDS?
The Funds are designed for a variety of investment objectives,
including current income, interest income exempt from Federal
Income Tax, and interest income exempt from Federal Income Tax
and Ohio Personal Income Tax. Each Fund pursues a different
objective and involves different risks. All of the Funds will
use their best efforts to maintain a constant net asset value
of $1.00 per share, although there is no guarantee that the
Funds will be able to do so. Please read about each Fund
before investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Funds will invest only in U.S. dollar-denominated
securities, will maintain an average maturity on a dollar-
weighted basis of 90 days or less, and will acquire only
"eligible securities" that present minimal credit risks and
have a maturity of 397 days or less. The Funds intend to
comply with Rule 2a-7 under the Investment Company Act of
1940.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
The Funds invest in securities that are backed by "credit
enhancements" such as letters of credit. The value of
investments in the Funds could decrease if the credit quality
of the credit enhancement provider declines. The Prime Money
Market Fund invests in mortgage-related securities which have
significantly greater price and yield volatility than
traditional fixed income securities. In addition, the Prime
Money Market Fund invests in U.S. dollar denominated foreign
securities which may expose the Fund to risks that are
different from investments in U.S. Securities. The Ohio
Municipal Money Market Fund is a nondiversified fund which
exposes investors to special risks. For more information about
risks, please read "More About the Funds" and "Investment
Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
Each Fund currently offers Class A, Class C and Fiduciary
Class shares. Class A and Class C 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. Fiduciary Class shares are not available to
Individual Retirement Accounts ("IRA").
The Prime Money Market Fund and the U.S. Treasury Securities
Money Market Fund also offer Class B and Service Class shares.
Class B shares are offered to the general public. Service
Class shares are offered to entities purchasing such shares on
behalf of investors requiring additional administrative or
accounting services such as sweep processing. The section
called "How To Do Business With The One Group" will provide
more information.
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the
Funds are open for business. Class C Shares are not available
for purchase in all of the Funds. Purchase and redemption
procedures are explained in greater detail in "How To Do
Business With The One Group." For additional information, call
The One Group Services Company at 1-800-480-4111.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on each business day and are
distributed periodically. Any capital gains are distributed at
least annually. Distributions are paid in additional shares of
the same class unless you elect to take the payment in cash.
For a more detailed discussion of dividends, see "Dividend
Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors"), an indirect subsidiary of BANC ONE CORPORATION,
serves as the advisor of the Funds. Banc One Investment
Advisors is paid a fee for its services. A more detailed
discussion regarding Banc One Investment Advisors, its
services and compensation can be found in the Prospectus under
the headings "The Advisor" and "Expense Summary."
<PAGE> 150
2
THE ONE GROUP(R)
PRIME MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a diversified money market fund that seeks current income with
liquidity and stability of principal.
[ICON] PORTFOLIO SECURITIES
The Fund invests exclusively in high quality money market instruments. These
instruments include U.S. Treasury obligations, obligations issued or guaranteed
by U.S. agencies or instrumentalities, mortgage-backed securities, commercial
paper, bank obligations and deposit notes. The Fund also may invest in
commercial paper issued by foreign issuers. The Fund may invest up to 10% of its
net assets in illiquid investments such as certain restricted securities and
private placements. The Fund also engages in securities lending. For a list of
all of the securities in which the Fund may invest, please read "Investment
Policies."
[ICON] RISK CONSIDERATIONS
The Fund invests in securities that are backed by "credit enhancements" such as
letters of credit. The value of your investment in the Fund could decrease if
the value of the securities in the portfolio decreases in response to declining
credit quality of a credit enhancement provider. The fund also invests in U.S.
dollar denominated foreign investments which involve risks that are different
from investments in U.S. companies. In addition, the Fund invests in
mortgage-related securities which have significantly greater price and yield
volatility than traditional fixed-income securities. Before you invest, please
read "More About the Funds" and "Investment Risks."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SERVICE FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C CLASS CLASS
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) none none none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none 5.00% 1.00% none none
Redemption Fees none none none none none
Exchange Fees none none none none none
ANNUAL OPERATING EXPENSES (2)
(as a percentage of average daily
net assets)
Investment Advisory Fees (after fee
waiver) (3) .30% .30% .30% .30% .30%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% .55% none
Other Expenses .20% .20% .20% .20% .20%
Total Fund Operating Expenses (after fee
waivers) (5) .75% 1.50% 1.50% 1.05% .50%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
(3) Without a fee waiver, Investment Advisory Fees would be .35% for all classes
of shares.
(4) Due to 12b-1 fees, long-term Class A, Class B, Class C and Service Class
shareholders may pay more than the equivalent of the maximum front-end sales
charges permitted under the rules of the National Association of Securities
Dealers. Without the voluntary waiver of fees, 12b-1 fees would be .75% for
Service Class shares.
(5) Without a voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be .80% for Class A shares, 1.55% for Class B
shares, 1.55% for Class C shares, 1.30% for Service Class shares and .55%
for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 8 $ 24 $ 42 $ 93
Class A (without fee waiver) $ 8 $ 26 $ 44 $ 99
Class B $ 65 $ 77 $ 102 $159
Class B (without fee waiver) $ 66 $ 79 $ 104 $164
Class C $ 25 $ 47 $ 82 $179
Class C (without fee waiver) $ 26 $ 49 $ 84 $185
Fiduciary Class $ 5 $ 16 $ 28 $ 63
Fiduciary Class (without fee waiver) $ 6 $ 18 $ 31 $ 69
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 8 $ 24 $ 42 $ 93
Class A (without fee waiver) $ 8 $ 26 $ 44 $ 99
Class B $ 15 $ 47 $ 82 $159
Class B (without fee waiver) $ 16 $ 49 $ 84 $164
Class C $ 15 $ 47 $ 82 $179
Class C (without fee waiver) $ 16 $ 49 $ 84 $185
Fiduciary Class $ 5 $ 16 $ 28 $ 63
Fiduciary Class (without fee waiver) $ 6 $ 18 $ 31 $ 69
</TABLE>
Class B shares automatically convert to Class A shares after eight years.
Therefore, the "10 years" examples above reflect this conversion.
Because of the nature of the shares, shareholders are not expected to remain in
Service Class shares for more than a very limited period of time. However, a
shareholder investing in the Service Class shares on a continual basis for a
period of one month would pay $1, three months would pay $3, one year would pay
$11. Without the voluntary fee reduction, that shareholder would pay $1 after
one month, $3 after three months, and $13 after one year.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 151
3
THE ONE GROUP(R) PRIME MONEY MARKET FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
--------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.051 0.054 0.052 0.031 0.030 0.045
- ----------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.051) (0.054) (0.052) (0.031) (0.030) (0.045)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 5.20% 5.49% 5.34% 3.19% 3.09% 4.64%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 2,563,768 $ 2,186,562 $ 1,965,416 $ 1,600,876 $ 979,275 $ 946,504
Ratio of expenses to average net assets 0.48% 0.44% 0.41% 0.40% 0.44% 0.59%
Ratio of net investment income to
average net assets 5.08% 5.34% 5.27% 3.18% 3.05% 4.49%
Ratio of expenses to average net assets* 0.56% 0.55% 0.57% 0.59% 0.62% 0.76%
Ratio of net investment income average
net assets* 5.00% 5.23% 5.12% 2.99% 2.87% 4.32%
<CAPTION>
---------------------------
FIDUCIARY 1991 1990
<S> <<C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
- -----------------------------------------------------------------------
Investment Activities
Net investment income 0.069 0.080
- -----------------------------------------------------------------------
Less: Distributions
Net investment income (0.069) (0.080)
- -----------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
- -----------------------------------------------------------------------
Total Return 7.12% 8.33%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 760,726 $ 562,680
Ratio of expenses to average net assets 0.68% 0.64%
Ratio of net investment income to
average net assets 6.86% 8.02%
Ratio of expenses to average net assets* 0.83% 0.79%
Ratio of net investment income average
net assets* 6.71% 7.87%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
--------------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.048 0.051 0.050 0.027 0.030 0.013
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.048) (0.051) (0.050) (0.027) (0.030) (0.013)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 4.94% 5.22% 5.08% 2.93% 2.83% 3.51%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 332,646 $ 315,374 $ 201,968 $ 74,759 $ 61,106 $ 511
Ratio of expenses to average net assets 0.73% 0.69% 0.67% 0.65% 0.65% 0.79%(b)
Ratio of net investment income to
average net assets 4.83% 5.09% 5.02% 2.92% 2.67% 3.40%(b)
Ratio of expenses to average net
assets* 0.91% 0.90% 0.92% 0.90% 0.99% 0.94%(b)
Ratio of net investment income to
average net assets* 4.65% 4.88% 4.77% 2.67% 2.33% 3.25%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class A Shares commenced offering on February 18,
1992. (b) Annualized.
<PAGE> 152
4
THE ONE GROUP(R) PRIME MONEY MARKET FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVEMBER 21,
1996 TO
JUNE 30,
CLASS B 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.026
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.026)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charge) 2.63%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 618
Ratio of expenses to average net assets 1.51%(c)
Ratio of net investment income to average net assets 4.16%(c)
Ratio of expenses to average net assets* 1.59%(c)
Ratio of net investment income to average net assets* 4.08%(c)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized.
<PAGE> 153
5
THE ONE GROUP(R)
MUNICIPAL MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a diversified fund that seeks as high a level of current interest
income exempt from Federal income tax as is consistent with capital preservation
and stability of principal.
[ICON] PORTFOLIO SECURITIES
As a matter of fundamental policy, the Fund will invest at least 80% of its
total assets in municipal securities. These are securities issued by or on
behalf of the states, territories and possessions of the United States,
including the District of Columbia, and their political subdivisions, agencies,
instrumentalities and authorities. These municipal securities produce interest
that, in the opinion of bond counsel for the issuer, is exempt from Federal
income tax. However, the Fund may invest as much as 100% of its assets in
municipal securities that produce income that is subject to the Federal
alternative minimum tax. If you are subject to the Federal alternative minimum
tax, please read the section of this prospectus entitled "Tax Treatment of
Shareholders" before you invest. The Fund also may invest up to 20% of its total
assets in other types of securities, such as taxable money market instruments,
including repurchase agreements. For a list of all the securities in which the
Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in securities that are backed by "credit enhancements" such as
letters of credit. The value of your investment in the Fund could decrease if
the value of the securities in the portfolio decreases in response to declining
credit quality of a credit enhancement provider. In addition, the Fund invests
in mortgage-related securities which have significantly greater price and yield
volatility than traditional fixed-income securities. Before you invest, please
read "More Information about the Funds" and "Investment Risks."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS C FIDUCIARY CLASS
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price) none none none
Maximum Contingent Deferred Sales Charge (as a
percentage of original purchase price or
redemption proceeds, as applicable) none 1.00% 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 waiver) (3) .25% .25% .25%
12b-1 Fees (4) .25% 1.00% none
Other Expenses .25% .25% .25%
Total Fund Operating Expenses (after fee
waiver) (5) .75% 1.50% .50%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
(3) Without a fee waiver, Investment Advisory Fees would be .35% for all classes
of shares.
(4) Due to 12b-1 fees, long-term Class A and Class C shareholders may pay more
than the equivalent of the maximum front-end sales charges permitted under
the rules of the National Association of Securities Dealers.
(5) Total Operating Expenses have been revised to reflect fee waivers. Without a
voluntary reduction of Investment Advisory fees, Total Operating Expenses
would be .85% for Class A shares, 1.60% for Class C shares and .60% for
Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 8 $ 24 $ 42 $ 93
Class A (without fee waiver) $ 9 $ 27 $ 47 $105
Class C $ 25 $ 47 $ 82 $179
Class C (without fee waiver) $ 26 $ 50 $ 87 $190
Fiduciary Class $ 5 $ 16 $ 28 $ 63
Fiduciary Class (without fee waiver) $ 6 $ 19 $ 33 $ 75
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 8 $ 24 $ 42 $ 93
Class A (without fee waiver) $ 9 $ 27 $ 47 $105
Class C $ 15 $ 47 $ 82 $179
Class C (without fee waiver) $ 16 $ 50 $ 87 $190
Fiduciary Class $ 5 $ 16 $ 28 $ 63
Fiduciary Class (without fee waiver) $ 6 $ 19 $ 33 $ 75
</TABLE>
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 154
6
THE ONE GROUP(R) MUNICIPAL MONEY MARKET FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-----------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.031 0.033 0.032 0.021 0.021 0.034 0.050 0.057
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.031) (0.033) (0.032) (0.021) (0.021) (0.034) (0.050) (0.057)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 3.19% 3.34% 3.28% 2.16% 2.15% 3.47% 5.17% 5.82%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $ 467,420 $ 459,807 $ 437,743 $ 352,702 $ 175,277 $ 170,961 $ 166,200 $ 145,712
Ratio of expenses to
average net assets 0.43% 0.41% 0.41% 0.40% 0.46% 0.43% 0.32% 0.36%
Ratio of net investment
income to average net
assets 3.16% 3.29% 3.26% 2.13% 2.12% 3.41% 5.04% 5.66%
Ratio of expenses to
average net assets* 0.55% 0.59% 0.59% 0.60% 0.66% 0.80% 0.67% 0.76%
Ratio of net investment
income to average net
assets* 3.04% 3.11% 3.08% 1.93% 1.92% 3.04% 4.69% 5.26%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.029 0.030 0.030 0.021 0.019 0.009
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.029) (0.030) (0.030) (0.021) (0.019) (0.009)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 2.97% 3.08% 3.02% 1.96% 1.89% 2.48%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 48,185 $ 50,720 $ 56,518 $ 41,595 $ 18,932 $ 122
Ratio of expenses to average net assets 0.68% 0.66% 0.66% 0.65% 0.66% 0.84%(b)
Ratio of net investment income to average net
assets 2.91% 3.04% 3.01% 1.92% 1.82% 2.44%(b)
Ratio of expenses to average net assets* 0.90% 0.94% 0.94% 0.91% 1.01% 0.99%(b)
Ratio of net investment income to average net
assets* 2.69% 2.76% 2.73% 1.66% 1.47% 2.29%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class A shares commenced offering on February 18,
1992. (b) Annualized.
<PAGE> 155
7
THE ONE GROUP(R)
OHIO MUNICIPAL MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified money market fund that seeks as high a level of
current interest income exempt from Federal income tax and Ohio personal income
tax as is consistent with capital preservation and stability of principal.
[ICON] PORTFOLIO SECURITIES
The Fund will invest at least 80% of its total assets in Ohio municipal
securities. These are securities issued by or on behalf of the State of Ohio and
its political subdivisions, agencies, instrumentalities and authorities. Ohio
municipal securities produce interest that, in the opinion of bond counsel for
the issuer, is exempt from both Federal income tax and Ohio personal income tax.
The Fund also may invest up to 20% of its total assets in non-Ohio municipal
securities, i.e., municipal securities issued by states, territories and
possessions of the United States, including the District of Columbia, other than
Ohio, as well as their political subdivisions, agencies, instrumentalities and
authorities that produce interest exempt from Federal income tax. The Fund has
the ability to invest as much as 100% of its assets in non-Ohio municipal
securities that produce income that is subject to the Federal alternative
minimum tax. If you are subject to the Federal alternative minimum tax, please
read the section of this prospectus entitled "Tax Treatment of Shareholders"
before you invest. Finally, the Fund also may invest up to 20% of its total
assets in other types of securities, such as taxable money market instruments,
including repurchase agreements. For a list of all the securities in which the
Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
Because of the relatively small number of issuers of Ohio municipal securities,
the Fund's performance is effected to a greater extent by the success of one or
a few issuers than is the performance of a diversified fund. In addition, the
Fund invests in mortgage-related securities which have significantly greater
price and yield volatility than traditional fixed-income securities. Before you
invest, please read "More About the Funds" and "Investment Risks."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS C FIDUCIARY CLASS
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price) none none none
Maximum Contingent Deferred Sales Charge (as a
percentage of original purchase price or
redemption proceeds, as applicable) none 1.00% 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 waiver) (3) .25% .25% .25%
12b-1 Fees(4) .25% 1.00% none
Other Expenses (after fee waiver) (5) .24% .24% .24%
Total Fund Operating Expenses (after fee
waivers) (6) .74% 1.49% .49%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
(3) Without a fee waiver, Investment Advisory Fees would be .30% for all classes
of shares.
(4) Due to 12b-1 fees, long-term Class A and Class C shareholders may pay more
than the equivalent of the maximum front-end sales charges permitted under
the rules of the National Association of Securities Dealers.
(5) Without a fee waiver, other expenses would be .29% for all classes of
shares.
(6) Total Operating Expenses have been revised to reflect fee waivers. Without a
voluntary reduction of Investment Advisory and 12b-1 fees, Total Operating
Expenses would be .84% for Class A shares, 1.59% for Class C shares and .59%
for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 8 $ 24 $ 41 $ 92
Class A (without fee waivers) $ 9 $ 27 $ 47 $104
Class C $ 25 $ 47 $ 81 $178
Class C (without fee waivers) $ 26 $ 50 $ 87 $189
Fiduciary Class $ 5 $ 16 $ 27 $ 62
Fiduciary Class (without fee waivers) $ 6 $ 19 $ 33 $ 74
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 8 $ 24 $ 41 $ 92
Class A (without fee waivers) $ 9 $ 27 $ 47 $104
Class C $ 15 $ 47 $ 81 $178
Class C (without fee waiver) $ 16 $ 50 $ 87 $189
Fiduciary Class $ 5 $ 16 $ 27 $ 62
Fiduciary Class (without fee waivers) $ 6 $ 19 $ 33 $ 74
</TABLE>
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 156
8
THE ONE GROUP(R) OHIO MUNICIPAL MONEY MARKET FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, JUNE 9,
1993 TO
------------------------------------------------ JUNE 30,
FIDUCIARY 1997 1996 1995 1994 1993(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 0.032 0.033 0.032 0.022 0.013
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.032) (0.032) (0.032) (0.022) (0.013)
In excess of net investment income -- (0.001) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.032) (0.033) (0.032) (0.022) (0.013)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 3.22% 3.34% 3.20% 2.25% 2.14%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 56,442 $ 55,915 $ 51,806 $ 55,375 $ 3,500
Ratio of expenses to average net assets 0.40% 0.41% 0.41% 0.34% 0.08%(b)
Ratio of net investment income to average net
assets 3.17% 3.19% 3.13% 2.29% 2.07%(b)
Ratio of expenses to average net assets* 0.53% 0.71% 0.60% 0.57% 0.51%(b)
Ratio of net investment income to average net
assets* 3.04% 2.89% 2.94% 2.06% 1.64%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Annualized.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, JANUARY 26,
1993 TO
------------------------------------------------ JUNE 30,
CLASS A 1997 1996 1995 1994 1993(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 0.029 0.030 0.029 0.021 0.009
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.029) (0.029) (0.029) (0.021) (0.009)
In excess of net investment income -- (0.001) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.029) (0.030) (0.029) (0.021) (0.009)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 2.96% 3.08% 2.98% 2.09% 2.34%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 30,479 $ 41,132 $ 35,790 $ 37,356 $ 25,125
Ratio of expenses to average net assets 0.65% 0.66% 0.63% 0.44% 0.26%(b)
Ratio of net investment income to average net
assets 2.90% 2.94% 2.91% 2.05% 2.03%(b)
Ratio of expenses to average net assets* 0.88% 1.06% 0.95% 0.94% 0.92%(b)
Ratio of net investment income to average net
assets* 2.67% 2.54% 2.59% 1.55% 1.37%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Annualized.
<PAGE> 157
9
THE ONE GROUP(R)
U.S. TREASURY SECURITIES MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a diversified money market fund that seeks current income with
liquidity and stability of principal.
[ICON] PORTFOLIO SECURITIES
The Fund will invest exclusively in short-term U.S. Treasury obligations
including repurchase agreements collateralized by such Treasury obligations and
when-issued securities. The Fund also engages in securities lending. For a list
of all the securities in which the Fund may invest, please read "Investment
Practices."
[ICON] RISK CONSIDERATIONS
Before you invest, please read "More About the Funds" and "Investment Risks."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SERVICE FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C CLASS CLASS
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) none none none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none 5.00% 1.00% none none
Redemption Fees none none none none none
Exchange Fees none none none none none
ANNUAL OPERATING EXPENSES (2)
(as a percentage of average daily
net assets)
Investment Advisory Fees (after fee
waiver) (3) .30% .30% .30% .30% .30%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% .55% none
Other Expenses .21% .21% .21% .21% .21%
Total Fund Operating Expenses
(after fee waivers) (5) .76% 1.51% 1.51% 1.06% .51%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
(3) Without a fee waiver, Investment Advisory Fees would be .35% for all classes
of shares.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted under the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .75% for Service
Class shares.
(5) Total Operating Expenses have been revised to reflect fee waivers. Without a
voluntary reduction of Investment Advisory and 12b-1 fees, Total Operating
Expenses would be .81% for Class A shares, 1.56% for Class B shares, 1.56%
for Class C shares, 1.31% for Service Class shares and .56% for Fiduciary
Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (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 $ 8 $ 24 $ 42 $ 94
Class A (without fee waiver) $ 8 $ 26 $ 45 $100
Class B $ 65 $ 78 $ 102 $160
Class B (without fee waiver) $ 66 $ 79 $ 105 $180
Class C $ 25 $ 48 $ 82 $186
Class C (without fee waiver) $ 26 $ 49 $ 85 $147
Fiduciary Class $ 5 $ 16 $ 29 $ 64
Fiduciary Class (without fee waiver) $ 6 $ 18 $ 31 $ 70
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 8 $ 24 $ 42 $ 94
Class A (without fee waiver) $ 8 $ 26 $ 45 $100
Class B $ 15 $ 48 $ 82 $160
Class B (without fee waiver) $ 16 $ 49 $ 85 $165
Class C $ 15 $ 48 $ 82 $180
Class C (without fee waiver) $ 16 $ 49 $ 85 $186
Fiduciary Class $ 5 $ 16 $ 29 $ 64
Fiduciary Class (without fee waiver) $ 6 $ 18 $ 31 $ 70
</TABLE>
Because of the nature of the shares, shareholders are not expected to remain in
Service Class shares for more than a very limited period of time. However, a
shareholder investing in the Service Class shares on a continual basis for a
period of one month would pay $1, three months would pay $3, and one year would
pay $11. Without the voluntary fee reduction, that shareholder would pay $1
after one month, $3 after three months, and $13 after one year.
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 158
10
THE ONE GROUP(R) U.S. TREASURY SECURITIES MONEY MARKET FUND FINANCIAL
HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
--------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.050 0.052 0.050 0.030 0.029 0.043
- ----------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.050)(a) (0.052) (0.050) (0.030) (0.029) (0.043)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 5.07% 5.34% 5.07% 3.01% 2.89% 4.40%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 2,243,376 $ 1,844,590 $ 1,178,091 $ 969,326 $ 492,862 $ 410,146
Ratio of expenses to average net assets 0.46% 0.42% 0.41% 0.40% 0.45% 0.55%
Ratio of net investment income to
average net assets 4.95% 5.17% 4.96% 3.02% 2.85% 4.25%
Ratio of expenses to average net assets* 0.57% 0.56% 0.59% 0.58% 0.67% 0.77%
Ratio of net investment income to
average net assets* 4.84% 5.03% 4.78% 2.84% 2.63% 4.04%
<CAPTION>
---------------------------
FIDUCIARY 1991 1990
<S> <<C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
- -----------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.062 0.078
- ------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.062) (0.078)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 6.63% 8.10%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 339,987 $ 119,544
Ratio of expenses to average net assets 0.60% 0.59%
Ratio of net investment income to
average net assets 6.20% 7.82%
Ratio of expenses to average net assets* 0.80% 0.79%
Ratio of net investment income to
average net assets* 6.00% 7.62%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Includes $.000002 short term capital gain.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(b)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.047 0.050 0.047 0.027 0.026 0.012
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.047)(a) (0.050) (0.047) (0.027) (0.026) (0.012)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 4.81% 5.08% 4.81% 2.76% 2.63% 3.38%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 530,164 $ 110,864 $ 98,723 $ 53,423 $ 30,759 $ 6
Ratio of expenses to average net assets 0.72% 0.67% 0.66% 0.63% 0.65% 0.59%(c)
Ratio of net investment income to
average net assets 4.71% 4.92% 4.71% 2.81% 2.52% 2.51%(c)
Ratio of expenses to average net
assets* 0.93% 0.91% 0.94% 0.87% 1.02% 0.71%(c)
Ratio of net investment income to
average net assets* 4.50% 4.68% 4.43% 2.57% 2.15% 2.39%(c)
</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) Includes $.000002 short term capital gain. (b) Class A Shares
commenced offering on February 18, 1992. (c) Annualized.
<PAGE> 159
11
THE ONE GROUP(R) U.S. TREASURY SECURITIES MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVEMBER 21,
1996 TO
JUNE 30,
CLASS B 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.024
- ----------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.024)(b)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charge) 2.44%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 49
Ratio of expenses to average net assets 1.48%(d)
Ratio of net investment income to average net assets 3.97%(d)
Ratio of expenses to average net assets* 1.59%(d)
Ratio of net investment income to average net assets* 3.86%(d)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Includes $.000002
short term capital gain. (c) Not annualized. (d) Annualized.
<PAGE> 160
12
MORE ABOUT THE FUNDS
PORTFOLIO QUALITY
- ----------------------------------------------------
Securities will be purchased by the Funds only if Banc One Investment Advisors
determine that they present minimal credit risk under guidelines adopted by the
Board of Trustees. In addition, unless a more specific rating is specified, all
investments of the Funds must be rated in one of the two highest rating
categories described in "Description of Ratings" in the Appendix. If an
investment is unrated, Banc One Investment Advisors must determine that it is of
comparable quality to a rated security. Banc One Investment Advisors will look
at a security's rating at the time of investment. For more information about
ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
- ----------------------------------------------------
Each Fund may invest up to 10% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK
CONSIDERATIONS
- ----------------------------------------------------
NET ASSET VALUE: There is no assurance that the Funds will meet their investment
objectives or be able to maintain a net asset value of $1.00 per share on a
continuous basis.
NON-DIVERSIFIED FUNDS: The Ohio Municipal Money Market Fund is a
"non-diversified" fund. This means that the Fund may invest a significantly
greater portion of its assets in the securities of a single issuer than can a
"diversified" fund. In addition, the Fund's investments are concentrated
geographically. These concentrations increase the risk of loss to the Fund if
the issuer of a security fails to make interest or principal payments or if the
market value of a security declines. Investment in the Fund may entail more
risks than an investment in another type of money market fund.
THE OHIO ECONOMY: The Ohio Municipal Money Market Fund's investments are
concentrated in the State of Ohio. While Ohio's economy has become increasingly
diversified, it continues to rely to a significant degree on durable goods
manufacturing, such as automobiles, tires, steel and household appliances. These
industries tend to be cyclical. Agriculture also is an important part of the
Ohio economy, and the state has several programs that provide financial
assistance to farmers. Although obligations issued by the state and its
political subdivisions are payable from specific sources or taxes, future
economic difficulties and the impact on state and local government finances may
negatively affect the market value of the Ohio municipal securities held by the
Ohio Municipal Money Market Fund.
FIXED INCOME SECURITIES: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
DERIVATIVES: Some of the Funds invest in securities that are considered to be
derivatives. These securities may be more volatile than other securities. These
include mortgage-backed securities, including collateralized mortgage
obligations and Real Estate Mortgage Investment Conduits (CMOs and REMICs) and
asset-backed securities. Derivatives may be riskier than traditional
investments.
<PAGE> 161
13
HOW TO DO BUSINESS WITH THE ONE GROUP
PURCHASING
FUND SHARES
- ----------------------------------------------------
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
- - The One Group Services Company, and
- - Shareholder Servicing Agents. These include investment advisors, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased this way will be held for
you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
- - Purchases may be made on any business day. This includes any day that the
Funds are open for business, other than weekends and the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving, and Christmas.
- - Purchase requests will be effective on the day received by The One Group
Services Company and you will be eligible to receive dividends declared the
same day, if such purchase orders are received by The One Group Services
Company:
(i) before 11:00 a.m., Eastern Standard Time ("EST"), for the Ohio
Municipal Money Market Fund;
(ii) before 12:00 noon, EST, for the Municipal Money Market Fund; and
(ii) before 2:00 p.m., EST, for the Prime Money Market Fund and the U.S.
Treasury Securities Money Market Fund.
In addition, the Fund's custodian, State Street Bank and Trust Company, must
receive "federal funds" before 4:00 p.m., EST on such day. If State Street
Bank and Trust Company does not receive federal funds by the cut-off time,
the purchase order will not be effective until the next business day on which
federal funds are timely received by State Street Bank and Trust Company.
- - If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase or
redemption order to the Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption requests.
- - The One Group Services Company can reject a purchase order if it does not
think that it is in the best interests of a Fund and/or its shareholders to
accept the order.
- - Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
The One Group offers the following classes of shares:
- - Class A, Class B and Class C shares are available to the general public.
- - Fiduciary Class shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or agency
capacity. We will refer to these entities as "Intermediaries."
- - Service Class shares are available to Intermediaries purchasing shares on
behalf of investors requiring additional administrative or accounting services
such as sweep processing.
- - If you intend to hold your shares six or more years, Class B shares may be
appropriate for you. If you intend to hold your shares for less than six
years, you may want to consider Class A or Class C shares.
The One Group Fund Direct IRA. The One Group offers a retirement plan and, in
1998, will offer an education plan. These plans allow participants to defer
taxes while their retirement and education savings grow. The education IRA
requires a minimum investment of $500. Call The One Group Services Company at
1-800-480-4111 for an Adoption Agreement.
HOW MUCH DO SHARES COST?
- - Shares are sold at net asset value ("NAV").
- - NAV per share is calculated by dividing the total market value of a Fund's
investment and other assets allocable to a class (minus class expenses) by the
number of outstanding shares in that class. The Funds use their best efforts
to maintain their NAV at $1.00, although there is no guarantee that they will
be able to do so.
- - NAV is calculated each business day as of 11:00 a.m. and 4:00 p.m., EST, for
the Ohio Municipal Money Market Fund, as of 12:00 noon and 4:00 p.m., EST, for
the Municipal Money Market Fund, and as of 2:00 p.m. and 4:00 p.m., EST, for
the Prime Money Market Fund and the U.S. Treasury Securities Money Market
Fund.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most appropriate
for you.
<PAGE> 162
14
2. Decide how much you want to invest. The minimum initial investment is $1,000
($100 for employees of BANC ONE CORPORATION and its affiliates).
- Subsequent investments must be at least $100 ($25 for employees of BANC ONE
CORPORATION and its affiliates).
- The One Group Services Company may waive these minimums.
3.Complete the Account Application Form. Be sure to sign up for all of the
Account privileges that you plan to take advantage of. Doing so now means that
you will not have to complete additional paperwork later.
4.Send the completed application and a personal check (unless you choose to pay
by wire or bank transfer) payable to "The One Group" to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
Contributions to Fund Direct IRAs should be made payable to "State Street
Bank and Trust Company for the Benefit of (your name)."
5.All checks should be in U.S. dollars. Third party checks will not be accepted.
Redemptions from a Fund will not be permitted for ten (10) calendar days if
purchases are made by check or under the Systematic Investment Plan (see
below).
6.If you purchase shares through a Shareholder Servicing Agent, you may be
required to complete additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent regarding purchases, exchanges
and redemptions.
7.If you have any questions, contact your Shareholder Servicing Agent or call
The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
- - Contact your Shareholder Servicing Agent or The One Group Services Company at
1-800-480-4111 to relay your purchase instructions.
- - Send a personal check payable to "The One Group" to State Street Bank and
Trust Company (see address above), authorize a bank transfer or initiate a
wire transfer.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - You may revoke your right to make purchases over the telephone by sending a
letter to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CAN I AUTOMATICALLY INVEST ON A
SYSTEMATIC BASIS?
Yes. After your Account is established, you may purchase additional Class A,
Class B and Class C shares by making automatic monthly investments from your
bank account. The minimum initial investment is still $1,000, but minimum
automatic additions are only $25. The One Group Services Company may waive these
minimums. To establish a Systematic Investment Plan:
- - Select the "Systematic Investment Plan" option on the Account Application
Form.
- - Provide the necessary information about the bank account from which your
investments will be made.
- - Shares purchased under a Systematic Investment Plan may not be redeemed for
ten (10) calendar days.
- - The One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for debiting your
bank account.
- - You may revoke your right to make systematic investments by sending a letter
to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
MAY I WRITE CHECKS ON MY ACCOUNT?
Class A and Class C shareholders may write checks for $250 or more.
- - Checks may be payable to any person and your account will continue to earn
dividends until the check clears.
- - Checks are free, but your bank or the payee may charge you for stop payment
orders, insufficient funds, or other valid reasons.
- - You can not use this option to close your account because of the difficulty of
determining the exact value of your account.
- - You must wait ten (10) calendar days before you can write a check against
shares purchased by a check.
TO SELECT THIS OPTION:
- - Select the "Check Writing" option on the Account Application Form.
<PAGE> 163
15
- - Complete, sign and return a signature card and other forms sent to you by
State Street Bank and Trust Company. You will receive a supply of checks that
will be drawn on State Street Bank and Trust Company.
CONVERSION FEATURE.
Your Class B shares automatically convert to Class A shares after eight years
(measured from the end of the month in which they were purchased).
- - After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Class A shares.
- - You will not be assessed any sales charges or fees for conversion of shares,
nor will you be subject to any tax.
- - If you have exchanged Class B shares of one Fund for Class B shares of
another, the time you held the shares in each Fund will be added together.
SALES CHARGES
- ----------------------------------------------------
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of The One Group. Compensation comes from: sales charges, 12b-1 fees and
payments by The One Group Services Company from its own resources. The One Group
Services Company, at its own expense, also will provide promotional incentives
in the form of travel expenses, lodging and bonuses to licensed individuals who
sell shares of the Funds, as well as vacation trips (including lodging at luxury
resorts), tickets to entertainment events, and merchandise.
CLASS B SHARES.
Class B shares are offered at NAV, without any up-front sales charges. However,
if you redeem these shares within six years of the purchase date, you will be
assessed a Contingent Deferred Sales Charge ("CDSC") according to the following
schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 0.00%
</TABLE>
The One Group Services Company pays a commission of 4.00% of the original
purchase price to Shareholder Servicing Agents who sell Class B shares.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
assessed a CDSC as follows:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C> <C>
0-1 1.00%
After first year none
</TABLE>
The One Group Services Company pays a commission of 1.00% of the original
purchase price to Shareholder Servicing Agents who sell Class C shares.
How the CDSC is Calculated
- - The Fund assumes that all purchases made in a given month were made on the
first day of the month.
- - The CDSC is based on the net amount redeemed.
- - A sales charge is not assessed on shares acquired through reinvestment of
dividends or capital gains distributions.
- - To keep your CDSC as low as possible, the Fund first will redeem any shares in
your account that carry no CDSC, starting with Class A Shares. After that, the
Fund will redeem the shares you have held for the longest time and thus have
the lowest CDSC.
<PAGE> 164
16
12B-1 FEES.
12b-1 fees are paid by The One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to brokers and other Shareholder
Servicing Agents that sell shares of The One Group.
- - The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .25% of the average daily net assets of
the Fund.
2. Class B and Class C shares pay a 12b-1 fee of 1.00% of the average daily
net assets of the Fund. This will cause expenses for Class B and Class C
shares to be higher and dividends to be lower than for Class A shares.
3. Service Class shares pay a 12b-1 fee of .75% of the average daily net
assets of the Fund, which is currently being waived to .55%.
4. There are no 12b-1 fees for Fiduciary Class shares.
- - 12b-1 fees, together with the CDSC, help The One Group Services Company sell
Class B and Class C shares without an "up-front" sales charge by defraying the
costs of advancing brokerage commissions and other expenses paid to
Shareholder Servicing Agents.
- - The One Group Services Company may use up to .25% of the fees for shareholder
servicing and up to .75% for distribution. During the last fiscal year, The
One Group Services Company received 12b-1 fees totaling .25% and 1.00% of the
average daily net assets of Class A and Class B shares, respectively.
- - The One Group Services Company may pay 12b-1 fees to its affiliates and to
Banc One Investment Advisors and its affiliates (or any sub-advisor) for
brokerage and other agency transactions.
SALES CHARGE
REDUCTIONS
AND WAIVERS
- ----------------------------------------------------
WAIVER OF THE CLASS B SALES CHARGE
No sales charge is imposed on redemptions of Class B shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and
you die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distributions from an IRA Account or
other qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a
party.
6. Acquired in exchange for Class B shares of other Funds of The One Group.
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and
you die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distributions from an IRA Account or
other qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a
party.
6. Acquired in exchange for Class C shares of other Funds of The One Group.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance. To see if you qualify, contact The One Group Services
Company at 1-800-480-4111 or your Shareholder Servicing Agent.
EXCHANGING FUND SHARES
- ----------------------------------------------------
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
- - Fiduciary Class shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group.
- - Class A shares of a Fund may be exchanged for Fiduciary Class shares of that
Fund or for Class A or Fiduciary Class shares of another
<PAGE> 165
17
Fund of The One Group, but only if you are eligible to purchase those shares.
- - Class B shares of a Fund may be exchanged for Class B shares of another Fund
of The One Group.
- - Class C shares of a Fund may be exchanged for Class C shares of another Fund
of The One Group.
- - Service Class shares do not have exchange privileges.
The One Group may change the terms and conditions of your exchange privileges
upon 60 days written notice.
The One Group does not charge a fee for this privilege.
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
- - State Street Bank and Trust Company receives the request by:
(i) 11:00 a.m. EST, for the Ohio Municipal Money Market Fund,
(ii) 12:00 noon EST, for the Municipal Money Market Fund, and
(iii) 2:00 p.m. EST, for the Prime Money Market Fund and the U.S. Treasury
Securities Money Market Fund.
- - You have provided The One Group with all of the information necessary to
process the exchange.
- - You have received a current prospectus of the Fund or Funds into which you
wish to invest.
- - You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
- - You will pay a sales charge if you own Fiduciary Class shares of a Fund and
you want to exchange those shares for Class A shares, unless you qualify for a
sales charge waiver (see above).
- - You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange them for
shares of a Fund that does, in which case you would pay the sales charge
applicable to the Fund into which you are exchanging.
2. That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that Fund's
sales charge and all other sales charges you have already paid.
- - If you exchange Class B or Class C shares of a Fund, you will not pay a sales
charge at the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC of
either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C shares is
carried over to your new shares.
ARE EXCHANGES TAXABLE?
Generally:
- - An exchange between classes of shares of the same Fund is not taxable.
- - An exchange between Funds is considered a sale and generally results in a
capital gain or loss for Federal income tax purposes.
- - You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short-term movements in the market. Therefore:
- - To prevent disruptions in the management of the Funds, The One Group limits
excessive exchange activity.
- - Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- - In addition, The One Group reserves the right to reject any exchange request
(even those that are not excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or otherwise adversely
affect other shareholders.
REDEEMING
FUND SHARES
- ----------------------------------------------------
WHEN CAN I REDEEM SHARES?
- - You may redeem all or some of your shares on any day that the Funds are open
for business.
- - Redemption requests received by The One Group Services Company before 4:00
p.m. EST, will be effective that day.
HOW DO I REDEEM SHARES?
- - Unless you have selected the telephone option on your Account Application
Form, you must send a written redemption request to your Shareholder Servicing
Agent, if applicable, or to State Street Bank and Trust Company at the
following address:
<PAGE> 166
18
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
- - All requests for redemptions from IRA accounts must be in writing.
- - You may request redemption forms by calling The One Group Services Company at
1-800-480-4111.
- - State Street Bank and Trust Company may require that the signature on your
redemption request be guaranteed by a commercial bank, a member of a domestic
stock exchange, or a member of the Securities Transfer Association Medallion
Program or the Stock Exchange Medallion Program, unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record; and
3. the redemption check is mailed to the shareholder at the record address.
- - On the Account Application Form you may elect to have the redemption proceeds
mailed or wired to:
1. a designated commercial bank; or
2. State Street Bank and Trust Company or your Shareholder Servicing Agent.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - Your redemption proceeds will ordinarily be paid within seven days after
receipt of the redemption request. However, the Funds will attempt to honor
requests for next day payment on redemptions, if the request is received
before:
(i)11:00 a.m. EST, for the Ohio Municipal Money Market Fund,
(ii)12:00 noon EST, for the Municipal Money Market Fund, and
(iii)2:00 p.m. EST, for the Prime Money Market Fund and the U.S. Treasury
Securities Money Market Fund.
- - The Funds also will attempt to honor requests for payments in two business
days, if the redemption request is received after the times listed above.
WHAT WILL MY SHARES BE WORTH?
- - The NAV of shares of the Funds are expected to remain constant at $1.00 per
share, although there is no assurance that this will always be the case.
- - If you own Class A, Service Class or Fiduciary Class shares, you will receive
the NAV calculated after your redemption request is received. Please read "How
Much Do Shares Cost?"
- - If you own Class B or Class C shares, you will receive the NAV calculated
after your redemption request is received, minus the amount of any applicable
CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
- - Call your Shareholder Servicing Agent or State Street Bank and Trust Company
at 1-800-480-4111 to relay your redemption request.
- - Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - REDEMPTIONS FROM YOUR IRA ACCOUNT MAY NOT BE MADE BY TELEPHONE.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000 you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
- - Select the "Systematic Withdrawal Plan" option on the Account Application
Form.
- - Specify the amount you wish to receive and the frequency of the payments.
- - You may designate a person other than yourself as the payee.
- - There is no charge for this service.
- - If you select this option, please keep in mind that:
1. If you own Class B or Class C shares, you or your designated payee may
receive systematic payments provided the payments are limited to no more
than 10% of your account value annually, measured from the date the
redemption request is received.
2. If you are age 70 1/2, you may elect to receive payments to the extent
that the payment represents a minimum required distribution from an IRA or
other qualifying retirement plan. You also may elect to receive payments
of less than $100 each.
3. If the amount of the systematic payment exceeds the income earned by your
account since the previous payment under the Systematic Withdrawal Plan,
payments will be made by redeeming some of your shares. This will reduce
the amount of your investment.
<PAGE> 167
19
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
- - All redemptions will be for cash. The redemption price of shares is expected
to remain constant at $1.00 per share, although there is no assurance that
this will always be the case.
- - If you redeem shares for which you paid by check, and The One Group has not
yet received payment on the check, The One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been collected from
your bank.
- - Because of the high cost of handling small investments, The One Group will
automatically redeem shares in accounts which, because of shareholder
redemptions, have values of less than $1,000. No sales charges will be
assessed and you will be given 60 days to make additional investments in the
Fund to increase the value of your account to at least $1,000.
- - The One Group may suspend your ability to redeem, or will redeem your shares
involuntarily, when it seems appropriate to do so in light of its
responsibilities under the Federal securities laws. The Statement of
Additional Information offers more details about this process.
<PAGE> 168
20
SHAREHOLDER INFORMATION
VOTING RIGHTS
- ----------------------------------------------------
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
BANC ONE CORPORATION (100 East Broad Street, Columbus, Ohio, 43271), through its
affiliates, may be deemed for purposes of The Investment Company Act of 1940, to
control the Prime Money Market Fund, the Ohio Municipal Money Market Fund and
the Municipal Money Market Fund. This is because as of August 5, 1997, BANC ONE
CORPORATION or its affiliates possessed the power to vote substantially all of
the Fiduciary Class shares of the Funds. On the same date, the following
shareholders owned 25% or more of Class A and Class B shares of the Funds. As a
consequence, they are considered to be controlling persons of those classes of
the Funds.
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
<S> <C> <C> <C>
BISYS Fund Services, Inc. Municipal Money 35.79% Record
FBO Bank One Corporate Sweep Market Fund
Attn: Linda Zerbe Class A
First and Market Building Suite 300
Pittsburgh, PA 15222
BISYS Fund Services, Inc. U.S. Treasury 39.89% Record
FBO Bank One Corporate Sweep Securities Money
Attn: Linda Zerbe Market Fund
First and Market Bldg., Suite 300 Class A
Pittsburgh, PA 15222
State Street Bank & Trust Co. U.S. Treasury 47.03% Record
Cust for the IRA of Securities
Edward Hillman III Money Market Fund
121 S. Walnut Street Class B
Troy, OH 45373-3530
</TABLE>
DIVIDEND POLICIES
- ----------------------------------------------------
DIVIDENDS
The Funds generally declare dividends on each business day. Dividends are
distributed on the first business day of each month. Capital gains, if any, for
all Funds are distributed at least annually.
Dividends payable on Fiduciary Class shares will be more than those payable on
other classes of shares. This is because Class A, Class B, Class C and Service
Class shares have higher distribution expenses.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8500, Boston, MA
02266-8500, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street.
SPECIAL DIVIDEND RULES FOR CLASS B SHARES
Class B shares received as dividends and capital gains distributions will be
accounted for separately. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of the Class B shares in
the sub-account will also convert to Class A shares. (See "Conversion Feature.")
<PAGE> 169
21
TAX TREATMENT
OF THE FUNDS
- ----------------------------------------------------
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT
OF SHAREHOLDERS
- ----------------------------------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares will generally produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
TAXATION OF DISTRIBUTIONS -- PRIME MONEY MARKET FUND AND U.S. TREASURY
SECURITIES MONEY MARKET FUND
Each Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gain) to investors on at
least an annual basis. Dividends you receive from a Fund, whether reinvested or
received in cash, will be taxable to you. Dividends from a Fund's net investment
income will be taxable as ordinary income and dividends from a Fund's long-term
capital gains will be taxable to you as such, regardless of how long you have
held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid the previous December.
TAXATION OF DIVIDENDS -- THE OHIO MUNICIPAL MONEY MARKET FUND AND THE MUNICIPAL
MONEY MARKET FUND
Each Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gain) to investors on at
least an annual basis. These Funds may pay "exempt-interest dividends" if at
least 50% of the value of Fund assets at the end of each quarter of the Fund's
taxable year consists of obligations the interest on which is excludable from
gross income. Exempt-interest dividends are generally excludable from an
investor's gross income for regular Federal income tax purposes. However, the
receipt of exempt-interest dividends may cause recipients of Social Security or
Railroad Retirement benefits to be taxed on a portion of such benefits. In
addition, the receipt of exempt-interest dividends may result in liability for
Federal alternative minimum tax and for state and local taxes. Corporate
shareholders will be required to take the interest on municipal securities into
account in determining their alternative minimum taxable income.
OHIO TAXATION OF DIVIDENDS FROM THE OHIO MUNICIPAL MONEY MARKET FUND
Dividends received from the Ohio Municipal Money Market Fund that result from
interest on Ohio municipal securities are exempt from the Ohio personal income
tax. Some Ohio statutes provide that interest on and gain from the sale of Ohio
municipal securities is exempt from all taxation in Ohio. Dividends that are
attributable to interest on or gain from the sale of obligations issued under
such statutes should be exempt from Ohio personal income tax. Ohio
municipalities may not impose income taxes on dividends on any intangible
property (including such property of the Fund) unless the intangible income was
not exempt from municipal income taxation before April 2, 1986 and the tax was
approved in an election held on November 8, 1988. Corporate shareholders will be
required to include the interest on Ohio municipal securities in their
alternative minimum-taxable income. Information in this paragraph is based on
current statutes and regulations as well as current policies of the Ohio
Department of Taxation, all of which may change.
TAXATION OF RETIREMENT PLANS
Distributions by the Funds to qualified retirement plans will not be taxable.
However, if shares are held by a plan that ceases to qualify for tax-exempt
treatment or by an individual who has received shares as a distribution from a
retirement plan, the distributions will be taxable to the plan or individual as
described in "Taxation of Distributions." If you are considering purchasing
shares with qualified retirement plan assets, you should consult your tax
advisor for a more complete explanation of the Federal, state, local and (if
applicable) foreign tax consequences of making such an investment.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
<PAGE> 170
22
SHAREHOLDER INQUIRIES
- ----------------------------------------------------
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In September and March you will receive a financial report from The One
Group. In addition, The One Group will periodically send you proxy
statements and other reports.
<PAGE> 171
ORGANIZATION AND MANAGEMENT OF THE FUNDS
23
THE FUNDS
Each Fund is a series of The One Group, an open-end management investment
company. The One Group currently consists of 40 separate Funds. Four of the
Funds are described in this prospectus; the other Funds are described in
separate prospectuses. Each Fund is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of The One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to The
One Group since 1993. Prior to that time, The One Group was advised by
affiliates of Banc One Investment Advisors. In addition to The One Group, Banc
One Investment Advisors serves as investment advisor to other mutual funds and
individual, corporate, charitable and retirement accounts. As of June 30, 1997,
Banc One Investment Advisors, an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, managed over $47 billion in assets.
For the fiscal year ended June 30, 1997, the Funds paid investment advisory fees
at the following rate:
<TABLE>
<CAPTION>
FUND ANNUAL RATE AS PERCENTAGE
OF AVERAGE DAILY NET ASSETS
<S> <C> <C>
The One Group(R) Prime Money Market Fund .29%
The One Group(R) Municipal Money Market
Fund .25%
The One Group(R) Ohio Municipal Money
Market Fund .25%
The One Group(R) U.S. Treasury Securities
Money Market Fund .25%
</TABLE>
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory compliance and
reporting. For these services, The One Group Services Company receives a fee
based on the total assets of The One Group. For the first $1.5 billion in One
Group assets, The One Group Services Company receives an annual fee of .20% of
each Fund's average daily net assets. The annual rate declines to .18% on assets
up to $2 billion, and to .16% when assets exceed $2 billion. The fee is
calculated daily and paid monthly. Some Funds are not included in the
calculations. Banc One Investment Advisors, the Sub-Administrator, provides
office space, equipment, and facilities, as well as legal and regulatory
support.
THE TRANSFER AGENT, CUSTODIAN AND THE SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500 or
your Shareholder Servicing Agent, if appropriate, handles shareholder
recordkeeping and statements, distributes dividends, and processes buy and sell
requests. As the Funds' custodian, State Street holds the Funds' assets, settles
all portfolio trades and assists in calculating the Funds' net asset values.
Bank One Trust Company, N.A. serves as sub-custodian in connection with the
Funds' securities lending activities under an agreement with State Street Bank
and Trust Company. Bank One Trust Company, N.A. is paid a fee for this service.
<PAGE> 172
24
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Fixed income securities are primarily influenced by
market, credit and prepayment risks, although certain securities may be subject
to additional risks. For a more complete discussion, see the Statement of
Additional Information. Following the table is a more complete discussion of
risk.
<TABLE>
<CAPTION>
FUND FUND CODE
<S> <C> <C>
The One Group(R) Prime Money Market Fund 1
The One Group(R) Municipal Money Market Fund 2
The One Group(R) Ohio Municipal Money Market
Fund 3
The One Group(R) U.S. Treasury Securities
Money Market Fund 4
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, bonds, STRIPS, and 1-4 Market
CUBES. The U.S. Treasury Securities Money Market Fund does not
buy STRIPS and CUBES.
TREASURY RECEIPTS: TRS, TIGRS, and CATS. 1-3 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies 1-3 Market
and instrumentalities of the U.S. Government. These include Credit
Ginnie Mae, Fannie Mae, and Freddie Mac.
CERTIFICATES OF DEPOSIT: Negotiable instruments with a stated 1-3 Market
maturity. Credit
Liquidity
TIME DEPOSITS: Non-negotiable receipts issued by a bank in 1-3 Liquidity
exchange for the deposit of funds. Credit
Market
REPURCHASE AGREEMENTS: The purchase of a security and the 1-4 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
REVERSE REPURCHASE AGREEMENT: The sale of a security and the 1-2 Market
simultaneous commitment to buy the security back at an agreed Leverage
upon price on an agreed upon date. This is treated as a
borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33% of the securities 1-4 Credit
owned by a Fund. In return the Fund will receive cash and/or Market
other securities as collateral. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Purchase or 1-4 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
INVESTMENT COMPANY SECURITIES: Shares of other mutual funds, 1-3 Market
including money market funds of The One Group and shares of
other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. Banc One
Investment Advisors will waive certain fees when investing in
funds for which it serves as investment advisor.
BANKERS' ACCEPTANCES: Bills of exchange or time drafts drawn on 1-3 Credit
and accepted by a commercial bank. Maturities are generally six Liquidity
months or less. Market
COMMERCIAL PAPER: Secured and unsecured short-term promissory 1-3 Credit
notes issued by corporations and other entities. Maturities Liquidity
generally vary from a few days to nine months. Market
FOREIGN SECURITIES: Commercial paper of foreign issuers and 1 Market
obligations of foreign banks, overseas branches of U.S. banks Political
and supranational entities. Liquidity
Foreign Investment
</TABLE>
<PAGE> 173
25
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
RESTRICTED SECURITIES: Securities not registered under the 1-3 Liquidity
Securities Act of 1933, such as privately placed commercial Market
paper and Rule 144A securities.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1-3 Market
interest rates which are reset daily, weekly, quarterly or some Credit
other period and which may be payable to the Fund on demand. Liquidity
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real 1-3 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs") and Real Estate Mortgage Credit
Investment Conduits ("REMICs"). Regulatory
DEMAND FEATURES: Securities that are subject to puts and standby 1-3 Market
commitments to purchase the securities at a fixed price (usually Liquidity
with accrued interest) within a fixed period of time following Management
demand by a Fund.
MUNICIPAL SECURITIES: Securities issued by a state or political 1-3 Market
subdivision to obtain funds for various public purposes. Credit
Municipal securities include private activity bonds and Political
industrial development bonds, as well as General Obligation Tax
Notes, Tax Anticipation Notes, Bond Anticipation Notes, Revenue
Anticipation Notes, Project Notes, other short-term tax-exempt
obligations, municipal leases, and obligations of municipal
housing authorities and single family revenue bonds.
SHORT-TERM FUNDING AGREEMENTS: Agreements issued by banks and 1 Market
highly rated insurance companies such as Guaranteed Investment Credit
Contracts ("GICs") and Bank Investment Contracts ("BICs"). Liquidity
PARTICIPATION INTERESTS: Interests in municipal securities, 1-3 Credit
including municipal leases, from financial institutions such as Tax
commercial and investment banks, savings and loan associations Market
and insurance companies. These interests may take the form of
participations, beneficial interests in a trust, partnership
interests or any other form of indirect ownership that allows
the Funds to treat the income from the investment as exempt from
Federal Income Tax.
ASSET-BACKED SECURITIES: Securities secured by company 1, 2 Pre-payment
receivables, home equity loans, truck and auto loans, leases, Market
credit card receivables and other securities backed by other Credit
types of receivables or other assets. Regulatory
</TABLE>
<PAGE> 174
26
INVESTMENT RISKS
- ----------------------------------------------------
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Funds may fluctuate, as will the value of
your investment in the Funds. Certain investments are more susceptible to these
risks than others.
- - CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default
rises.
- - LEVERAGE RISK. The risk associated with securities or practices (such as
borrowing) that multiply small index or market movements into large changes in
value.
- - LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that normally prevails in the
market. The seller may have to lower the price, sell other securities instead
or forego an investment opportunity, any of which could have a negative effect
on fund management or performance. This includes the risk of missing out on an
investment opportunity because the assets necessary to take advantage of it
are tied up in less advantageous investments.
- - MANAGEMENT RISK. The risk that a strategy used by a fund's management may fail
to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than
it was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. For fixed income
securities, market risk is largely, but not exclusively, influenced by changes
in interest rates. A rise in interest rates typically causes a fall in values,
while a fall in rates typically causes a rise in values. Finally, key
information about a security or market may be inaccurate or unavailable. This
is particularly relevant to investments in foreign securities.
- - POLITICAL RISK. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
- - FOREIGN INVESTMENT RISK. Risks associated with higher transaction costs,
delayed settlements, currency controls, and adverse economic developments.
This also includes the risk that fluctuations in the exchange rates between
the U.S. dollar and foreign currencies may negatively affect an investment.
Adverse changes in exchange rates may erode or reverse any gains produced by
foreign currency denominated investments and may widen any losses. Exchange
rate volatility also may affect the ability of an issuer to repay U.S. dollar
denominated debt, thereby increasing credit risk.
- - PRE-PAYMENT RISK. The risk that the principal repayment of a security will
occur at an unexpected time, especially that the repayment of a mortgage or
asset-backed security occurs either significantly sooner or later than
expected. Changes in pre-payment rates can result in greater price and yield
volatility. Pre-payments generally accelerate when interest rates decline.
When mortgage and other obligations are pre-paid, a Fund may have to reinvest
in securities with a lower yield. Further, with early repayment, a Fund may
fail to recoup any premium paid, resulting in an unexpected capital loss.
- - TAX RISK. The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
- - REGULATORY RISK. The risk associated with Federal and state laws which may
restrict the remedies that a mortgage lender has when a borrower defaults on
mortgage loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor relief laws,
restrictions on "due on sale" clauses, and state usury laws.
<PAGE> 175
27
INVESTMENT POLICIES
- ----------------------------------------------------
Each Fund's investment objective and the following investment policies
summarized below are fundamental. This means that they cannot be changed without
the consent of a majority of the outstanding shares of the Funds. In addition to
the fundamental policies mentioned earlier, the following fundamental policies
apply to each Fund as specified. The full text of the fundamental policies can
be found in the Statement of Additional Information.
FUNDAMENTAL POLICIES OF EACH FUND
Each Fund:
1. Will use its best efforts to maintain a constant net asset value of $1.00 per
share, although there is no guarantee that the Funds will be able to do so.
2. Will not 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.
FUNDAMENTAL POLICIES OF SPECIFIC FUNDS
The Prime Money Market Fund:
1. Will not concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include obligations issued or guaranteed by the
U.S. government or its agencies and instrumentalities, domestic bank
certificates of deposit or bankers' acceptances, and repurchase agreements
involving such securities, municipal securities or governmental guarantees of
municipal securities. In addition, private activity bonds backed only by the
revenues and assets of a non-governmental user will not be deemed to be
municipal securities.
The Prime Money Market Fund, the Municipal Money Market Fund and the U.S.
Treasury Securities Money Market Fund:
1. Will not purchase an issuer's securities if as a result more than 5% of a
Fund's total assets would be invested in the securities of that issuer or the
Fund would own more than 10% of the outstanding voting securities of that
issuer. This does not include securities issued or guaranteed by the United
States, its agencies or instrumentalities, and repurchase agreements
involving these securities. This restriction applies with respect to 75% of a
Fund's total assets. The Funds may invest the remaining 25% of their total
assets without restriction.
The U.S. Treasury Securities Money Market Fund:
1. Will invest only in U.S. Treasury obligations and repurchase agreements
collateralized by such obligations.
The Ohio Municipal Money Market Fund:
1. Will not purchase an issuer's securities if as a result more than 25% of its
total assets would be invested in the securities of that issuer or the Fund
would own more than 10% of the outstanding voting securities of that issuer.
This does not include securities issued or guaranteed by the United States,
its agencies or instrumentalities, securities of registered investment
companies, and repurchase agreements involving these securities. This
restriction applies with respect to 50% of the Fund's total assets. With
respect to the remaining 50% of its total assets, the Fund will not purchase
an issuer's securities if as a result more then 5% of its total assets would
be invested in the securities of that issuer.
2. Will not concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include municipal securities or governmental
guarantees of municipal securities. In addition, private activity bonds
backed only by the assets and revenues of a non-governmental user will not be
deemed to be Ohio municipal securities.
The Municipal Money Market Fund:
1. Will not concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include municipal securities or governmental
guarantees of municipal securities. In addition, private activity bonds
backed only by the revenues and assets of a non-governmental user will not be
deemed to be municipal securities.
Additional investment policies can be found in the Statement of Additional
Information.
<PAGE> 176
28
TEMPORARY DEFENSIVE POSITION
Sometimes the Ohio Municipal Money Market Fund and the Municipal Money Market
Fund may temporarily invest up to 100% of their total assets in securities that
are not municipal securities, such as taxable money market instruments
(including repurchase agreements) and may hold uninvested cash pending
investment. While the Funds are engaged in a temporary defensive position, they
will not be pursuing their investment objectives. Therefore, the Funds will
pursue a temporary defensive position only when market conditions warrant.
<PAGE> 177
29
APPENDIX
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free U.S. Treasury
obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet financial
commitment is strong. Obligations designated with a plus sign (+)
indicate that capacity to meet financial commitment is extremely strong.
A-2 Issues somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than obligations in higher rating
categories. However, the capacity to meet financial commitments is
satisfactory.
FITCH'S INVESTORS SERVICE, L.P. ("FITCH")
F-1+ Exceptionally strong credit quality. Strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Assurance of timely payment is only
slightly less in degree than issues rated F-1+.
F-2 Good credit quality. Satisfactory degree of assurance for timely
payment, but the margin of safety is not as good as for issues assigned
F-1+ and F-1 ratings.
IBCA LIMITED ("IBCA")
A1 Highest capacity for timely repayment. Those issues rated A1+ possess a
particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such capacity may
be susceptible to adverse changes in business, economic or financial
conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
<PAGE> 178
30
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
AAA The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
Aa These insurance companies offer excellent financial security. Together
with the Aaa group, they constitute what are generally known as high
grade companies. They are rated lower than Aaa companies because
long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
DESCRIPTION OF CORPORATE/MUNICIPAL BOND RATINGS
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong capacity to
meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's capacity
to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories. However, capacity to meet its financial commitment on
the obligations is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligations.
Speculative Grade
BB Less vulnerable to non-payment than other speculative issues. However,
these bonds face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet financial commitment on the obligation.
B More vulnerable to non-payment than obligations rated BB, but currently
has the capacity to meet its financial commitment on the obligation.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to meet its financial commitment on the
obligation.
CCC Currently vulnerable to non-payment, and is dependent upon favorable
business, financial, and economic conditions to meet its financial
commitment on the obligation. In the event of adverse
<PAGE> 179
31
business, financial, or economic conditions will likely impair the
capacity to meet its financial commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments
on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
Investment Grade
Aaa Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large, or an exceptionally stable, margin and principal is secure.
Aa High quality by all standards. Margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be
greater, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
Baa These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
Ba These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may be
small).
Caa Bonds in this category have poor standing and may be in default. These
bonds carry an element of danger with respect to principal and interest
payments.
Ca Speculative to a high degree and could be in default or have other
marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S
MIG1 & Short-term municipal securities rated MIG1 or VMIG1 are of the best
VMIG1 quality. They have strong protection from established cash flows,
superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2 & These Short-term municipal securities are of high quality. Margins of
VMIG2 protection are ample although not so large as in the preceding group.
MIG3 & Favorable quality. All security elements are accounted for, but the
VMIG3 undeniable strength of the preceding grades is lacking. Liquidity and
cash flow protection may be narrow and marketing access for
refinancing is likely to be less well established.
S&P
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
<PAGE> 180
32
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
aaa Top-quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within the
universe of preferred stocks.
aa High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
a Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues
rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock obligations.
Whereas the issuer normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest will be paid
on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal and
interest is strong, the relative degree is not as high as for issues
rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to adverse
developments than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
<PAGE> 181
Investment Advisor and Sub-Administrator
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Distributor
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION
ABOUT THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT
CHARGE BY CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES
COMPANY AT 3435 STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL
INFORMATION IS INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC
MAINTAINS A WEB SITE (WWW.SEC.COM) THAT CONTAINS THE STATEMENT OF ADDITIONAL
INFORMATION, MATERIALS INCORPORATED BY REFERENCE AND OTHER INFORMATION
REGARDING THE ONE GROUP(R).
TOG-F-123
<PAGE> 182
THE ONE GROUP(R) FAMILY OF MUTUAL FUNDS
INSTITUTIONAL MONEY MARKET FUNDS
COMBINED PROSPECTUS
NOVEMBER 1, 1997
THE ONE GROUP(R) GOVERNMENT MONEY MARKET FUND
THE ONE GROUP(R) TREASURY ONLY MONEY MARKET FUND
This prospectus describes two money market mutual funds. The
Funds are offered only to certain institutional and accredited
investors. The information in this prospectus is important.
Please read it carefully before you invest, and save it
for future reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: O ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY BANC ONE CORPORATION OR ITS AFFILIATES; o ARE
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
BY ANY FEDERAL OR STATE GOVERNMENTAL AGENCY; o
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THERE IS NO ASSURANCE THAT THE FUNDS WILL MEET THEIR
INVESTMENT OBJECTIVES OR BE ABLE TO MAINTAIN A NET
ASSET VALUE OF $1.00 PER SHARE ON A CONTINUOUS BASIS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 183
TABLE OF CONTENTS
<TABLE>
<S> <C>
A BRIEF PREVIEW OF THE FUNDS............................ 1
ABOUT THE FUNDS......................................... 2
The One Group(R) Government Money Market Fund........ 2
The One Group(R)Treasury Only Money Market Fund...... 4
MORE ABOUT THE FUNDS.................................... 6
HOW TO DO BUSINESS WITH THE ONE GROUP................... 7
Purchasing Fund Shares............................... 7
Exchanging Fund Shares............................... 8
Redeeming Fund Shares................................ 8
SHAREHOLDER INFORMATION................................. 10
Voting Rights........................................ 10
Dividend Policies.................................... 10
Tax Treatment of the Funds........................... 10
Tax Treatment of Shareholders........................ 10
Shareholder Inquiries................................ 10
ORGANIZATION & MANAGEMENT OF THE FUNDS.................. 11
The Funds............................................ 11
The Board of Trustees................................ 11
The Advisor.......................................... 11
The Distributor...................................... 11
The Administrator and Sub-Administrator.............. 11
The Transfer Agent, Custodian and Sub-Custodian...... 11
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND
POLICIES.............................................. 12
Investment Practices................................. 12
Investment Risks..................................... 13
Investment Policies.................................. 13
APPENDIX: DESCRIPTION OF RATINGS........................ 15
</TABLE>
<PAGE> 184
1
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE ONE GROUP INSTITUTIONAL MONEY MARKET
FUNDS?
The Funds are designed to produce high current income with
liquidity and stability of principal. Each of the Funds will
use their best efforts to maintain a constant net asset value
of $1.00 per share, although there is no guarantee that the
Funds will be able to do so. Please read about each Fund
before investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Funds will invest only in U.S. dollar-denominated
securities, will maintain an average maturity on a dollar-
weighted basis of 90 days or less, and will acquire only
"eligible securities" that present minimal credit risks and
have a maturity of 397 days or less. The Funds intend to
comply with Rule 2a-7 under The Investment Company Act of
1940.
WHO CAN BUY SHARES?
The Funds are offered only to institutional and other
accredited investors. For more details, please see the section
of this prospectus entitled "Purchasing Fund Shares."
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the
Funds are open for business. Purchase and redemption
procedures are explained in greater detail in "How To Do
Business With The One Group." For additional information, call
The One Group Services Company at 1-800-480-4111.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on each business day and are
distributed periodically. Any capital gains are distributed at
least annually. Distributions are paid in additional shares of
the same class unless you elect to take the payment in cash.
For a more detailed discussion of dividends, see "Dividend
Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors"), an indirect subsidiary of BANC ONE CORPORATION,
serves as the advisor of the Funds. Banc One Investment
Advisors is paid a fee for its services. A more detailed
discussion regarding Banc One Investment Advisors, its
services and compensation can be found in the Prospectus under
the headings "The Advisor" and "Expense Summary."
<PAGE> 185
2
THE ONE GROUP(R)
GOVERNMENT MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks high current income with liquidity and stability of principal.
[ICON] PORTFOLIO SECURITIES
The Fund invests exclusively in securities that are issued or guaranteed by the
U.S. government or by select U.S. government agencies and instrumentalities,
some of which are subject to repurchase agreements, as well as variable and
floating rate instruments, mortgage-backed securities, and puts. The Fund may
invest in other money market funds if those funds have similar investment
policies and objectives and invest only in securities with short-term ratings
that are equal to or higher than those in which the Fund invests. The Fund also
engages in securities lending. For a list of all the securities in which the
Fund may invest, please read "Investment Practices."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1)
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) none
ANNUAL OPERATING EXPENSES (2)
(as a percentage of average daily net assets)
Investment Advisory Fees .08%
Other Expenses .10%
Total Fund Operating Expenses .18%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the 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>
$ 2 $ 6 $10 $ 23
</TABLE>
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 186
3
THE ONE GROUP(R) GOVERNMENT MONEY MARKET FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception
if less than 10 years. The total returns in the table represent the rate a
shareholder would have earned on an investment in the Fund
(assuming reinvestment of all dividends and distributions). This information has
been derived from financial statements audited by Coopers & Lybrand L.L.P.,
whose report, along with the Fund's financial statements, is included in the
Statement of Additional Information, which is available upon request.
<TABLE>
<CAPTION>
JUNE 14,
1993 TO
YEARS ENDED JUNE 30, JUNE 30,
------------------------------------------------------------------
1997 1996 1995 1994 1993(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 0.053 0.055 0.053 0.033 0.001
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.053) (0.055) (0.053) (0.033) (0.001)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 5.43% 5.61% 5.41% 3.40% 3.28%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 1,083,438 $ 855,613 $ 720,699 $ 692,253 $ 244,991
Ratio of expenses to average net
assets 0.14% 0.18% 0.21% 0.11% 0.07%(b)
Ratio of net investment income to
average net assets 5.31% 5.46% 5.28% 3.41% 3.13%(b)
Ratio of expenses to average net
assets* 0.14% 0.18% 0.22% 0.20% 0.33%(b)
Ratio of net investment income to
average net assets* 5.31% 5.46% 5.27% 3.32% 2.87%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Annualized.
3
<PAGE> 187
4
THE ONE GROUP(R)
TREASURY ONLY MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks high current income with liquidity and stability of principal
with the added assurance of a Fund that does not purchase securities that are
subject to repurchase agreements.
[ICON] PORTFOLIO SECURITIES
The Fund invests exclusively in U.S. Treasury bills, notes, bonds and other U.S.
obligations issued or guaranteed by the U.S. Treasury. The Fund also engages in
securities lending. For a list of all the securities in which the Fund may
invest, please read "Investment Practices."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1)
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) none
ANNUAL OPERATING EXPENSES (2)
(as a percentage of average daily net assets)
Investment Advisory Fees .08%
Other Expenses .10%
Total Fund Operating Expenses .18%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the 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>
$ 2 $ 6 $10 $ 23
</TABLE>
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 188
5
THE ONE GROUP(R) TREASURY ONLY MONEY MARKET FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
APRIL 16,
YEARS ENDED JUNE 30, 1993 TO
--------------------------------------------------------------- JUNE 30,
1997 1996 1995 1994 1993(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 0.051 0.052 0.051 0.032 0.006
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.051) (0.052) (0.051) (0.032) (0.006)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 5.24% 5.38% 5.22% 3.23% 2.96%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 480,860 $ 415,961 $ 288,697 $ 217,725 $ 60,330
Ratio of expenses to average net assets 0.15% 0.17% 0.20% 0.15% 0.07%(b)
Ratio of net investment income to average
net assets 5.12% 5.23% 5.14% 3.23% 2.95%(b)
Ratio of expenses to average net assets* 0.15% 0.17% 0.21% 0.22% 0.33%(b)
Ratio of net investment income to average
net assets* 5.12% 5.23% 5.13% 3.16% 2.69%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Annualized.
<PAGE> 189
6
MORE ABOUT THE FUNDS
PORTFOLIO QUALITY
- ----------------------------------------------------
Securities will be purchased by the Funds only if Banc One Investment Advisors
determines that they present minimal credit risk under guidelines adopted by the
Board of Trustees. In addition, unless a more specific rating is specified, all
investments of the Funds must be rated in one of the two highest rating
categories described in "Description of Ratings" in the Appendix. If an
investment is unrated, Banc One Investment Advisors must determine that it is of
comparable quality to a rated security. Banc One Investment Advisors will look
at a security's rating at the time of investment. For more information about
ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
- ----------------------------------------------------
Each Fund may invest up to 10% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK CONSIDERATIONS
- ----------------------------------------------------
NET ASSET VALUE: There is no assurance that the Funds will meet their investment
objectives or be able to maintain a net asset value of $1.00 per share on a
continuous basis.
PORTFOLIO TURNOVER: The Funds attempt to increase yield by taking advantage of
short-term market variations. This policy is expected to result in high
portfolio turnover. However, this should not adversely affect the Funds because
they usually do not pay brokerage commissions when purchasing U.S. government
securities.
FIXED INCOME SECURITIES: The value of the securities held by the Funds will
increase or decrease based on changes in interest rates. If rates increase, the
value of the Funds' investments generally decline. On the other hand, if rates
fall, the value of the investments generally increases. The value of your
investment in a Fund will increase or decrease as the value of a Fund's
investments increase and decrease. While securities with longer duration and
maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
<PAGE> 190
7
HOW TO DO BUSINESS WITH THE ONE GROUP
PURCHASING
FUND SHARES
- ----------------------------------------------------
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
- - The One Group Services Company, and
- - Shareholder Servicing Agents. These include investment advisors, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased this way will be held for
you by the Shareholder Servicing Agent.
WHO MAY PURCHASE FUND SHARES?
Fund shares may be purchased by:
- - Commercial and retail institutional investors, including affiliates of BANC
ONE CORPORATION, that have opened accounts with the Fund's transfer agent,
State Street Bank and Trust Company, either directly or through a Shareholder
Servicing Agent.
- - Individuals with a net worth, or joint net worth with their spouse, at the
time of purchase in excess of $1 million.
- - Individuals with annual income, or joint annual income with their spouse, at
the time of purchase in excess of $200,000.
- - If you have questions about eligibility, please call The One Group Services
Company at 1-800-480-4111.
WHEN CAN I BUY SHARES?
- - Purchases may be made on any business day. This includes any day that the
Funds are open for business, other than weekends and the following holidays:
New Years Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving, and Christmas.
- - Purchase requests will be effective on the day received by The One Group
Services Company and you will be eligible to receive dividends declared the
same day, if (i) such purchase orders are received by The One Group Services
Company before 2:00 p.m., Eastern Standard Time ("EST"), and (ii) the Fund's
custodian, State Street Bank and Trust Company, receives "federal funds"
before 4:00 p.m., EST. If State Street Bank and Trust Company does not receive
federal funds by the cut-off time, the purchase order will not be effective
until the next business day on which federal funds are timely received by
State Street Bank and Trust Company.
- - If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase or
redemption order to the Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption requests.
- - The One Group Services Company can reject a purchase order if it does not
think that it is in the best interests of a Fund and/or shareholders to accept
the order.
- - Shares are electronically recorded. Therefore, certificates will not be
issued.
HOW MUCH DO SHARES COST?
- - Shares are sold at net asset value ("NAV").
- - NAV per share is calculated by dividing the total market value of a Fund's
investments and other assets (minus expenses) by the number of outstanding
shares. The Funds use their best efforts to maintain their NAV at $1.00,
although there is no guarantee that they will be able to do so.
- - NAV is calculated each business day as of 2:00 p.m. and 4:00 p.m. EST.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most appropriate
for you.
2. Decide how much you want to invest.
- The minimum initial investment is $1,000,000.
- Subsequent investments must be at least $5,000.
- The One Group Services Company may waive these minimums.
3. Complete the Account Application Form. Be sure to sign up for all of the
Account privileges that you plan to take advantage of. Doing so now means
that you will not have to complete additional paperwork later.
4. Send the completed application and a personal check (unless you choose to pay
by wire or bank transfer) payable to "The One Group" to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions from a Fund will not be permitted for ten (10) calendar
days if purchases are made by check.
<PAGE> 191
8
6. If you purchase shares through a Shareholder Servicing Agent, you may be
required to complete additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent regarding purchases,
exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or call
The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
- - Contact your Shareholder Servicing Agent or The One Group Services Company at
1-800-480-4111 to relay your purchase instructions.
- - Authorize a bank transfer or initiate a wire transfer payable to "The One
Group" to State Street Bank and Trust Company (see address above).
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - You may revoke your right to make purchases over the telephone by sending a
letter to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
EXCHANGING
FUND SHARES
- ----------------------------------------------------
WHAT ARE MY EXCHANGE PRIVILEGES?
- - You may exchange your shares for shares of the other Fund described in this
prospectus. You may also exchange your shares for shares of any institutional
money market fund that The One Group may offer.
- - The One Group may change the terms and conditions of your exchange privileges
upon 60 days written notice.
- - The One Group does not charge a fee for this privilege.
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
- - State Street Bank and Trust Company receives the request by 12:30 p.m. EST.
- - You have provided The One Group with all of the information necessary to
process the exchange.
- - You have received a current prospectus of the Fund or Funds into which you
wish to invest.
- - You have contacted your Shareholder Servicing Agent, if necessary.
ARE EXCHANGES TAXABLE?
Generally:
- - An exchange between Funds is considered a sale and generally results in a
capital gain or loss for Federal income tax purposes.
- - You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short term movements in the market. Therefore:
- - To prevent disruptions in the management of the Funds, The One Group limits
excessive exchange activity.
- - Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- - In addition, The One Group reserves the right to reject any exchange request
(even those that are not excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or otherwise adversely
affect other shareholders.
REDEEMING
FUND SHARES
- ----------------------------------------------------
WHEN CAN I REDEEM SHARES?
- - You may redeem all or some of your shares on any day that the Funds are open
for business.
- - Redemption requests received by The One Group Services Company before 4:00
p.m. EST, will be effective that day.
HOW DO I REDEEM SHARES?
- - Unless you have selected the telephone option on your Account Application
Form, you must send a written redemption request to your Shareholder Servicing
Agent, if applicable, or to State Street Bank and Trust Company at the
following address:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
- - You may request redemption forms by calling The One Group Services Company at
1-800-480-4111.
<PAGE> 192
9
- - State Street Bank and Trust Company may require that the signature on your
redemption request be guaranteed by a commercial bank, a member of a domestic
stock exchange, or a member of the Securities Transfer Association Medallion
Program or the Stock Exchange Medallion Program, unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record; and
3. the redemption check is mailed to the shareholder at the record address.
- - On the Account Application Form you may elect to have the redemption proceeds
mailed or wired to:
1. a designated commercial bank; or
2. State Street Bank and Trust Company or your Shareholder Servicing Agent.
- - State Street Bank and Trust Company may charge a wire redemption fee. The
current charge is $7.00.
- - Your redemption proceeds will ordinarily be paid within seven days after
receipt of the redemption request. However, the Funds will attempt to honor
requests for next day payment on redemptions, if the request is received
before 12:30 p.m., EST.
- - The Funds will attempt to honor requests for payments in two business days, if
the redemption request is received after the time listed above.
WHAT WILL MY SHARES BE WORTH?
- - The NAV of shares of the Funds is expected to remain constant at $1.00 per
share, although there is no assurance that this will always be the case.
- - You will receive the NAV calculated after your redemption request is received.
Please read "How Much Do Shares Cost?"
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
- - Call your Shareholder Servicing Agent or State Street Bank and Trust Company
at 1-800-480-4111 to relay your redemption request.
- - Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
- - State Street Bank and Trust Company may charge a wire redemption fee. The
current charge is $7.00.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
- - All redemptions will be for cash. The redemption price of shares is expected
to remain constant at $1.00 per share, although there is no assurance that
this will always be the case.
- - If you redeem shares for which you paid by check, and The One Group has not
yet received payment on the check, The One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been collected from
your bank.
- - Because of the high cost of handling small investments, The One Group will
automatically redeem shares in accounts which, because of shareholder
redemptions, have values of less than $50,000. No sales charges will be
assessed and you will be given 60 days to make additional investments in the
Fund to increase the value of your account to at least $50,000.
- - The One Group may suspend your ability to redeem, or will redeem your shares
involuntarily, when it seems appropriate to do so in light of its
responsibilities under the Federal securities laws. The Statement of
Additional Information offers more details about this process.
<PAGE> 193
10
SHAREHOLDER INFORMATION
VOTING RIGHTS
- ----------------------------------------------------
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund
votes separately on matters relating solely to that Fund, or which affect that
Fund differently. However, all shareholders will have equal voting rights on
matters that affect all shareholders equally.
BANC ONE CORPORATION (100 East Broad Street, Columbus, Ohio, 43271), through its
affiliates, may be deemed for purposes of the Investment Company Act of 1940, to
control the Government Money Market Fund. This is because as of August 5, 1997,
BANC ONE CORPORATION or its affiliates possessed the power to vote substantially
all of the shares of that Fund.
DIVIDEND POLICIES
- ----------------------------------------------------
DIVIDENDS
The Funds generally declare dividends on each business day. Dividends are
distributed on the first business day of each month. Capital gains, if any, for
all Funds are distributed at least annually.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund, unless you have elected to
take such payment in cash. The price of the shares is the NAV determined
immediately following the dividend record date. Reinvested dividends and
distributions receive the same tax treatment as dividends and distributions paid
in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8500, Boston, MA
02266-8500, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street.
TAX TREATMENT OF THE FUNDS
- ----------------------------------------------------
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT OF SHAREHOLDERS
- ----------------------------------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares will generally produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
TAXATION OF DISTRIBUTIONS
Each Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gain) to investors on at
least an annual basis. Dividends you receive from a Fund, whether reinvested or
received in cash, will be taxable to you. Dividends from a Fund's net investment
income will be taxable as ordinary income and dividends from a Fund's long-term
capital gains will be taxable to you as such, regardless of how long you have
held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid the previous December.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
SHAREHOLDER INQUIRIES
- ----------------------------------------------------
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In March and September you will receive a financial report from The One
Group. In addition, The One Group will periodically send you proxy
statements and other reports.
<PAGE> 194
11
ORGANIZATION AND MANAGEMENT OF THE FUNDS
THE FUNDS
Each Fund is a series of The One Group, an open-end management investment
company. The One Group currently consists of 40 separate Funds. Two of the Funds
are described in this prospectus; the other Funds are described in separate
prospectuses. Each Fund described in this prospectus is diversified. Each Fund
is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of The One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to The
One Group since 1993. Prior to that time, The One Group was advised by
affiliates of Banc One Investment Advisors. In addition to The One Group, Banc
One Investment Advisors serves as investment advisor to other mutual funds and
individual, corporate, charitable and retirement accounts. As of June 30, 1997,
Banc One Investment Advisors, an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, managed over $47 billion in assets. For the fiscal year ended June
30, 1997, the Funds paid investment advisory fees of .08% of each Fund's average
daily net assets.
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory compliance and
reporting. For these services, The One Group Services Company receives an annual
fee of .05% of each Fund's average daily net assets. The fee is calculated daily
and paid monthly. Banc One Investment Advisors, the Sub-Administrator, provides
office space, equipment, and facilities, as well as legal and regulatory
support.
THE TRANSFER AGENT, CUSTODIAN, AND SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500, or
your Shareholder Servicing Agent, if appropriate, handles shareholder
recordkeeping and statements, distributes dividends, and processes buy and sell
requests. As the Funds' custodian, State Street holds the Funds' assets, settles
all portfolio trades and assists in calculating the Funds' net asset values.
Bank One Trust Company, N.A. serves as sub-custodian in connection with the
Funds' securities lending activities under an agreement with State Street Bank
and Trust Company. Bank One Trust Company, N.A. is paid a fee for this service.
<PAGE> 195
12
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Fixed income securities are primarily influenced by
market, credit and prepayment risks, although certain securities may be subject
to additional risks. For a more complete discussion, please see the Statement of
Additional Information. Following the table is a more complete discussion of
risk.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
<S> <C> <C>
The One Group(R) Government Money Market Fund 1
The One Group(R) Treasury Only Money Market
Fund 2
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, and bonds. 1, 2 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies 1 Market
and instrumentalities of the U.S. Government. These include Credit
Ginnie Mae, Fannie Mae, and Freddie Mac.
REPURCHASE AGREEMENTS: The purchase of a security and the 1 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
PUT OPTIONS: A put option gives the buyer the right to sell, and 1 Liquidity
obligates the seller to buy, a security at a specified price. Management
The Fund will sell only secured put options. Market
Credit
Leverage
SECURITIES LENDING: The lending of up to 33% of the securities 1, 2 Credit
owned by a Fund. In return the Fund will receive cash and/or Market
other securities as collateral. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Purchase or 1, 2 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
INVESTMENT COMPANY SECURITIES: Shares of other mutual funds, 1 Market
including money market funds of The One Group and shares of
other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. Banc One
Investment Advisors will waive certain fees when investing in
funds for which it serves as investment advisor.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1 Market
interest rates which are reset daily, weekly, quarterly or some Credit
other period and which may be payable to Credit the Fund on Liquidity
demand.
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real 1 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs") and Real Estate Mortgage Credit
Investment Conduits ("REMICs"). Regulatory
</TABLE>
<PAGE> 196
13
INVESTMENT RISKS
- ----------------------------------------------------
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities in the Funds may fluctuate, as will the value of your
investment in the Funds. Certain investments are more susceptible to these risks
than others.
- - CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default
rises.
- - LEVERAGE RISK. The risk associated with securities or practices that multiply
small index or market movements into large changes in value. Leverage is often
associated with investments in derivatives, but also may be embedded directly
in the characteristics of other securities.
- - LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that normally prevails in the
market. The seller may have to lower the price, sell other securities instead
or forego an investment opportunity, any of which could have a negative effect
on fund management or performance. This includes the risk of missing out on an
investment opportunity because the assets necessary to take advantage of it
are tied up in less advantageous investments.
- - MANAGEMENT RISK. The risk that a strategy used by a fund's management may fail
to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than
it was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. There also is the
risk that the current interest rate may not accurately reflect existing market
rates. For fixed income securities, market risk is largely, but not
exclusively, influenced by changes in interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Finally, key information about a security or market may be
inaccurate or unavailable.
- - PRE-PAYMENT RISK. The risk that the principal repayment of a security will
occur at an unexpected time, especially that the repayment of a mortgage or
asset-backed security occurs either significantly sooner or later than
expected. Changes in pre-payment rates can result in greater price and yield
volatility. Pre-payments generally accelerate when interest rates decline.
When mortgage and other obligations are pre-paid, a Fund may have to reinvest
in securities with a lower yield. Further, with early repayment, a Fund may
fail to recover any premium paid, resulting in an unexpected capital loss.
- - REGULATORY RISK. The risk associated with Federal and state laws which may
restrict the remedies that a mortgage lender has when a borrower defaults on
mortgage loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor relief laws,
restrictions on "due on sale" clauses, and state usury laws.
INVESTMENT POLICIES
- ----------------------------------------------------
Each Fund's investment objective and the following investment policies
summarized below are fundamental. This means that they cannot be changed without
the consent of a majority of the outstanding shares of the Funds. The full text
of the fundamental policies can be found in the Statement of Additional
Information.
FUNDAMENTAL POLICIES OF EACH FUND
Each Fund:
1. Will use its best efforts to maintain a constant net asset value of $1.00 per
share, although there is no guarantee that the Funds will be able to do so.
2. Will not purchase the securities of an issuer if as a result more than 5% of
its total assets would be invested in the securities of that issuer or the
Fund would own more than 10% of the outstanding voting securities of that
issuer. This does not include securities issued or guaranteed by the United
States, its agencies or instrumen-
<PAGE> 197
14
talities, and repurchase agreements involving these securities. This
restriction applies with respect to 75% of a Fund's total assets. The Funds
may invest the remaining 25% of their total assets without restriction.
3. Will not purchase securities while borrowings (including reverse repurchase
agreements) exceed 5% of the respective Fund's assets.
4. Will not borrow money or issue senior securities, except that the Funds may
borrow from banks for temporary purposes in amounts not exceeding 10% of
their total assets at the time of the borrowing.
5. Will not mortgage, pledge or hypothecate any assets, except in connection
with borrowing specified in 4 above and in amounts not in excess of the
lesser of the dollar amount borrowed or 10% of the value of the respective
Fund's total assets at the time of its borrowing.
FUNDAMENTAL POLICIES OF SPECIFIC FUNDS
The Treasury Only Money Market Fund:
1. Will not purchase securities other than U.S. Treasury bills, notes and other
U.S. obligations issued or guaranteed by the U.S. Treasury.
2. Will not invest in any securities subject to repurchase agreements.
The Government Money Market Fund:
1. Will not purchase securities other than those issued or guaranteed by the
U.S. government or its agencies or instrumentalities, some of which may be
subject to repurchase agreements.
Additional investment policies can be found in the Statement of Additional
Information.
<PAGE> 198
15
APPENDIX
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free U.S. Treasury
obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet financial
commitment is strong. Obligations designated with a plus sign (+)
indicate that capacity to meet financial commitment is extremely
strong.
A-2 Issues somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than obligations in higher rating
categories. However, the capacity to meet financial commitments is
satisfactory.
FITCH'S INVESTORS SERVICE, L.P. ("FITCH")
F-1+ Exceptionally strong credit quality. Strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Assurance of timely payment is only
slightly less in degree than issues rated F-1+.
F-2 Good credit quality. Satisfactory degree of assurance for timely
payment, but the margin of safety is not as good as for issues assigned
F-1+ and F-1 ratings.
IBCA LIMITED ("IBCA")
A1 Highest capacity for timely repayment. Those issues rated A1+ possess a
particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such capacity may
be susceptible to adverse changes in business, economic or financial
conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety
and soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
<PAGE> 199
16
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
AAA The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
Aa These insurance companies offer excellent financial security. Together
with the Aaa group, they constitute what are generally known as high
grade companies. They are rated lower than Aaa companies because
long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.
AA AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
DESCRIPTION OF CORPORATE/MUNICIPAL BOND RATINGS
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong capacity to
meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's capacity
to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories. However, capacity to meet its financial commitment on
the obligation is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligation.
Speculative Grade
BB Less vulnerable to non-payment than other speculative issues. However,
these bonds face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet financial commitment on the obligation.
B More vulnerable to non-payment than obligations rated BB, but currently
has the capacity to meet its financial commitment on the obligation.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to meet its financial commitment on the
obligation.
CCC Currently vulnerable to non-payment, and is dependent upon favorable
business, financial, and economic conditions to meet its financial
commitment on the obligation. In the event of adverse busi-
<PAGE> 200
17
ness, financial, or economic conditions, they are not likely to have the
capacity to meet its financial commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments
on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
Investment Grade
Aaa Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large, or an exceptionally stable, margin and principal is secure.
Aa High quality by all standards. Margins of protection may not be as
large as in Aaa securities, fluctuation of protective elements may be
greater, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
Baa These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
BA These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may be
small).
Caa Bonds in this category have poor standing and may be in default. These
bonds carry an element of danger with respect to principal and interest
payments.
Ca Speculative to a high degree and could be in default or have other
marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S
MIG1 & VMIG1 Short-term municipal securities rated MIG1 or VMIG1 are of
the best quality. They have strong protection from established cash
flows, superior liquidity support or demonstrated broad-based access
to the market for refinancing.
MIG2 & VMIG2 These Short-term municipal securities are of high quality.
Margins of protection are ample although not so large as in the
preceding group.
MIG3 & VMIG3 Favorable quality. All security elements are accounted for,
but the undeniable strength of the preceding grades is lacking.
Liquidity and cash flow protection may be narrow and marketing
access for refinancing is likely to be less well established.
S&P
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
Aaa Top-quality preferred stock. This rating indicates good asset
protection and the
<PAGE> 201
18
least risk of dividend impairment within the universe of preferred
stocks.
aa High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
a Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues
rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock obligations.
Whereas the issuer normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest will be paid
on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal and
interest is strong, the relative degree is not as high as for issues
rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to adverse
developments than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
<PAGE> 202
INVESTMENT ADVISOR AND SUB-ADMINISTRATOR
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
DISTRIBUTOR
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
ADMINISTRATOR
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
LEGAL COUNSEL
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES COMPANY AT 3435
STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL INFORMATION IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS A WEB SITE
(WWW.SEC.COM) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIALS
INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING THE ONE GROUP(R).
TOG-F-124
<PAGE> 203
THE ONE GROUP(R) FAMILY OF MUTUAL FUNDS
THE ONE GROUP INVESTOR FUNDS
COMBINED PROSPECTUS
NOVEMBER 1, 1997
THE ONE GROUP(R) INVESTOR GROWTH FUND
THE ONE GROUP(R) INVESTOR GROWTH & INCOME FUND
THE ONE GROUP(R) INVESTOR BALANCED FUND
THE ONE GROUP(R) INVESTOR CONSERVATIVE GROWTH FUND
This prospectus describes four mutual funds that invest in other mutual
funds. The funds in this prospectus pursue a variety of investment objectives,
including growth, total return, capital appreciation, and current income. The
information in this prospectus is important. Please read it carefully before you
invest, and save it for future reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: o ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED BY BANC ONE CORPORATION OR ITS AFFILIATES; o ARE NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY FEDERAL OR
STATE GOVERNMENTAL AGENCY; o INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 204
TABLE OF CONTENTS
<TABLE>
<S> <C>
A BRIEF PREVIEW OF THE FUNDS................................................. 1
ABOUT THE FUNDS.............................................................. 2
The One Group(R) Investor Growth Fund..................................... 2
The One Group(R) Investor Growth & Income Fund............................ 5
The One Group(R) Investor Balanced Fund................................... 8
The One Group(R) Investor Conservative Growth Fund........................ 11
MORE ABOUT THE FUNDS......................................................... 14
HOW TO DO BUSINESS WITH THE ONE GROUP........................................ 15
Purchasing Fund Shares.................................................... 15
Sales Charges............................................................. 16
Sales Charge Reductions and Waivers....................................... 18
Exchanging Fund Shares.................................................... 19
Redeeming Fund Shares..................................................... 20
SHAREHOLDER INFORMATION...................................................... 22
Voting Rights............................................................. 22
Dividend Policies......................................................... 22
Tax Treatment of the Funds................................................ 23
Tax Treatment of Shareholders............................................. 23
Shareholder Inquiries..................................................... 23
ORGANIZATION AND MANAGEMENT OF THE FUNDS..................................... 24
The Funds................................................................. 24
The Board of Trustees..................................................... 24
The Advisor............................................................... 24
The Distributor........................................................... 24
The Administrator and Sub-Administrator................................... 24
The Transfer Agent, Custodian and Sub-Custodian........................... 24
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES................... 25
Investment Practices...................................................... 25
Investment Policies....................................................... 28
APPENDIX A: DETAILS ABOUT THE UNDERLYING FUNDS' INVESTMENT PRACTICES AND
POLICIES................................................................... 29
APPENDIX B: DESCRIPTION OF RATINGS........................................... 34
</TABLE>
<PAGE> 205
1
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE ONE GROUP INVESTOR FUNDS?
The Funds are designed for a variety of investment objectives,
including total return, capital appreciation, current income,
and long-term capital growth. Each Fund pursues a different
objective and involves different risks. Please read about each
Fund before investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Funds normally will invest in a diversified group of One
Group mutual funds, which invest primarily in equity, fixed
income and money market instruments. Shares are available for
long-term investors, including tax-advantaged retirement
accounts; the Funds should not be used for short-term trading
purposes. The Funds' investment return is diversified by its
investment in the underlying mutual funds which invest in
growth and income stocks, foreign securities, debt securities,
and cash or cash equivalents. The underlying mutual funds in
which the Fund will invest have the following characteristics:
<TABLE>
<S> <C>
The One Group(R) Prime Money Market Fund Money Market
The One Group(R) Limited Volatility Bond Fund Fixed Income
The One Group(R) Intermediate Bond Fund Fixed Income
The One Group(R) Income Bond Fund Fixed Income
The One Group(R) Government Bond Fund Fixed Income
The One Group(R) Ultra Short-Term Income Fund Fixed Income
The One Group(R) Disciplined Value Fund Equity
The One Group(R) International Equity Index Fund Equity
The One Group(R) Large Company Growth Fund Equity
The One Group(R) Large Company Value Fund Equity
The One Group(R) Growth Opportunities Fund Equity
The One Group(R) Value Growth Fund Equity
The One Group(R) Small Capitalization Fund Equity
The One Group(R) Income Equity Fund Equity
The One Group(R) Equity Index Fund Equity
</TABLE>
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
The investments of each Fund are concentrated in the
underlying funds, so each Fund's investment performance is
directly related to the performance of the underlying funds.
Each Fund's net asset value will fluctuate with changes in the
equity and bond markets and the value of the mutual funds in
which it invests. In addition, as a matter of fundamental
policy, each Fund must allocate its investments among the
underlying funds. As a result, the Funds do not have the same
flexibility to invest as a mutual fund without such
constraints. For more information about risks, please read
"More About the Funds" and "Investment Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
The Funds currently offer four classes of Shares: Class A,
Class B, Class C and Fiduciary Class. Class A, Class B and
Class C 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. The section called "How To Do
Business With The One Group" will provide more information.
Fiduciary Class shares are not available to Individual
Retirement Accounts ("IRA").
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the
Funds are open for business. Purchase and redemption
procedures are explained in greater detail in "How To Do
Business With The One Group." For additional information, call
The One Group Services Company at 1-800-480-4111.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared monthly and distributed on
the first business day of each month. Any capital gains are
distributed at least annually. Distributions are paid in
additional shares of the same class unless you elect to take
the payment in cash. For a more detailed discussion of
dividends, see "Dividend Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors"), an indirect subsidiary of BANC ONE CORPORATION,
serves as the advisor of the Funds. Banc One Investment
Advisors is paid a fee for its services. Banc One Investment
Advisors also serves as the advisor to the underlying mutual
funds, for which it receives a fee.
<PAGE> 206
2
THE ONE GROUP(R)
INVESTOR GROWTH FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation by investing primarily in a
diversified group of The One Group mutual funds which invest primarily in equity
securities.
[ICON] INVESTMENT STRATEGY
The Fund invests 80% to 100% of its total assets in nine mutual funds of The One
Group which invest primarily in equity securities, up to 20% of its total assets
in five mutual funds of The One Group that invest primarily in fixed income
securities, and up to 10% of its assets in one money market fund of The One
Group.
[ICON] PORTFOLIO SECURITIES
The Fund will invest in the underlying mutual funds within the following range:
<TABLE>
<S> <C>
The One Group(R) Prime Money Market Fund 0-10%
The One Group(R) Limited Volatility Bond
Fund 0-20%
The One Group(R) Intermediate Bond Fund 0-20%
The One Group(R) Income Bond Fund 0-20%
The One Group(R) Government Bond Fund 0-20%
The One Group(R) Ultra Short-Term Income
Fund 0-20%
The One Group(R) Disciplined Value Fund 0-40%
The One Group(R) International Equity
Index Fund 0-40%
The One Group(R) Large Company Growth Fund 0-48%
The One Group(R) Large Company Value Fund 0-55%
The One Group(R) Growth Opportunities Fund 0-40%
The One Group(R) Value Growth Fund 0-50%
The One Group(R) Small Capitalization Fund 0-40%
The One Group(R) Income Equity Fund 0-50%
The One Group(R) Equity Index Fund 0-50%
</TABLE>
[ICON] RISK CONSIDERATIONS
The Fund's investments are concentrated in other mutual funds, so the Fund's
investment performance is directly related to the performance of those mutual
funds. In addition, as a matter of fundamental policy, the Fund must allocate
its investments primarily among the mutual funds. As a result, the Fund's
investment flexibility is limited. The Fund may invest in a mutual fund which
invests in medium or lower grade bonds, which can be volatile. See "Special Risk
Considerations."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3)
(as a percentage of average daily net assets)
Investment Advisory Fees (after fee waivers) (4) .01% .01% .01% .01%
12b-1 Fees (after fee waiver) (5) .25% 1.00% 1.00% none
Other Expenses .19% .19% .19% .19%
Total Operating Expenses (after fee waivers) (6) .45% 1.20% 1.20% .20%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Investment Advisory fees have been revised to reflect fee waivers. Without
the waiver, Investment Advisory fees would be .05% for all classes of
shares.
(5) Due to 12b-1 fees, long-term Class A, Class B, and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A.
(6) Without the voluntary reduction of fees, Total Operating Expenses would be
.59% for Class A shares, 1.24% for Class B shares, 1.24% for Class C shares,
and .24% for Fiduciary Class shares.
The Fund will indirectly pay a portion of the expenses incurred by the
underlying funds. The following chart provides the expense ratio for each
underlying fund in which the Fund invests (based on the current fund
prospectus). Some of these expense ratios may include a voluntary reduction of
investment advisory fees.
<TABLE>
<CAPTION>
NAME OF UNDERLYING FUND EXPENSE RATIO
<S> <C>
The One Group(R) Prime Money Market Fund .50%
The One Group(R) Limited Volatility Bond Fund .62%
The One Group(R) Intermediate Bond Fund .62%
The One Group(R) Income Bond Fund .62%
The One Group(R) Government Bond Fund .69%
The One Group(R) Ultra Short-Term Income Fund .55%
The One Group(R) Disciplined Value Fund 1.00%
The One Group(R) International Equity Index Fund .96%
The One Group(R) Large Company Growth Fund 1.00%
The One Group(R) Large Company Value Fund .99%
The One Group(R) Growth Opportunities Fund 1.00%
The One Group(R) Value Growth Fund 1.05%
The One Group(R) Small Capitalization Fund 1.06%
The One Group(R) Income Equity Fund 1.01%
The One Group(R) Equity Index Fund .35%
</TABLE>
After combining the total operating expenses of the Fund with those of the
underlying funds, the estimated average weighted expense ratio for Class A
shares is 1.30%, for Class B shares is 2.05%, for Class C shares is 2.05%, and
for Fiduciary Class shares is 1.05%.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charges; (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
Class A (without fee waiver) $ 60 $ 91 $ 124 $217
Class B $ 71 $ 94 $ 130 $219
Class B (without fee waiver) $ 72 $ 98 $ 136 $233
Class C $ 31 $ 64 $ 110 $238
Class C (without fee waiver) $ 32 $ 68 $ 116 $249
Fiduciary Class $ 11 $ 33 $ 58 $128
Fiduciary Class (without fee waiver) $ 12 $ 37 $ 64 $141
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 58 $ 84 $ 113 $195
Class A (without fee waiver) $ 60 $ 91 $ 124 $217
Class B $ 21 $ 64 $ 110 $219
Class B (without fee waiver) $ 22 $ 68 $ 116 $233
Class C $ 21 $ 64 $ 110 $238
Class C (without fee waiver) $ 22 $ 68 $ 116 $249
Fiduciary Class $ 11 $ 33 $ 58 $128
Fiduciary Class (without fee waiver) $ 12 $ 37 $ 64 $141
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" examples above reflect the conversion.
These examples are designed to assist you in understanding the costs and
expenses that may be directly or indirectly paid by investors in the Fund. THE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 207
3
THE ONE GROUP(R) INVESTOR GROWTH FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
FIDUCIARY JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.09
Net realized and unrealized gains (losses) from investments 1.25
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.34
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.09)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.09)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.25
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 13.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $31,318
Ratio of expenses to average net assets 0.20%(c)
Ratio of net investment income to average net assets 1.70%(c)
Ratio of expenses to average net assets* 0.77%(c)
Ratio of net investment income to average net assets* 1.13%(c)
Portfolio turnover (d) 18.49%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
CLASS A JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.07
Net realized and unrealized gains (losses) from investments 1.21
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.28
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.07)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.21
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 12.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $4,439
Ratio of expenses to average net assets 0.46%(c)
Ratio of net investment income to average net assets 1.82%(c)
Ratio of expenses to average net assets* 1.62%(c)
Ratio of net investment income to average net assets* 0.66%(c)
Portfolio turnover (d) 18.49%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 208
4
THE ONE GROUP(R) INVESTOR GROWTH FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
CLASS B JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
Investment Activities
Net investment income 0.04
Net realized and unrealized gains (losses) from investments 1.34
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.38
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.34
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 13.88%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $7,651
Ratio of expenses to average net assets 1.20%(c)
Ratio of net investment income to average net assets 0.97%(c)
Ratio of expenses to average net assets* 2.18%(c)
Ratio of net investment income to average net assets* (0.01%)(c)
Portfolio turnover (d) 18.49%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 209
5
THE ONE GROUP(R)
INVESTOR GROWTH & INCOME FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation and growth of income by investing
primarily in a diversified group of The One Group mutual funds which invest
primarily in equity securities.
[ICON] INVESTMENT STRATEGY
The Fund invests 60% to 80% of its total assets in nine mutual funds of The One
Group which invest primarily in equity securities, 20% to 40% of its total
assets in five mutual funds of The One Group that invest primarily in fixed
income securities, and up to 10% of its assets in one money market fund of The
One Group.
[ICON] PORTFOLIO SECURITIES
The Fund will invest in the underlying mutual funds within the following ranges:
<TABLE>
<S> <C>
The One Group(R) Prime Money Market Fund 0-10%
The One Group(R) Limited Volatility Bond
Fund 0-30%
The One Group(R) Intermediate Bond Fund 0-30%
The One Group(R) Income Bond Fund 0-30%
The One Group(R) Government Bond Fund 0-30%
The One Group(R) Ultra Short-Term Income
Fund 0-30%
The One Group(R) Disciplined Value Fund 0-40%
The One Group(R) International Equity
Index Fund 0-40%
The One Group(R) Large Company Growth Fund 0-50%
The One Group(R) Large Company Value Fund 0-60%
The One Group(R) Growth Opportunities Fund 0-40%
The One Group(R) Value Growth Fund 0-60%
The One Group(R) Small Capitalization Fund 0-40%
The One Group(R) Income Equity Fund 0-60%
The One Group(R) Equity Index Fund 0-60%
</TABLE>
[ICON] RISK CONSIDERATIONS
The Fund's investments are concentrated in other mutual funds, so the Fund's
investment performance is directly related to the performance of those mutual
funds. In addition, as a matter of fundamental policy, the Fund must allocate
its investments primarily among the mutual funds. As a result, the Fund's
investment flexibility is limited. The Fund may invest in a mutual fund which
invests in medium or lower grade bonds, which can be volatile. See "Special Risk
Considerations."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3)
(as a percentage of average daily net assets)
Investment Advisory Fees (after fee waivers) (4) .01% .01% .01% .01%
12b-1 Fees (after fee waiver) (5) .25% 1.00% 1.00% none
Other Expenses .19% .19% .19% .19%
Total Operating Expenses (after fee waivers) (6) .45% 1.20% 1.20% .20%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Investment Advisory fees have been revised to reflect fee waivers. Without
the waiver, Investment Advisory fees would be .05% for all classes of
shares.
(5) Due to 12b-1 fees, long-term Class A, Class B, and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A.
(6) Without the voluntary reduction of fees, Total Operating Expenses would be
.59% for Class A shares, 1.24% for Class B shares, 1.24% for Class C shares,
and .24% for Fiduciary Class shares.
The Fund will indirectly pay a portion of the expenses incurred by the
underlying funds. The following chart provides the expense ratio for each
underlying fund (based on the current fund prospectus). Some of these expense
ratios may include a voluntary reduction of investment advisory fees.
<TABLE>
<CAPTION>
NAME OF UNDERLYING FUND EXPENSE RATIO
<S> <C>
The One Group(R) Prime Money Market Fund .50%
The One Group(R) Limited Volatility Bond Fund .62%
The One Group(R) Intermediate Bond Fund .62%
The One Group(R) Income Bond Fund .62%
The One Group(R) Government Bond Fund .69%
The One Group(R) Ultra Short-Term Income Fund .55%
The One Group(R) Disciplined Value Fund 1.00%
The One Group(R) International Equity Index Fund .99%
The One Group(R) Large Company Growth Fund 1.00%
The One Group(R) Large Company Value Fund .98%
The One Group(R) Growth Opportunities Fund 1.00%
The One Group(R) Value Growth Fund 1.05%
The One Group(R) Small Capitalization Fund 1.06%
The One Group(R) Income Equity Fund 1.01%
The One Group(R) Equity Index Fund .35%
</TABLE>
After combining the total operating expenses of the Fund with those of the
underlying funds, the estimated average weighted expense ratio for Class A
shares is 1.28%, for Class B shares is 2.03%, for Class C shares is 2.03%, and
for Fiduciary Class shares is 1.03%.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charges; (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 $ 57 $ 84 $ 112 $193
Class A (without fee waiver) $ 60 $ 90 $ 123 $216
Class B $ 71 $ 94 $ 129 $217
Class B (without fee waiver) $ 72 $ 97 $ 135 $232
Class C $ 31 $ 64 $ 109 $236
Class C (without fee waiver) $ 32 $ 67 $ 115 $248
Fiduciary Class $ 11 $ 33 $ 57 $126
Fiduciary Class (without fee waiver) $ 12 $ 37 $ 63 $140
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 57 $ 84 $ 112 $193
Class A (without fee waiver) $ 60 $ 90 $ 123 $216
Class B $ 21 $ 64 $ 109 $217
Class B (without fee waiver) $ 22 $ 67 $ 115 $232
Class C $ 21 $ 64 $ 109 $236
Class C (without fee waiver) $ 22 $ 67 $ 115 $248
Fiduciary Class $ 11 $ 33 $ 57 $126
Fiduciary Class (without fee waiver) $ 12 $ 37 $ 63 $140
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" examples above reflect the conversion.
These examples are designed to assist you in understanding the costs and
expenses that may be directly or indirectly paid by investors in the Fund. THE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 210
6
THE ONE GROUP(R) INVESTOR GROWTH & INCOME FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
FIDUCIARY JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.15
Net realized and unrealized gains from investments 0.93
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.08
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.15)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.15)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.93
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 10.87%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $43,660
Ratio of expenses to average net assets 0.20%(c)
Ratio of net investment income to average net assets 2.78%(c)
Ratio of expenses to average net assets * 0.66%(c)
Ratio of net investment income to average net assets* 2.32%(c)
Portfolio turnover (d) 18.07%
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
CLASS A JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.12
Net realized and unrealized gains from investments 1.02
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.14
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.12)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.12)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.02
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 11.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $4,262
Ratio of expenses to average net assets 0.46%(c)
Ratio of net investment income to average net assets 2.67%(c)
Ratio of expenses to average net assets* 1.26%(c)
Ratio of net investment income to average net assets* 1.87%(c)
Portfolio turnover (d) 18.07%
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 211
7
THE ONE GROUP(R) INVESTOR GROWTH & INCOME FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
CLASS B JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.09
Net realized and unrealized gains (losses) from investments 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.09
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.09)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.09)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 11.02%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $8,896
Ratio of expenses to average net assets 1.21%(c)
Ratio of net investment income to average net assets 1.94%(c)
Ratio of expenses to average net assets* 1.89%(c)
Ratio of net investment income to average net assets* 1.26%(c)
Portfolio turnover (d) 18.07%
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 212
8
THE ONE GROUP(R)
INVESTOR BALANCED FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks high total return consistent with the preservation of capital by
investing primarily in a diversified group of The One Group mutual funds which
invest primarily in equity and fixed income securities.
[ICON] INVESTMENT STRATEGY
The Fund invests 40% to 60% of its total assets in nine mutual funds of The One
Group which invest primarily in equity securities, 40% to 60% of its total
assets in five mutual funds of The One Group which invest primarily in fixed
income securities, and up to 10% of its assets in one money market fund of The
One Group.
[ICON] PORTFOLIO SECURITIES
The Fund will invest in the underlying mutual funds within the following range:
<TABLE>
<S> <C>
The One Group(R) Prime Money Market Fund 0-10%
The One Group(R) Limited Volatility Bond Fund 0-50%
The One Group(R) Intermediate Bond Fund 0-50%
The One Group(R) Income Bond Fund 0-50%
The One Group(R) Government Bond Fund 0-50%
The One Group(R) Ultra Short-Term Income Fund 0-50%
The One Group(R) Disciplined Value Fund 0-30%
The One Group(R) International Equity Index Fund 0-30%
The One Group(R) Large Company Growth Fund 0-40%
The One Group(R) Large Company Value Fund 0-50%
The One Group(R) Growth Opportunities Fund 0-30%
The One Group(R) Value Growth Fund 0-40%
The One Group(R) Small Capitalization Fund 0-30%
The One Group(R) Income Equity Fund 0-40%
The One Group(R) Equity Index Fund 0-40%
</TABLE>
[ICON] RISK CONSIDERATIONS
The Fund's investments are concentrated in other mutual funds, so the Fund's
investment performance is directly related to the performance of those mutual
funds. In addition, as a matter of fundamental policy, the Fund must allocate
its investments primarily among the mutual funds. As a result, the Fund's
investment flexibility is limited. The Fund may invest in a mutual fund which
invests in medium or lower grade bonds, which can be volatile. See "Special Risk
Considerations."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3)
(as a percentage of average daily net assets)
Investment Advisory Fees (after fee waivers) (4) .01% .01% .01% .01%
12b-1 Fees (after fee waiver) (5) .25% 1.00% 1.00% none
Other Expenses .19% .19% .19% .19%
Total Operating Expenses (after fee waivers) (6) .45% 1.20% 1.20% .20%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Investment Advisory fees have been revised to reflect fee waivers. Without
the waiver, Investment Advisory fees would be .05% for all classes of
shares.
(5) Due to 12b-1 fees, long term Class A, Class B, and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A.
(6) Without the voluntary reduction of fees, Total Operating Expenses would be
.59% for Class A shares, 1.24% for Class B shares, 1.24% for Class C Shares,
and .24% for Fiduciary Class shares.
The Fund will indirectly pay a portion of the expenses incurred by the
underlying funds. The following chart provides the expense ratio for each
underlying fund in which the Fund invests (based on the current fund
prospectus). Some of these expense ratios may include a voluntary reduction of
investment advisory fees.
<TABLE>
<CAPTION>
NAME OF UNDERLYING FUND EXPENSE RATIO
<S> <C>
The One Group(R) Prime Money Market Fund .50%
The One Group(R) Limited Volatility Bond Fund .62%
The One Group(R) Intermediate Bond Fund .62%
The One Group(R) Income Bond Fund .62%
The One Group(R) Government Bond Fund .69%
The One Group(R) Ultra Short-Term Income Fund .55%
The One Group(R) Disciplined Value Fund 1.00%
The One Group(R) International Equity Index Fund 1.00%
The One Group(R) Large Company Growth Fund 1.00%
The One Group(R) Large Company Value Fund .99%
The One Group(R) Growth Opportunities Fund 1.00%
The One Group(R) Value Growth Fund 1.05%
The One Group(R) Small Capitalization Fund 1.06%
The One Group(R) Income Equity Fund 1.01%
The One Group(R) Equity Index Fund .35%
</TABLE>
After combining the total operating expenses of the Fund with those of the
underlying funds, the estimated average weighted expense ratio for Class A
shares is 1.23%, for Class B shares is 1.98%, for Class C shares is 1.98%, and
for Fiduciary Class shares is .98%.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charges; (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 $ 57 $ 82 $ 100 $187
Class A (without fee waiver) $ 59 $ 89 $ 122 $213
Class B $ 70 $ 92 $ 127 $211
Class B (without fee waiver) $ 72 $ 96 $ 134 $229
Class C $ 30 $ 62 $ 107 $231
Class C (without fee waiver) $ 32 $ 66 $ 114 $245
Fiduciary Class $ 10 $ 31 $ 54 $120
Fiduciary Class (without fee waiver) $ 11 $ 36 $ 62 $136
</TABLE>
Assuming no redemption at the end of the time period, 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 $ 57 $ 82 $ 110 $187
Class A (without fee waiver) $ 59 $ 89 $ 122 $213
Class B $ 20 $ 62 $ 107 $211
Class B (without fee waiver) $ 22 $ 66 $ 114 $229
Class C $ 20 $ 62 $ 107 $231
Class C (without fee waiver) $ 22 $ 66 $ 114 $245
Fiduciary Class $ 10 $ 31 $ 54 $120
Fiduciary Class (without fee waiver) $ 11 $ 36 $ 62 $136
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" examples above reflect the conversion.
These examples are designed to assist you in understanding the costs and
expenses that may be directly or indirectly paid by investors in the Fund. THE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 213
9
THE ONE GROUP(R) INVESTOR BALANCED FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
FIDUCIARY JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.21
Net realized and unrealized gains from investments 0.63
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.84
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.21)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.21)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.63
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 8.48%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 72,155
Ratio of expenses to average net assets 0.20%(c)
Ratio of net investment income to average net assets 3.84%(c)
Ratio of expenses to average net assets* 0.56%(c)
Ratio of net investment income to average net assets* 3.48%(c)
Portfolio turnover (d) 12.20%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
CLASS A JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.17
Net realized and unrealized gains from investments 0.66
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.83
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.17)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.17)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.66
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 8.41%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 2,176
Ratio of expenses to average net assets 0.47%(c)
Ratio of net investment income to average net assets 3.78%(c)
Ratio of expenses to average net assets* 1.12%(c)
Ratio of net investment income to average net assets* 3.13%(c)
Portfolio turnover (d) 12.20%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 214
10
THE ONE GROUP(R) INVESTOR BALANCED FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
CLASS B JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.16
Net realized and unrealized gains from investments 0.65
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.81
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.16)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.16)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.65
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 8.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 5,672
Ratio of expenses to average net assets 1.22%(c)
Ratio of net investment income to average net assets 2.93%(c)
Ratio of expenses to average net assets* 1.73%(c)
Ratio of net investment income to average net assets* 2.42%(c)
Portfolio turnover (d) 12.20%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 215
11
THE ONE GROUP(R)
INVESTOR CONSERVATIVE GROWTH FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks income and capital appreciation by investing primarily in a
diversified group of The One Group mutual funds which invest primarily in equity
and fixed income securities.
[ICON] INVESTMENT STRATEGY
The Fund invests 20% to 40% of its total assets in nine mutual funds of The One
Group which invest primarily in equity securities, 60% to 80% of its total
assets in five mutual funds of The One Group which invest primarily in fixed
income securities, and up to 10% of its assets in one money market fund of The
One Group.
[ICON] PORTFOLIO SECURITIES
The Fund will invest in the underlying mutual funds within the following range:
<TABLE>
<S> <C>
The One Group(R) Prime Money Market Fund 0-10%
The One Group(R) Limited Volatility Bond
Fund 0-70%
The One Group(R) Intermediate Bond Fund 0-70%
The One Group(R) Income Bond Fund 0-70%
The One Group(R) Government Bond Fund 0-70%
The One Group(R) Ultra Short-Term Income
Fund 0-70%
The One Group(R) Disciplined Value Fund 0-20%
The One Group(R) International Equity
Index Fund 0-20%
The One Group(R) Large Company Growth Fund 0-20%
The One Group(R) Large Company Value Fund 0-20%
The One Group(R) Growth Opportunities Fund 0-20%
The One Group(R) Value Growth Fund 0-20%
The One Group(R) Small Capitalization Fund 0-20%
The One Group(R) Income Equity Fund 0-20%
The One Group(R) Equity Index Fund 0-20%
</TABLE>
[ICON] RISK CONSIDERATIONS
The Fund's investments are concentrated in other mutual funds, so the Fund's
investment performance is directly related to the performance of those mutual
funds. In addition, as a matter of fundamental policy, the Fund must allocate
its investments primarily among the mutual funds. As a result, the Fund's
investment flexibility is limited. The Fund may invest in a mutual fund which
invests in medium or lower grade bonds, which can be volatile. See "Special Risk
Considerations."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3)
(as a percentage of average daily net assets)
Investment Advisory Fees (after fee waivers) (4) .01% .01% .01% .01%
12b-1 Fees (after fee waiver) (5) .25% 1.00% 1.00% none
Other Expenses .19% .19% .19% .19%
Total Operating Expenses (after fee waivers) (6) .45% 1.20% 1.20% .20%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Investment Advisory fees have been revised to reflect fee waivers. Without
the waiver, Investment Advisory fees would be .05% for all classes of
shares.
(5) Due to 12b-1 fees, long term Class A, Class B, and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A.
(6) Without the voluntary reduction of fees, Total Operating Expenses would be
.59% for Class A shares, 1.24% for Class B shares, 1.24% for Class C shares,
and .24% for Fiduciary Class shares.
The Fund will indirectly pay a portion of the expenses incurred by the
underlying funds. The following chart provides the expense ratio for each
underlying fund in which the Fund invests (based on the current fund
prospectus). Some of these expense ratios may include a voluntary reduction of
investment advisory fees.
<TABLE>
<CAPTION>
NAME OF UNDERLYING FUND EXPENSE RATIO
<S> <C>
The One Group(R) Prime Money Market Fund .50%
The One Group(R) Limited Volatility Bond Fund .62%
The One Group(R) Intermediate Bond Fund .62%
The One Group(R) Income Bond Fund .62%
The One Group(R) Government Bond Fund .69%
The One Group(R) Ultra Short-Term Income Fund .55%
The One Group(R) Disciplined Value Fund 1.00%
The One Group(R) International Equity Index Fund 1.00%
The One Group(R) Large Company Growth Fund .99%
The One Group(R) Large Company Value Fund .99%
The One Group(R) Growth Opportunities Fund 1.00%
The One Group(R) Value Growth Fund 1.05%
The One Group(R) Small Capitalization Fund 1.06%
The One Group(R) Income Equity Fund 1.01%
The One Group(R) Equity Index Fund .35%
</TABLE>
After combining the total operating expenses of the Fund with those of the
underlying funds, the estimated average weighted expense ratio for Class A
shares is 1.15%, for Class B shares is 1.90%, for Class C shares is 1.90%, and
for Fiduciary Class shares is .90%.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charges; (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 $ 56 $ 80 $ 105 $178
Class A (without fee waiver) $ 59 $ 88 $ 119 $208
Class B $ 69 $ 90 $ 123 $203
Class B (without fee waiver) $ 71 $ 95 $ 131 $223
Class C $ 29 $ 60 $ 103 $222
Class C (without fee waiver) $ 31 $ 65 $ 111 $240
Fiduciary Class $ 9 $ 29 $ 50 $111
Fiduciary Class (without fee waiver) $ 11 $ 34 $ 59 $131
</TABLE>
Assuming no redemption at the end of each time period, 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 $ 56 $ 80 $ 105 $178
Class A (without fee waiver) $ 59 $ 88 $ 119 $208
Class B $ 19 $ 60 $ 103 $203
Class B (without fee waiver) $ 21 $ 65 $ 111 $223
Class C $ 19 $ 60 $ 103 $222
Class C (without fee waiver) $ 21 $ 65 $ 111 $240
Fiduciary Class $ 9 $ 29 $ 50 $111
Fiduciary Class (without fee waiver) $ 11 $ 34 $ 59 $131
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" examples above reflect the conversion.
These examples are designed to assist you in understanding the costs and
expenses that may be directly or indirectly paid by investors in the Fund. THE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 216
12
THE ONE GROUP(R) INVESTOR CONSERVATIVE GROWTH FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
FIDUCIARY JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.26
Net realized and unrealized gains (losses) from investments 0.33
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.59
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.26)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.26)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.33
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 6.00%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 15,038
Ratio of expenses to average net assets 0.20%(c)
Ratio of net investment income to average net assets 4.92%(c)
Ratio of expenses to average net assets* 1.46%(c)
Ratio of net investment income to average net assets* 3.66%(c)
Portfolio turnover (d) 28.46%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
CLASS A JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.22
Net realized and unrealized gains (losses) from investments 0.32
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.54
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.22)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.22)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.32
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 5.46%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $1,299
Ratio of expenses to average net assets 0.47%(c)
Ratio of net investment income to average net assets 4.76%(c)
Ratio of expenses to average net assets* 3.05%(c)
Ratio of net investment income to average net assets* 2.18%(c)
Portfolio turnover (d) 28.46%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 217
13
THE ONE GROUP(R) INVESTOR CONSERVATIVE GROWTH FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DECEMBER 10, 1996
THROUGH
CLASS B JUNE 30, 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.19
Net realized and unrealized gains (losses) from investments 0.33
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.52
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.19)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.19)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.33
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 5.30%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $2,616
Ratio of expenses to average net assets 1.21%(c)
Ratio of net investment income to average net assets 4.06%(c)
Ratio of expenses to average net assets* 3.52%(c)
Ratio of net investment income to average net assets* 1.75%(c)
Portfolio turnover (d) 28.46%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE> 218
MORE ABOUT THE FUNDS
14
ILLIQUID INVESTMENTS
- ----------------------------------------------------
Each Fund may invest up to 15% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Board of Trustees in determining whether an
investment is illiquid.
TEMPORARY
DEFENSIVE POSITION
- ----------------------------------------------------
Sometimes Banc One Investment Advisors decides that because of market conditions
the Funds should temporarily be invested in instruments other than the
underlying mutual funds. Therefore, the Funds are permitted for temporary
defensive purposes to invest up to 100% of their assets in short-term fixed
income securities. These securities include obligations of the U.S. Government
and its agencies and instrumentalities, commercial paper, bank certificates of
deposit, repurchase agreements, bankers' acceptances, variable amount master
demand notes and bank money market deposit accounts. The Funds also may hold
cash for liquidity purposes.
To the extent that the Funds are engaged in a temporary defensive position, they
will not be pursuing their investment objective.
SPECIAL RISK
CONSIDERATIONS
- ----------------------------------------------------
EQUITY FUNDS Because equity funds invest primarily in equity securities, which
fluctuate in value, the funds' shares will fluctuate in value. In addition,
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.
FIXED-INCOME FUNDS Investments in fixed income securities (for example, bonds)
will increase or decrease in value based on changes in interest rates. If rates
increase, the value of a Fund's investments generally declines. On the other
hand, if rates fall, the value of the investments generally increases. The value
of your investment in a Fund will increase and decrease as the value of a Fund's
investments increase and decrease. While securities with longer duration and
maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
INDEX FUNDS An index fund's investment objective is to track the performance of
a specified index. Therefore, securities may be purchased, retained and sold by
an index fund at times when an actively managed fund would not do so. As a
result, you can expect greater risk of loss (and a correspondingly greater
prospect of gain) from changes in the value of securities that are heavily
weighted in the index than would be the case if the funds were not fully
invested in such securities. Because of this, an index fund's share price can be
volatile and you should be able to handle sudden, and sometimes substantial,
fluctuation in the value of your investment.
INTERNATIONAL FUNDS Funds investing in foreign securities are subject to special
risks. These risks may include future unfavorable political and economic
developments, possible withholding taxes, seizure of foreign deposits, currency
controls, higher transaction costs, and delayed settlements of transactions.
Securities of some foreign companies are less liquid, and their prices more
volatile, than securities of comparable U.S. companies. Additionally, there may
be less public information available about foreign issuers. Finally, since the
funds may invest in securities denominated in foreign currencies, changes in
exchange rates may affect the value of investments in the funds.
SMALL CAPITALIZATION FUNDS Smaller, less seasoned companies may be subject to
greater business risk than larger, established companies. They may be more
vulnerable to changes in economic conditions, specific industry conditions,
market fluctuations and other factors affecting the profitability of other
companies. Therefore, the stock price of smaller capitalization companies may be
subject to greater price fluctuations than that of larger, established
companies. Due to these and other risk factors, the price movement of the
securities held by the funds may be volatile and the net asset value of shares
of the funds may fluctuate.
<PAGE> 219
HOW TO DO BUSINESS WITH THE ONE GROUP
15
PURCHASING
FUND SHARES
- ----------------------------------------------------
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
- - The One Group Services Company, and
- - Shareholder Servicing Agents. These include investment advisors, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased this way will be held for
you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
- - Purchases may be made on any business day. This includes any day that the
Funds are open for business, other than weekends and the following holidays:
New Years Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.
- - Purchase requests received by The One Group Services Company before 4:00 p.m.
Eastern Standard Time ("EST"), will be effective that day.
- - Purchase orders may be cancelled by the Fund's Custodian, State Street Bank
and Trust Company, if it does not receive "federal funds" by 4:00 p.m. EST (i)
on the business day after the order is placed if you are buying Fiduciary
Class shares, and (ii) on the third business day if you are purchasing Class
A, Class B and Class C shares.
- - If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase or
redemption order to the Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption requests.
- - The One Group Services Company can reject a purchase order if it does not
think that it is in the best interests of a Fund and/or its shareholders to
accept the order.
- - Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
The One Group offers the following classes of shares:
- - Class A, Class B and Class C shares are available to the general public.
- - Fiduciary Class shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or agency
capacity. We will refer to these entities as "Intermediaries."
- - If you intend to hold your shares for six or more years, Class B shares may be
appropriate for you. If you intend to hold your shares for less than six
years, you may want to consider Class A or Class C shares.
The One Group Fund Direct IRA. The One Group offers a retirement plan and, in
1998, will offer an education plan. These plans allow participants to defer
taxes while their retirement and education savings grow. The education IRA
requires a minimum investment of $500. Call The One Group Services Company at
1-800-480-4111 for an Adoption Agreement.
HOW MUCH DO SHARES COST?
- - Shares are sold at net asset value ("NAV") plus a sales charge, if any.
- - Each class of shares in each Fund has a different NAV. This is primarily
because each class has different distribution expenses.
- - NAV per share is calculated by dividing the total market value of a Fund's
investments and other assets allocable to a class (minus class expenses) by
the number of outstanding shares in that class.
- - A Fund's NAV changes every day. NAV is calculated each business day at 4:00
p.m. EST.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most appropriate
for you.
2. Decide how much you want to invest.
- The minimum initial investment is $1,000 ($100 for employees of BANC ONE
CORPORATION and its affiliates).
- Subsequent investments must be at least $100 ($25 for employees of BANC ONE
CORPORATION and its affiliates).
- You may purchase no more than $250,000 of Class B shares at one time.
- The One Group Services Company may waive these minimums.
3. Complete the Account Application Form. Be sure to sign up for all of the
Account privileges that you plan to take advantage of. Doing so now means
that you will not have to complete additional paperwork later.
<PAGE> 220
16
4. Send the completed application and a personal check (unless you choose to pay
by wire or bank transfer) payable to "The One Group" to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
Contributions to Fund Direct IRAs should be made payable to "State Street
Bank and Trust Company for the Benefit of (your name)."
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions from a Fund will not be permitted for ten (10) calendar
days if purchases are made by check or under the Systematic Investment Plan
(see below).
6. If you purchase shares through a Shareholder Servicing Agent, you may be
required to complete additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent regarding purchases,
exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or call
The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
- - Contact your Shareholder Servicing Agent or The One Group Services Company at
1-800-480-4111 to relay your purchase instructions.
- - Send a personal check made payable to "The One Group" to State Street Bank and
Trust Company (see address above), authorize a bank transfer or initiate a
wire transfer.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - You may revoke your right to make purchases over the telephone by sending a
letter to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CAN I AUTOMATICALLY INVEST ON A SYSTEMATIC BASIS?
Yes. After your Account is established, you may purchase additional Class A,
Class B and Class C shares by making automatic monthly investments from your
bank account. The minimum initial investment is still $1,000, but minimum
automatic additions are only $25. The One Group Services Company may waive these
minimums. To establish a Systematic Investment Plan:
- - Select the "Systematic Investment Plan" option on the Account Application
Form.
- - Provide the necessary information about the bank account from which your
investments will be made.
- - Shares purchased under a Systematic Investment Plan may not be redeemed for
ten (10) calendar days.
- - The One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for debiting your
bank account.
- - You may revoke your right to make systematic investments by sending a letter
to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CONVERSION FEATURE
Your Class B shares automatically convert to Class A shares after eight years
(measured from the end of the month in which they were purchased).
- - After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Class A shares.
- - You will not be assessed any sales charges or fees for conversion of shares,
nor will you be subject to any tax.
- - Because the share price of the Class A shares may be higher than that of the
Class B shares at the time of conversion, you may receive fewer Class A
shares; however, the dollar value will be the same.
- - If you have exchanged Class B shares of one Fund for Class B shares of
another, the time you held the shares in each Fund will be added together.
SALES CHARGES
- ----------------------------------------------------
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of The One Group. Compensation comes from: sales charges, 12b-1 fees and
payment by The One Group Services Company from its own resources. The One Group
Services Company, at its own expense, also will provide promotional incentives
in the form of travel expenses, lodging and bonuses to licensed individuals who
sell shares of the Funds, as well as vacation trips (including lodging at luxury
resorts), tickets to entertainment events, and merchandise.
<PAGE> 221
17
CLASS A SHARES
This table shows the amount of sales charge you pay and the commissions paid to
Shareholder Servicing Agents.
<TABLE>
<CAPTION>
SALES CHARGE AS A %
OF THE OFFERING SALES CHARGE AS A % COMMISSION AS A %
AMOUNT OF PURCHASE PRICE OF YOUR INVESTMENT OF OFFERING PRICE
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.05%
$100,000-$249,999 3.50% 3.63% 3.05%
$250,000-$499,999 2.50% 2.56% 2.05%
$500,000-$999,999 2.00% 2.04% 1.60%
$1,000,000* 0.00% 0.00% 0.00%
</TABLE>
* If you purchase $1 million or more of Class A shares and are not assessed a
sales charge at the time of purchase, you will be charged the equivalent of
1% of the purchase price if you redeem any or all of the Class A shares
within one year of purchase.
CLASS B SHARES
Class B shares are offered at NAV, without any up-front sales charges. However,
if you redeem these shares within six years of the purchase date, you will be
assessed a Contingent Deferred Sales Charge ("CDSC") according to the following
schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 0.00%
</TABLE>
The One Group Services Company pays a commission of 4.00% of the original
purchase price to Shareholder Servicing Agents who sell Class B shares.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
assessed a CDSC as follows:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 1.00%
After first year None
</TABLE>
Shareholder Servicing Agents selling Class C shares receive a commission of
1.00% of the original purchase price from The One Group Services Company.
How the CDSC is Calculated
- - The Fund assumes that all purchases made in a given month were made on the
first day of the month.
- - The CDSC is based on the current market value or the original cost of the
shares, whichever is less.
- - A sales charge is not imposed on increases in NAV above the initial purchase
price, nor is a sales charge assessed on shares acquired through reinvestment
of dividends or capital gains distributions.
- - To keep your CDSC as low as possible, the Fund first will redeem any shares in
your account that carry no CDSC, starting with Class A Shares. After that, the
Fund will redeem the shares you have held for the longest time and thus have
the lowest CDSC.
<PAGE> 222
18
12B-1 FEES
12b-1 fees are paid by The One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to Shareholder Servicing Agents that sell
shares of The One Group.
- - The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .35% of the average daily net assets of
the Fund, which is currently being waived to .25%.
2. Class B and Class C shares pay a 12b-1 fee of 1.00% of the average daily
net assets of the Fund. This will cause expenses for Class B and Class C
shares to be higher and dividends to be lower than for Class A shares.
3. There are no 12b-1 fees for Fiduciary Class shares.
- - 12b-1 fees, together with the CDSC, help The One Group Services Company sell
Class B and Class C shares without an "up-front" sales charge by defraying the
costs of advancing brokerage commissions and other expenses paid to
Shareholder Servicing Agents.
- - The One Group Services Company may use up to .25% of the fees for shareholder
servicing and up to .75% for distribution. During the last fiscal year, The
One Group Services Company received 12b-1 fees totaling .25%, 1.00% and 1.00%
of the average daily net assets of Class A, Class B and Class C shares,
respectively.
- - The One Group Services Company may pay 12b-1 fees to its affiliates and to
Banc One Investment Advisors and its affiliates (or any sub-advisor) for
brokerage and other agency transactions.
SALES CHARGE REDUCTIONS AND WAIVERS
- ----------------------------------------------------
REDUCING YOUR CLASS A SALES CHARGES
There are several ways you can reduce the sales charges you pay on Class A
shares:
1. Right of Accumulation: You may add the market value of any Class A, Class B
or Class C shares of a Fund (except a money market fund) that you (and your
spouse and minor children) already own to the amount of your next Class A
purchase for purposes of calculating the sales charge. An Intermediary also
may take advantage of this option.
2. Letter of Intent: With an initial investment of $2,000, you may purchase
Class A shares of one or more funds over the next 13 months and pay the same
sales charge that you would have paid if all shares were purchased at once. A
percentage of your investment will be held in escrow until the full amount
covered by the Letter of Intent has been invested.
To take advantage of the accumulation privilege or letter of intent, complete
the appropriate section of your fund application, or contact your Shareholder
Servicing Agent. To determine if you are eligible for the accumulation
privilege, contact The One Group Services Company at 1-800-480-4111. These
programs may be terminated or amended at any time.
WAIVER OF THE CLASS A SALES CHARGE
No sales charge is imposed on Class A shares of the Funds if the shares were:
1. Bought with the reinvestment of dividends and capital gains distributions.
2. Acquired in exchange for other Fund shares if a comparable sales charge has
been paid for the exchanged shares.
3. Bought by officers, directors or trustees, retirees and employees (and their
spouses and immediate family members) of:
- The One Group.
- BANC ONE CORPORATION and its subsidiaries and affiliates.
- The One Group Services Company and its subsidiaries and affiliates.
- State Street Bank and Trust Company and its subsidiaries and affiliates.
- Broker/dealers who have entered into dealer agreements with The One Group
and their subsidiaries and affiliates.
- An investment sub-advisor of a fund of The One Group and such sub-advisor's
subsidiaries and affiliates.
4. Bought by:
- Affiliates of BANC ONE CORPORATION and certain accounts (other than IRA
Accounts) for which an Intermediary acts in a fiduciary, advisory, agency,
custodial or similar capacity.
- Accounts to which a bank or broker-dealer charges an asset allocation fee,
provided the bank or broker-dealer has an agreement with The One Group
Services Company.
- Retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to, those defined in sections 401(a),
403(b) or 457 of the Internal Revenue Code and "rabbi trusts."
- Shareholder Servicing Agents who have a dealer arrangement with The One
Group
<PAGE> 223
19
Services Company, who place trades for their own accounts or for the
accounts of their clients and who charge a management, consulting or other
fee for their services, as well as clients of such Shareholder Servicing
Agents who place trades for their own accounts if the accounts are linked
to the master account of such Shareholder Servicing Agent on the books and
record of the broker or agent.
5. Bought with proceeds from the sale of Fiduciary Class shares of a Fund of The
One Group or acquired in an exchange of Fiduciary Class shares of a Fund for
Class A shares of the same Fund, but only if the purchase is made within 60
days of the sale or distribution.
6. Bought with proceeds from the sale of shares of a mutual fund (other than a
fund of The One Group) for which a sales charge was paid, but only if the
purchase is made within 60 days of the sale or distribution.
7. Bought in an IRA with the proceeds of a distribution from an employee benefit
plan, but only if the purchase is made within 60 days of the sale or
distribution and, at the time of the distribution, the employee benefit plan
had plan assets invested in a Fund of The One Group.
8. Bought with assets of The One Group.
9. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
The waivers described in (5), (6) and (7) above will not continue indefinitely
and may be discontinued at any time without notice.
WAIVER OF THE CLASS B SALES CHARGE
No sales charge is imposed on redemptions of Class B shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class B shares of other Funds of The One Group.
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class C shares of other Funds of The One Group.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance. To see if you qualify, contact The One Group Services
Company at 1-800-480-4111, or your Shareholder Servicing Agent.
EXCHANGING
FUND SHARES
- ----------------------------------------------------
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
- - Fiduciary Class shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group.
- - Class A shares of a Fund may be exchanged for Fiduciary Class shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group, but only if you are eligible to purchase those shares.
- - Class B shares of a Fund may be exchanged for Class B shares of another Fund
of The One Group.
- - Class C shares of a Fund may be exchanged for Class C shares of another Fund
of The One Group.
The One Group does not charge a fee for this privilege. In addition, The One
Group may change the terms and conditions of your exchange privileges upon 60
days written notice.
<PAGE> 224
20
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
- - State Street Bank and Trust Company receives the request by 4:00 p.m. EST.
- - You have provided The One Group with all of the information necessary to
process the exchange.
- - You have received a current prospectus of the Fund or Funds in which you wish
to invest.
- - You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
- - You will pay a sales charge if you own Fiduciary Class shares of a Fund and
you want to exchange those shares for Class A shares, unless you qualify for a
sales charge waiver (see above).
- - You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange them for
shares of a Fund that does, in which case you would pay the sales charge
applicable to the Fund into which you are exchanging.
2. That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that Fund's
sales charge and all other sales charges you have already paid.
- - If you exchange Class B or Class C shares of a Fund, you will not pay a sales
charge at the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC of
either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C shares is
carried over to your new shares.
ARE EXCHANGES TAXABLE?
Generally:
- - An exchange between classes of shares of the same Fund is not taxable.
- - An exchange between Funds is considered a sale and generally results in a
capital gain or loss for Federal income tax purposes.
- - You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short-term movements in the market. Therefore:
- - To prevent disruptions in the management of the Funds, The One Group limits
excessive exchange activity.
- - Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- - In addition, The One Group reserves the right to reject any exchange request
(even those that are not excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or otherwise adversely
affect other shareholders.
REDEEMING FUND SHARES
- ----------------------------------------------------
WHEN CAN I REDEEM SHARES?
- - You may redeem all or some of your shares on any day that the Funds are open
for business.
- - Redemption requests received by The One Group Services Company before 4:00
p.m. EST will be effective that day.
HOW DO I REDEEM SHARES?
- - Unless you have selected the telephone option on your Account Application
Form, you must send a written redemption request to your Shareholder Servicing
Agent, if applicable, or to State Street Bank and Trust Company at the
following address:
The One Group
c/o State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
- - All requests for redemptions from IRA accounts must be in writing.
- - You may request redemption forms by calling The One Group Services Company at
1-800-480-4111.
- - State Street Bank and Trust Company may require that the signature on your
redemption request be guaranteed by a commercial bank, a member of a domestic
stock exchange, or a member of the Securities Transfer Association Medallion
Program or the Stock Exchange Medallion Program, unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record; and
<PAGE> 225
21
3. the redemption check is mailed to the shareholder at the record address.
- - On the Account Application Form you may elect to have the redemption proceeds
mailed or wired to:
1. a designated commercial bank or
2. State Street Bank and Trust Company or your Shareholder Servicing Agent.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - Your redemption proceeds will be paid within seven days after receipt of the
redemption request.
WHAT WILL MY SHARES BE WORTH?
- - If you own Class A and Fiduciary Class shares and the Fund receives your
redemption request by 4:00 p.m. EST, you will receive that day's NAV.
- - If you own Class B and Class C shares and the Fund receives your redemption
request by 4:00 p.m. EST, you will receive that day's NAV, minus the amount of
any applicable CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
- - Call your Shareholder Servicing Agent or State Street Bank and Trust Company
at 1-800-480-4111 to relay your redemption request.
- - Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - REDEMPTIONS FROM YOUR IRA ACCOUNT MAY NOT BE MADE BY TELEPHONE.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000, you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
- - Select the "Systematic Withdrawal Plan" option on the Account Application
Form.
- - Specify the amount you wish to receive and the frequency of the payments.
- - You may designate a person other than yourself as the payee.
- - There is no charge for this service.
- - If you select this option, please keep in mind that:
1. It may not be in your best interest to buy additional Class A shares while
participating in a Systematic Withdrawal Plan. This is because Class A
shares have an up-front sales charge.
2. If you own Class B or Class C shares, you or your designated payee may
receive systematic payments provided the payments are limited to no more
than 10% of your account value annually, measured from the date the
redemption request is received.
3. If you are age 70 1/2, you may elect to receive payments to the extent
that the payment represents a minimum required distribution from an IRA or
other qualifying retirement plan.
4. If the amount of the systematic payment exceeds the income earned by your
account since the previous payment under the Systematic Withdrawal Plan,
payments will be made by redeeming some of your shares. This will reduce
the amount of your investment.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
- - All redemptions will be for cash.
- - If you redeem shares for which you paid by check, and The One Group has not
yet received payment on the check, The One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been collected from
your bank.
- - Because of the high cost of handling small investments, The One Group will
automatically redeem shares in accounts which, because of shareholder
redemptions, have values of less than $1,000. No sales charges will be
assessed and you will be given 60 days to make additional investments in the
Fund to increase the value of your account to at least $1,000.
- - The One Group may suspend your ability to redeem, or will redeem your shares
involuntarily, when it seems appropriate to do so in light of its
responsibilities under the Federal securities laws. The Statement of
Additional Information offers more details about this process.
<PAGE> 226
SHAREHOLDER INFORMATION
22
VOTING RIGHTS
- ----------------------------------------------------
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
BANC ONE CORPORATION (100 East Broad Street, Columbus, Ohio, 43271), through its
affiliates, may be deemed for purposes of the Investment Company Act of 1940, to
control the Funds. This is because as of August 5, 1997, BANC ONE CORPORATION or
its affiliates possessed the power to vote substantially all of the Fiduciary
Class shares of the Funds.
On that same date, the following shareholders owned 25% or more of the Class C
shares of the Funds. As a consequence, they are considered to be controlling
persons of Class C shares of the Funds.
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
<S> <C> <C> <C> <C>
Dean Witter FBO David H Behm & Investor Balanced Fund 39.79% Record
Christine A Behm JT TEN Class C
Church St Station -- P.O. Box
250
New York, NY 10277
Dean Witter FBO Alexis B Newell Investor Balanced Fund 34.55% Record
7812 Meadow Park Drive #228 Class C
Church St Station -- P.O. Box
250
New York, NY 10013-0250
Dean Witter FBO Ninfa D Cayayan Investor Growth Fund 27.59% Record
MD PFT SHR PL Class C
Ninfa A Cayayan MD TTEE
Church St Station -- P.O. Box
250
New York, NY 10277
</TABLE>
DIVIDEND POLICIES
- ----------------------------------------------------
DIVIDENDS
The Funds generally declare dividends monthly. Dividends are distributed on the
first Business Day of each month. Capital gains, if any, for all Funds are
distributed at least annually.
The Funds pay dividends and distributions on a per-share basis. This means that
the value of your shares will be reduced by the amount of the payment. If you
purchase shares shortly before the record date for a dividend or the
distribution of capital gains, you will pay the full price for the shares and
receive some portion of the price back as a taxable dividend or distribution.
Dividends payable on Fiduciary Class shares will be more than those payable on
other classes of shares. This is because Class A, Class B and Class C shares
have higher distribution expenses.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8500, Boston, MA
02266-8500, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street.
SPECIAL DIVIDEND RULES FOR CLASS B SHARES
Class B shares received as dividends and capital gains distributions will be
accounted for separately. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of the Class B shares in
the sub-account will also convert to Class A shares. (See "Conversion Feature".)
<PAGE> 227
23
TAX TREATMENT
OF THE FUNDS
- ----------------------------------------------------
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT
OF SHAREHOLDERS
- ----------------------------------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of shares of the Funds generally will produce
either a taxable gain or a loss. You are responsible for any tax liabilities
generated by your transactions.
TAXATION OF DISTRIBUTIONS
Dividends you receive from a Fund, whether reinvested or received in cash, will
be taxable to you. Dividends from a Fund's net investment income will be taxable
as ordinary income and dividends from a Fund's long-term capital gains will be
taxable to you as such, regardless of how long you have held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid the previous December.
TAXATION OF RETIREMENT PLANS
Distributions by the Funds to qualified retirement plans will not be taxable.
However, if shares are held by a plan that ceases to qualify for tax-exempt
treatment or by an individual who has received shares as a distribution from a
retirement plan, the distributions will be taxable to the plan or individual as
described in "Taxation of Distributions." If you are considering purchasing
shares with qualified retirement plan assets, you should consult your tax
advisor for a more complete explanation of the Federal, state, local and (if
applicable) foreign tax consequences of making such an investment.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
SHAREHOLDER INQUIRIES
- ----------------------------------------------------
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In March and September you will receive a financial report from The One
Group. In addition, The One Group will periodically send you proxy
statements and other reports.
<PAGE> 228
ORGANIZATION AND MANAGEMENT OF THE FUNDS
24
THE FUNDS
Each Fund is a series of The One Group, an open-end management investment
company. The One Group currently consists of 40 separate Funds. Four of the
Funds are described in this prospectus; the other Funds are described in
separate prospectuses. Each Fund described in this prospectus is diversified.
Each Fund is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of The One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to The
One Group since 1993. Prior to that time, The One Group was advised by
affiliates of Banc One Investment Advisors. In addition to The One Group, Banc
One Investment Advisors serves as investment advisor to other mutual funds and
individual, corporate, charitable and retirement accounts. As of June 30, 1997,
Banc One Investment Advisors, an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, managed over $47 billion in assets. For the fiscal year ended June
30, 1997, the Funds paid investment advisory fees of .01% of each Fund's average
daily net assets.
No single person is responsible for managing the assets of the Funds. Rather,
investment decisions for the Funds are made by committee. Banc One Investment
Advisors also serves as the advisor to the underlying mutual funds, for which it
receives a fee.
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory compliance and
reporting. For these services, The One Group Services Company receives an annual
fee of .10% of each Fund's average daily net assets, on the first $500,000,000
in Fund assets. The fee declines to .075% on net assets between $500,000,000 and
$1 billion, and to .05% on assets over $1 billion. The fee is calculated daily
and paid monthly. Banc One Investment Advisors, the Sub-Administrator, provides
office space, equipment, and facilities, as well as legal and regulatory
support.
THE TRANSFER AGENT, CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500, or
your Shareholder Servicing Agent, if appropriate, handles shareholder
recordkeeping and statementing, distributes dividends, and processes buy and
sell requests. As the Funds' custodian, State Street holds the Funds' assets,
settles all portfolio trades and assists in calculating the Funds' net asset
values. Bank One Trust Company, N.A. serves as sub-custodian in connection with
The One Group's securities lending activities under an agreement with State
Street Bank and Trust Company. Bank One Trust Company, N.A. is paid a fee for
this service.
<PAGE> 229
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
25
INVESTMENT PRACTICES
- ----------------------------------------------------
The following is a brief description of the principal investment policies of the
underlying funds.
THE ONE GROUP(R) PRIME MONEY MARKET FUND
The One Group(R) Prime Money Market Fund seeks current income with liquidity and
stability of principal. The fund intends to comply with the regulations of the
Securities and Exchange Commission applicable to money market funds using the
amortized cost method for calculating net asset value. These regulations impose
certain quality, maturity and diversification restraints on investments by the
fund. Under these regulations, the fund will invest only in U.S.
dollar-denominated securities, will maintain an average maturity on a
dollar-weighted basis of 90 days or less, and will acquire only "eligible
securities" that present minimal credit risks and are treated as having a
maturity of 397 days or less.
THE ONE GROUP(R) LIMITED VOLATILITY
BOND FUND
The One Group(R) Limited Volatility Bond Fund seeks current income consistent
with preservation of capital through investment in high and medium-grade
fixed-income securities. The Fund normally invests at least 80% of total assets
in debt securities of all types with short to intermediate maturities. Debt
securities include bonds, notes and other obligations. At least 65% of the
Fund's total assets will consist of bonds rated in one of the three highest
investment grade categories at the time of investment, or if unrated, determined
by Banc One Investment Advisors to be of comparable quality, and at least 65% of
total assets will consist of obligations issued by the U.S. government or its
agencies and instrumentalities, some of which may be subject to repurchase
agreements. Many investments will satisfy both requirements. Under normal market
conditions, it is anticipated that the fund's average weighted maturity will
range between one and five years. The fund may also purchase taxable or
tax-exempt municipal securities. Up to 20% of the fund's total assets may be
invested in preferred stocks.
THE ONE GROUP(R) INTERMEDIATE BOND FUND
The One Group(R) Intermediate Bond Fund seeks current income consistent with the
preservation of capital through investments in high and medium-grade
fixed-income securities with intermediate maturities. The fund will normally
invest at least 80% of total assets in debt securities of all types. Debt
securities include bonds, notes and other obligations. At least 65% of the
fund's total assets will consist of bonds rated in one of the three highest
investment grade categories at the time of investment, or if unrated, determined
by Banc One Investment Advisors to be of comparable quality, and at least 50% of
total assets will consist of obligations issued by the U.S. government or its
agencies and instrumentalities, some of which may be subject to repurchase
agreements. Many investments will satisfy both requirements. The Fund also may
invest in more speculative debt securities if they present attractive
opportunities and are rated in the lowest investment grade category. The fund
may also purchase taxable or tax-exempt municipal securities. Under normal
market conditions, it is anticipated that the fund's average weighted maturity
will range between three and ten years. Up to 20% of the fund's total assets may
be invested in preferred stocks.
THE ONE GROUP(R) INCOME BOND FUND
The One Group(R) Income Bond Fund seeks a high level of current income by
investing primarily in a diversified portfolio of high, medium and low grade
debt securities. The Fund normally will invest at least 70% of its total assets
in debt securities of all types rated as investment grade at the time of
investment or, if unrated, determined by Banc One Investment Advisors to be of
comparable quality. In addition, up to 30% of the Fund's total assets may be
invested in convertible securities, preferred stock, loan participations and
debt securities rated below investment grade or, if unrated, determined by Banc
One Investment Advisors to be of comparable quality. Securities rated below
investment grade are called "high yield bonds," "non-investment grade bonds" and
"junk bonds." These securities are rated in the fifth or lower rating
categories, for example, BB or lower by Standard & Poor's Corporation ("S&P")
and Ba or lower by Moody's Investors Service, Inc. ("Moody's"), and are
considered to have speculative characteristics. Even though it may invest in
debt securities in all rating categories, the Fund will not invest more than 20%
of its total assets in securities rated below the fifth rating category. As a
matter of fundamental policy, at least 65% of the Fund's total assets will
consist of bonds. The Fund also may purchase taxable or tax-exempt municipal
securities.
<PAGE> 230
26
Under normal market conditions, it is anticipated that the Fund's average
weighted maturity will range between five and twenty years. The Fund may shorten
its effective weighted average maturity to as little as two years if deemed
appropriate for temporary defensive purposes.
THE ONE GROUP(R) GOVERNMENT BOND FUND
The One Group(R) Government Bond Fund seeks a high level of current income with
liquidity and safety of principal. The Fund will limit its investments to
securities issued by the U.S. Government and its agencies and instrumentalities
or related to securities issued by the U.S. Government and its agencies and
instrumentalities. At least 65% of the total assets of the Fund 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 average weighted remaining maturity of the fund is
expected to be between three and fifteen years, however, the Fund's average
weighted remaining maturity may be outside this range if warranted by market
conditions. The balance of the Fund's assets may be invested in debt securities
and taxable or tax-exempt municipal securities.
THE ONE GROUP(R) ULTRA SHORT-TERM
INCOME FUND
The One Group(R) Ultra Short-Term Income Fund seeks a high level of current
income consistent with low volatility of principal by investing in a diversified
portfolio of short-term investment grade securities. The Fund normally invests
at least 80% of its total assets in debt securities of all types, including
money market instruments. In addition, up to 20% of the fund's total assets may
be invested in other securities, including preferred stock. The fund will invest
in adjustable rate mortgage pass-through securities and other securities
representing an interest in or collateralized by mortgages with periodic
interest rate resets, some of which may be subject to repurchase agreements.
These securities often are issued or guaranteed by the U.S. government, its
agencies or instrumentalities. However, the Fund also may purchase
mortgage-backed securities that are issued by non-governmental entities. Such
securities may or may not have private insurer guarantees as to timely payments.
The fund also may purchase mortgage and interest rate swaps and interest rate
floors and caps. The fund also may employ other investment techniques to enhance
returns, such as loans of fund securities, mortgage dollar rolls, repurchase
agreements, options contracts and reverse repurchase agreements. The Fund will
maintain a maximum duration of approximately two years.
THE ONE GROUP(R) DISCIPLINED VALUE FUND
The One Group(R) Disciplined Value Fund seeks capital appreciation with the
secondary goal of achieving current income by investing primarily in equity
securities. The Fund will invest mainly in equity securities with below-market
average price-to-earnings and price-to-book value ratios. The issuer's soundness
and earnings prospects also will be considered. If Banc One Investment Advisors
determines that a company's fundamentals are declining or that the company's
ability to pay dividends has been impaired, it likely will eliminate the Fund's
holding of the company's stock. The Fund normally invests at least 80% of the
value of its total assets in equity securities consisting of common stocks and
debt securities and preferred stocks that are convertible into common stocks.
The fund also may enter into options and futures transactions. The balance of
the fund's assets will be held in cash equivalents.
THE ONE GROUP(R) INTERNATIONAL
EQUITY INDEX FUND
The One Group(R) International Equity Index Fund seeks to provide investment
results that correspond to the aggregate price and dividend performance of the
securities in the Gross Domestic Product Weighted Morgan Stanley Capital
International Europe, Australia and Far East Index ("MSCI EAFE GDP Index" or
"EAFE GDP Index").(1) The Fund normally will invest at least 65% of the value
of its total assets in foreign equity securities, which are representative of
the Index and secondarily in stock index futures. The Fund's investments will
consist of common stocks (including sponsored and unsponsored American
Depository Receipts) and preferred stocks, securities convertible into common
stocks (only if they are listed on registered exchanges or actively traded in
the over-the-counter market), warrants and depository receipts. No more than 10%
of the fund's net assets will be held in cash or cash equivalents. The fund may
invest up
- ---------------
(1) "MSCI EAFE GDP Index" is a registered service mark of Morgan Stanley Capital
International, which does not sponsor and is in no way affiliated with the
fund.
<PAGE> 231
27
to 10% ofits net assets in securities of emerging international markets. A
substantial portion of the fund's assets will be denominated in foreign
currencies.
THE ONE GROUP(R) LARGE COMPANY
GROWTH FUND
The One Group(R) Large Company Growth Fund seeks long-term capital appreciation
and growth of income by investing primarily in equity securities. The Fund will
normally invest at least 65%, of the value of its total assets in equity
securities consisting of common stocks, warrants and any rights to purchase
common stocks. To achieve its objective, the Fund will invest primarily in
equity securities of large, well established companies with weighted average
capitalization in excess of the market median capitalization of the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500 Index").(2) The fund may
invest the remainder of its assets in any combination of nonconvertible fixed
income securities, repurchase agreements, options and futures contracts,
securities issued by the U.S. government and its agencies and instrumentalities,
and cash equivalents.
THE ONE GROUP(R) LARGE COMPANY
VALUE FUND
The One Group(R) Large Company Value Fund seeks capital appreciation with the
incidental goal of achieving current income by investing primarily in equity
securities. The Fund will invest in equity securities of large capitalization
companies that are believed to be selling below their long-term investment
values. The average weighted market capitalization of the companies in which the
Fund invests will normally exceed the median market capitalization of the S&P
500 Index. In addition, the Fund may invest in stock of companies which have
"breakup" values well in excess of current market values or which have uniquely
undervalued corporate assets. The Fund normally will 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.
The remainder of the fund's assets will be held in cash equivalents
THE ONE GROUP(R) GROWTH OPPORTUNITIES FUND
The One Group(R) Growth Opportunities Fund seeks growth of capital and,
secondarily, current income by investing primarily in equity securities. The
Fund invests in securities that have the potential to produce above-average
earnings growth per share over a one-to-three year period. Typically, the Fund
acquires shares of established companies with a history of above-average growth,
as well as those companies expected to enter periods of above-average growth.
Not all the securities purchased by the Fund will pay dividends. The Fund also
invests in smaller companies in emerging growth industries. At least 80% of the
value of its total assets will be invested in equity securities consisting of
common stocks and debt securities and preferred stocks that are convertible into
common stocks. The fund also may enter into options and futures transactions.
The remainder of the fund's assets will be held in cash equivalents.
THE ONE GROUP(R) VALUE GROWTH FUND
The One Group(R) Value Growth Fund seeks long-term capital growth and growth of
income with a secondary objective of providing a moderate level of current
income. The Fund invests primarily in common stocks, debt securities, preferred
stocks, convertible securities, warrants, and other equity securities of
overlooked or undervalued companies that show the potential for growth of
earnings over time. Although the Fund expects to invest in securities that pay a
moderate level of income, it may also invest in non-income producing securities.
The Fund normally will invest at least 65% of the value of its total assets in
securities with the characteristics described above. Although the fund intends
to invest all of its assets in such securities, up to 35% of its total assets
may be held in cash or invested in U.S. Government Securities, other investment
grade fixed-income securities cash and cash equivalents.
THE ONE GROUP(R) SMALL CAPITALIZATION FUND
The One Group(R) Small Capitalization Fund seeks long-term capital growth
primarily by investing in a portfolio of equity securities of
small-capitalization and emerging growth companies. The Fund invests primarily
in a portfolio of common stocks, debt securities, preferred stocks, convertible
securities, warrants and other equity securities of small capitalization
companies. Generally, Banc One Investment Advisors selects a portfolio of
companies with a capitalization equivalent to the median market capitalization
of the S&P Small-Cap 600 Index(3), although the Fund may occasionally hold
securities of companies whose market capitaliza-
- ---------------
(2) "Standard & Poor's 500" is a registered trademark of Standard & Poor's
Corporation, which does not sponsor and is in no way affiliated with the
Fund.
(3) "Standard & Poor's Small-Cap 600" is a registered trademark of Standard &
Poor's Corporation, which does not sponsor and is in no way affiliated with
the Fund.
<PAGE> 232
28
tions are considerably larger if doing so contributes to the funds investment
objective. At least 65% of the value of the Fund's total assets normally will be
invested in securities with the characteristics described above. Up to 35% of
its total assets may be held in cash or invested in U.S. Government Securities,
other investment grade fixed-income securities and cash equivalents.
THE ONE GROUP(R) INCOME EQUITY FUND
The One Group(R) Income Equity Fund seeks current income through regular payment
of dividends with the secondary goal of achieving capital appreciation by
investing primarily in equity securities. The Fund attempts to keep its yield
above the S&P 500 Index by investing in common stocks of corporations which
regularly pay dividends, although continued payment of dividends cannot be
assured. The fund 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. The Fund normally invests 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. The Fund also may enter into options and futures
transactions. The balance of the Fund's assets will be held in cash equivalents.
THE ONE GROUP(R) EQUITY INDEX FUND
The One Group(R) Equity Index Fund seeks investment results that correspond to
the aggregate price and dividend performance of the securities in the S&P 500
Index. The Fund normally invests in many of the stocks which comprise the S&P
500 Index and secondarily in stock index futures. Cash reserves will not
normally exceed 10% of the fund's net assets. The Advisor generally selects
stocks for the Fund in the order of their weightings in the S&P 500 Index
beginning with the heaviest weighted stocks. The percentage of the Fund's assets
to be invested in each stock is approximately the same as the percentage it
represents in the S&P 500 Index.
Details about each underlying fund's investment practices and the risks
associated with those practices can be found in Appendix B.
INVESTMENT POLICIES
- ----------------------------------------------------
Each Fund's investment objective and the investment policies summarized below
are fundamental. This means that they cannot be changed without the consent of a
majority of the outstanding shares of the Funds. The full text of the
fundamental policies can be found in the Statement of Additional Information.
Each Fund may not:
1. Purchase an issuer's securities if as a result more then 5% of its total
assets would be invested in the securities of that issuer or the Fund would
own more than 10% of the outstanding voting securities of any of that issuer.
This does not include securities issued or guaranteed by the United States,
its agencies or instrumentalities, securities of other registered investment
companies and repurchase agreements involving these securities. This
restriction applies with respect to 75% of a Fund's total assets.
2. Concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include obligations issued or guaranteed by the
U.S. government or its agencies and instrumentalities and repurchase
agreements involving such securities.
3. 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.
Additional investment policies can be found in the Statement of Additional
Information.
PORTFOLIO TURNOVER
Portfolio turnover may vary greatly from year to year as well as within a
particular year. Higher portfolio turnover rates will likely result in higher
transaction costs to the Funds and may result in additional tax consequences to
you. The portfolio turnover rate for each Fund for the fiscal year ended June
30, 1997 is shown on the Financial Highlights.
<PAGE> 233
APPENDIX A
29
INVESTMENT PRACTICES
The underlying funds invest in a variety of securities and employ a number of
investment techniques. Each security and technique involves certain risks. What
follows is a list of the securities and techniques utilized by the Funds, as
well as the risks inherent in their use. For a more complete discussion, see the
Statement of Additional Information. Following the table is a more complete
discussion of risk.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
<S> <C> <C>
The One Group(R) Prime Money Market Fund 1
The One Group(R) Limited Volatility Bond Fund 2
The One Group(R) Intermediate Bond Fund 3
The One Group(R) Income Bond Fund 4
The One Group(R) Government Bond Fund 5
The One Group(R) Ultra Short-Term Income Fund 6
The One Group(R) Disciplined Value Fund 7
The One Group(R) International Equity Index
Fund 8
The One Group(R) Large Company Growth Fund 9
The One Group(R) Large Company Value Fund 10
The One Group(R) Growth Opportunities Fund 11
The One Group(R) Value Growth Fund 12
The One Group(R) Small Capitalization Fund 13
The One Group(R) Income Equity Fund 14
The One Group(R) Equity Index Fund 15
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, bonds, STRIPS, and 1-15 Market
CUBES.
TREASURY RECEIPTS: TRS, TIGRS, and CATS. 1-15 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies 1-15 Market
and instrumentalities of the U.S. Government. These include Credit
Ginnie Mae, Fannie Mae, and Freddie Mac.
CERTIFICATES OF DEPOSIT: Negotiable instruments with a stated 1-4, 6-15 Market
maturity. Credit
Liquidity
TIME DEPOSITS: Non-negotiable receipts issued by a bank in 1-4, 6-15 Liquidity
exchange for the deposit of funds. Credit
Market
COMMON STOCK: Shares of ownership of a company. 7-15 Market
REPURCHASE AGREEMENTS: The purchase of a security and the 1-15 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
REVERSE REPURCHASE AGREEMENT: The sale of a security and the 1-15 Market
simultaneous commitment to buy the security back at an agreed Leverage
upon price on an agreed upon date. This is treated as a
borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33% of the securities 1-15 Credit
owned by a Fund. In return the Fund will receive cash and/or Market
other securities as collateral. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Purchase or 1-15 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
INVESTMENT COMPANY SECURITIES: Shares of other mutual funds, 1-4, 6-15 Market
including money market funds of The One Group and shares of
other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. Banc One
Investment Advisors will waive certain fees when investing in
funds for which it serves as investment advisor.
CONVERTIBLE SECURITIES: Bonds or preferred stock that convert to 3, 4, 6-15 Market
common stock. Credit
</TABLE>
<PAGE> 234
30
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
CALL AND PUT OPTIONS: A call option gives the buyer the right to 3-15 Management
buy, and obligates the seller of the option to sell, a security Liquidity
at a specified price. A put option gives the buyer the right to Credit
sell, and obligates the seller of the option to buy, a security Market
at a specified price. The Funds will sell only covered call and Leverage
secured put options.
FUTURES AND RELATED OPTIONS: A contract providing for the future 3-15 Management
sale and purchase of a specified amount of a specified security, Market
class of securities, or an index at a specified time in the Credit
future and at a specified price. Liquidity
Leverage
REAL ESTATE INVESTMENT TRUSTS ("REITS"): Pooled investment 2-15 Liquidity
vehicles which invest primarily in income producing real estate Management
or real estate related loans or interest. Market
Pre-payment
Tax
Regulatory
BANKERS' ACCEPTANCES: Bills of exchange or time drafts drawn on 1-4, 6, 7, Credit
and accepted by a commercial bank. Maturities are generally six 9-15 Liquidity
months or less. Market
COMMERCIAL PAPER: Secured and unsecured short-term promissory 1-4, 6, 7, Credit
notes issued by corporations and other entities. Maturities 9-15 Liquidity
generally vary from a few days to nine months. Market
FOREIGN SECURITIES: Stocks issued by foreign companies, as well 1-4, 6-14 Market
as commercial paper of foreign issuers and obligations of Political
foreign banks, overseas branches of U.S. banks and supranational Liquidity
entities. Includes American Depository Receipts. Foreign Investment
RESTRICTED SECURITIES: Securities not registered under the 1-4, 6, Liquidity
Securities Act of 1933, such as privately placed commercial 7-14 Market
paper and Rule 144A securities.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1-7, 9-14 Market
interest rates which are reset daily, weekly, quarterly or some Credit
other period and which may be payable to the Fund on demand. Liquidity
WARRANTS: Securities, typically issued with preferred stock or 1-6, 7-15 Market
bonds, that give the holder the right to buy a proportionate Credit
amount of common stock at a specified price.
PREFERRED STOCK: A class of stock that generally pays a dividend 2-4, 8, Market
at a specified rate and has preference over common stock in the 10,
payment of dividends and in liquidation. 13, 14
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real 1-6 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs"), Real Estate Investment Conduits Credit
("REMICs"), and Stripped Mortgage-Backed Securities ("SMBS"). Regulatory
DEMAND FEATURES: Securities that are subject to puts and standby 1-4, 6 Market
commitments to purchase the securities at a fixed price (usually Liquidity
with accrued interest) within a fixed period of time following Management
demand by a Fund.
ASSET-BACKED SECURITIES: Securities secured by company 1-4, 6 Pre-payment
receivables, home equity loans, truck and auto loans, leases, Market
credit card receivables and other securities backed by other Credit
types of receivable or other assets.
MORTGAGE DOLLAR ROLLS: A transaction in which a Fund sells 2-6 Pre-payment
securities for delivery in a current month and simultaneously Market
contracts with the same party to repurchase similar but not Regulatory
identical securities on a specified future date.
ADJUSTABLE RATE MORTGAGE LOANS ("ARMS"): Loans in a mortgage 2-6 Pre-payment
pool which provide for a fixed initial mortgage interest rate Market
for a specified period of time, after which the rate may be Credit
subject to periodic adjustments. Regulatory
CORPORATE DEBT SECURITIES: Corporate bonds and non-convertible 3, 4, 6 Market
debt securities. Credit
SWAPS, CAPS AND FLOORS: A Fund may enter into these transactions 3-15 Market
to manage its exposure to changing interest rates and other Management
factors. Swaps involve an exchange of obligations by two Credit
parties. Caps and floors entitle a purchaser to a principal Liquidity
amount from the seller of the cap or floor to the extent that a
specified index exceeds or falls below a predetermined interest
rate or amount.
</TABLE>
<PAGE> 235
31
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
NEW FINANCIAL PRODUCTS: New options and futures contracts, and 3-15 Management
other financial products continue to be developed and the Fund Credit
may invest in such options, contracts and products. Market
Liquidity
STRUCTURED INSTRUMENTS: Debt securities issued by agencies and 3-6 Market
instrumentalities of the U.S. government, banks, municipalities, Liquidity
corporations and other businesses whose interest and/or Management
principal payments are indexed to foreign currency exchange Credit
rates, interest rates, or one or more other references indices. Foreign Investment
MUNICIPAL SECURITIES: Securities issued by a state or political 2, 3, 4, 6 Market
subdivision to obtain funds for various public purposes. Credit
Municipal securities include private activity bonds and Political
industrial development bonds, as well as General Obligation Tax
Notes, Tax Anticipation Notes, Bond Anticipation Notes, Revenue
Anticipation Notes, Project Notes, other short-term tax-exempt
obligations, municipal leases, and obligations of municipal
housing authorities and single family revenue bonds.
OBLIGATIONS OF SUPRANATIONAL AGENCIES: Obligations of 8 Credit
supranational agencies who are chartered to promote economic Foreign Investment
development and are supported by various governments and
governmental agencies.
CURRENCY FUTURES AND RELATED OPTIONS: The Fund may engage in 8 Management
transactions in financial futures and related options, which are Liquidity
generally described above. The Fund will enter into these Credit
transactions in foreign currencies and for hedging purposes Market
only. Political
Leverage
Foreign Investment
FORWARD FOREIGN EXCHANGE TRANSACTIONS: Contractual agreement to 8 Management
purchase or sell one specified currency for another currency at Liquidity
a specified future date and price. The Fund will enter into Credit
forward foreign exchange transactions for hedging purposes only. Market
Political
Leverage
Foreign Investment
ZERO COUPON DEBT SECURITIES: Bonds and other debt that pay no 2-4, 6 Credit
interest, but are issued at a discount from their value at Market
maturity. When held to maturity, their entire returns equals the
difference between their issue price and their maturity value.
ZERO-FIXED-COUPON DEBT SECURITIES: Zero-coupon debt securities 2-4, 6 Credit
which convert on a specified date to interest-bearing debt Market
securities.
STRIPPED MORTGAGE-BACKED SECURITIES: Derivative multi-class 3-6 Pre-payment
mortgage securities which are usually structured with two Market
classes of shares that receive different proportions of the Credit
interest and principal from a pool of mortgage assets. These Regulatory
include IOs and POs. The Funds only invest in Stripped Mortgage
Backed securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities.
INVERSE FLOATING RATE INSTRUMENTS: Leveraged floating rate debt 3-6 Market
instruments with interest rates that reset in the opposite Leverage
direction from the market rate of interest to which the inverse Credit
floater is indexed.
LOAN PARTICIPATIONS AND ASSIGNMENTS: Participations in, or 2-4, 6 Credit
assignments of all or a portion of loans to corporations or to Political
governments of the less developed countries ("LDC's"). Foreign Investment
Market
Liquidity
FIXED RATE MORTGAGE LOANS: Investments in fixed rate mortgage 2-4, 6 Credit
loans or mortgage pools which bear simple interest at fixed Pre-payment
annual rates and have original terms ranging from 5 to 40 years. Regulatory
Market
SHORT-TERM FUNDING AGREEMENTS: Investments in short-term funding 1-4, 6 Credit
agreements issued by banks and highly rated U.S. insurance Liquidity
companies such as Guaranteed Investment Contracts (GIC's) and Market
Bank Investment Contracts (BIC's).
PARTICIPATION INTERESTS: Investments in municipal securities, 1 Credit
including municipal leases, from financial institutions such as Market
commercial and investment banks, savings and loan associations Tax
and insurance companies. These interest may take the form of
participations, beneficial interests in trusts, partnership
interests or any other form of indirect ownership that allows
the Funds to treat the income from the investment as exempt from
Federal Income Tax.
</TABLE>
<PAGE> 236
32
INVESTMENT RISKS
- ----------------------------------------------------
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the underlying funds may fluctuate, as will the
value of the Fund's investments in the underlying funds. Ultimately, the value
of your investment will be affected. Certain investments are more susceptible to
these risks than others.
- - CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default
rises.
- - LEVERAGE RISK. The risk associated with securities or practices that multiply
small index or market movements into large changes in value. Leverage is often
associated with investments in derivatives, but also may be embedded directly
in the characteristics of other securities.
- HEDGED. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Hedges are sometimes subject to imperfect matching between
the derivative and underlying security, and there can be no assurance that
a Fund's hedging transactions will be effective.
- SPECULATIVE. To the extent that a derivative is not used as a hedge, the
fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater
than the derivative's original cost.
- - LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that normally prevails in the
market. The seller may have to lower the price, sell other securities instead
or forego an investment opportunity, any of which could have a negative effect
on fund management or performance. This includes the risk of missing out on an
investment opportunity because the assets necessary to take advantage of it
are tied up in less advantageous investments.
- - MANAGEMENT RISK. The risk that a strategy used by a fund's management may fail
to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than
it was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. There is also the
risk that the current interest rate may not accurately reflect existing market
rates. For fixed income securities, market risk is largely, but not
exclusively, influenced by changes in interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Finally, key information about a security or market may be
inaccurate or unavailable. This is particularly relevant to investments in
foreign securities.
- - POLITICAL RISK. The risk of losses attributable to unfavorable governmental or
political actions, seizures of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
- - FOREIGN INVESTMENT RISK. The risk associated with higher transaction costs,
delayed settlements, currency controls and adverse economic developments. This
also includes the risk that fluctuations in the exchange rates between the
U.S. dollar and foreign currencies may negatively affect an investment.
Adverse changes in exchange rates may erode or reverse any gains produced by
foreign currency denominated investments and may widen any losses. Exchange
rate volatility also may affect the ability of an issuer to repay U.S. dollar
denominated debt, thereby increasing credit risk.
- - PRE-PAYMENT RISK. The risk that the principal repayment of a security will
occur at an unexpected time, especially that the repayment of a mortgage or
asset-backed security occurs either significantly sooner or later than
expected. Changes in pre-payment rates can result in
<PAGE> 237
33
greater price and yield volatility. Pre-payments generally accelerate when
interest rates decline. When mortgage and other obligations are pre-paid, a
Fund may have to reinvest in securities with a lower yield. Further, with
early prepayment, a Fund may fail to recover any premium paid, resulting in an
unexpected capital loss.
- - TAX RISK. The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
- - REGULATORY RISK. The risk associated with Federal and state laws which may
restrict the remedies that a mortgage lender has when a borrower defaults on
mortgage loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor relief laws,
restrictions on "due on sale" clauses, and state usury laws.
<PAGE> 238
APPENDIX B
34
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free U.S. Treasury
obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet financial
commitment is strong. Obligations designated with a plus sign (+)
indicate that capacity to meet financial commitment is extremely
strong.
A-2 Issues somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than obligations in higher rating
categories. However, the capacity to meet financial commitments is
satisfactory.
FITCH'S INVESTORS SERVICE, L.P. ("FITCH")
F-1+ Exceptionally strong credit quality. Strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Assurance of timely payment is only
slightly less in degree than issues rated F-1+.
F-2 Good credit quality. Satisfactory degree of assurance for timely
payment, but the margin of safety is not as good as for issues assigned
F-1+ and F-1 ratings.
IBCA LIMITED ("IBCA")
A1 Highest capacity for timely repayment. Those issues rated A1+ possess a
particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such capacity may
be susceptible to adverse changes in business, economic or financial
conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
<PAGE> 239
35
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
AAA The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
Aa These insurance companies offer excellent financial security.
Together with the Aaa group, they constitute what are generally
known as high grade companies. They are rated lower than Aaa
companies because long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's
capacity to meet its financial commitment on the obligation is still
strong.
DESCRIPTION OF CORPORATE/ MUNICIPAL BOND RATINGS
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong capacity
to meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's capacity
to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories. However, capacity to meet its financial commitment
on the obligation is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligation.
Speculative Grade
BB Less vulnerable to non-payment than other speculative issues. However,
these bonds face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet financial commitment on the obligation.
B More vulnerable to non-payment than obligations rated BB, but
currently has the capacity to meet its financial commitment on the
obligation. Adverse business, financial or economic conditions will
likely impair capacity or willingness to meet its financial
commitment on the obligation.
CCC Currently vulnerable to non-payment, and is dependent upon favorable
business, financial, and economic conditions to meet its financial
commitment on the obligation. In the event of adverse busi-
<PAGE> 240
36
ness, financial, or economic conditions, they are not likely to have
the capacity to meet its financial commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but
payments on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
Investment Grade
Aaa Best quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments are
protected by a large, or an exceptionally stable, margin and
principal is secure.
Aa High quality by all standards. Margins of protection may not be as
large as in Aaa securities, fluctuation of protective elements may be
greater, or there may be other elements present that make the
long-term risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
Baa These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
Ba These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may
be small).
Caa Bonds in this category have poor standing and may be in default.
These bonds carry an element of danger with respect to principal and
interest payments.
Ca Speculative to a high degree and could be in default or have other
marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S
MIG1 & Short-term municipal securities rated MIG1 or VMIG1 are of the best
VMIG1 quality. They have strong protection from established cash flows,
superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2 &
VMIG2 These Short-term municipal securities rated MIG2 or VMIG2 are of high
quality. Margins of protection are ample although not so large as in
the preceding group.
MIG3 & Favorable quality. All security elements are accounted for, but the
VMIG3 undeniable strength of the preceding grades is lacking. Liquidity and
cash flow protection may be narrow and marketing access for
refinancing is likely to be less well established.
S&P
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
aaa Top-quality preferred stock. This rating indicates good asset
protection and the
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37
least risk of dividend impairment within the universe of preferred
stocks.
aa High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
a Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred
stock obligations is very strong, although not as overwhelming as
for issues rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock
obligations. Whereas the issuer normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to make payments for
a preferred stock in this category than for issues in the "A"
category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest will be
paid on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal and
interest is strong, the relative degree is not as high as for issues
rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to adverse
developments than obligations with higher ratings, capacity to
service principal and interest in a timely fashion is considered
adequate.
TBW-4 Non-investment grade and, therefore, speculative.
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INVESTMENT ADVISOR AND SUB-ADMINISTRATOR
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
DISTRIBUTOR
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
ADMINISTRATOR
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
LEGAL COUNSEL
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
The Statement of Additional Information contains more detailed information about
the Funds. The current Statement of Additional Information has been filed with
the Securities and Exchange Commission and is available without charge by
calling 1-800-480-4111 or by writing to The One Group Services Company at 3435
Stelzer Road, Columbus, Ohio 43219. The Statement of Additional Information is
incorporated into this prospectus by reference. The SEC maintains a Web site
(www.sec.com) that contains the Statement of Additional Information, materials
incorporated by reference and other information regarding The One Group(R).
TOG-F-125
<PAGE> 243
STATEMENT OF ADDITIONAL INFORMATION
THE ONE GROUP(R)
The One Group U.S. Treasury Securities Money Market Fund
(the "U.S. Treasury Securities Money Market Fund")
The One Group Prime Money Market Fund (the "Prime Money Market Fund")
The One Group Municipal Money Market Fund (the "Municipal Money Market Fund")
The One Group Ohio Municipal Money Market Fund (the "Ohio Municipal Money Market
Fund")
The One Group Income Equity Fund (the "Income Equity Fund")
The One Group Disciplined Value Fund (the "Disciplined Value Fund")
The One Group Growth Opportunities Fund (the "Growth Opportunities Fund")
The One Group International Equity Index Fund (the "International Equity Index
Fund")
The One Group Equity Index Fund (the "Equity Index Fund")
The One Group Large Company Value Fund (the "Large Company Value Fund")
The One Group Large Company Growth Fund (the "Large Company Growth Fund")
The One Group Asset Allocation Fund (the "Asset Allocation Fund")
The One Group Income Bond Fund (the "Income Bond Fund")
The One Group Limited Volatility Bond Fund (the "Limited Volatility Bond Fund")
The One Group Intermediate Bond Fund (the "Intermediate Bond Fund")
The One Group Government Bond Fund (the "Government Bond Fund")
The One Group Ultra Short-Term Income Fund (the "Ultra Short-Term Income Fund")
The One Group Municipal Income Fund (the "Municipal Income Fund")
The One Group Intermediate Tax-Free Bond Fund (the "Intermediate Tax-Free Bond
Fund")
The One Group Ohio Municipal Bond Fund (the "Ohio Municipal Bond Fund")
The One Group Texas Tax-Free Bond Fund (the "Texas Tax-Free Bond Fund")
The One Group West Virginia Municipal Bond Fund (the "West Virginia Municipal
Bond Fund")
The One Group Kentucky Municipal Bond Fund (the "Kentucky Municipal Bond Fund")
The One Group Arizona Municipal Bond Fund (the "Arizona Municipal Bond Fund")
The One Group Treasury Money Market Fund (the "Treasury Money Market Fund")
The One Group Treasury Only Money Market Fund (the "Treasury Only Money Market
Fund")
The One Group Government Money Market Fund (the "Government Money Market Fund")
The One Group Tax Exempt Money Market Fund (the "Tax Exempt Money Market Fund")
The One Group Institutional Prime Money Market Fund (the "Institutional Prime
Money Market Fund")
The One Group Louisiana Municipal Bond Fund (the "Louisiana Municipal Bond
Fund")
The One Group Value Growth Fund (the "Value Growth Fund")
The One Group Small Capitalization Fund (the "Small Capitalization Fund")
The One Group Income Fund (the "Income Fund")
The One Group Investor Growth Fund (the "Investor Growth Fund)
The One Group Investor Growth & Income Fund (the "Investor Growth & Income Fund)
The One Group Investor Aggressive Growth Fund (the "Investor Aggressive Growth")
The One Group Investor Fixed Income Fund (the "Investor Fixed Income Fund")
The One Group Investor Conservative Growth Fund (the "Investor Conservative
Growth Fund")
The One Group Investor Balanced Fund (the "Investor Balanced Fund")
The One Group Treasury & Agency Fund (the "Treasury & Agency Fund")
(each a "Fund," and collectively the "Funds")
November 1, 1997
This Statement of Additional Information is not a Prospectus, but supplements
and should be read in conjunction with the Prospectuses dated November 1, 1997.
This Statement of Additional Information is incorporated in its entirety into
each Fund's Prospectus. A copy of each Prospectus is available without charge by
writing to The One Group Services Company, 435 Stelzer Road, Columbus, Ohio
43219, or by telephoning toll free (800)-480-4111.
<PAGE> 244
TABLE OF CONTENTS
PAGE
THE TRUST......................................................................1
INVESTMENT OBJECTIVES AND POLICIES.............................................2
Additional Information on Fund Instruments.........................2
High Quality Investments With Regard to the Money Market and
Institutional Money Market Funds.......................2
Bank Obligations...................................................3
Commercial Paper...................................................3
Repurchase Agreements..............................................3
Reverse Repurchase Agreements......................................4
Government Securities..............................................4
Loan Participations and Assignments................................4
Futures and Options Trading........................................5
Futures Contracts..................................................5
Restrictions on the Use of Futures Contracts.......................6
Risk Factors in Futures Transactions...............................7
Options Contracts..................................................7
Covered Calls......................................................8
Purchasing Call Options............................................9
Purchasing Put Options............................................10
Secured Puts......................................................10
Risk Factors in Options Transactions..............................10
Mortgage-Related Securities.......................................10
Real Estate Investment Trusts ("REITs")...........................14
Foreign Investments...............................................15
PERCS ......................................................16
When-Issued Securities and Forward Commitments....................16
Securities Lending................................................16
Index Investing by the Equity Index and International
Equity Index Funds....................................17
Foreign Currency Transactions.....................................18
Forward Foreign Currency Exchange Contracts.......................19
Foreign Currency Futures Contracts................................20
Variable and Floating Rate Instruments............................22
Municipal Securities..............................................23
Demand Features...................................................26
Swaps, Caps and Floors............................................26
Structured Instruments............................................27
New Financial Products............................................28
Restricted Securities.............................................28
High Yield Securities.............................................29
U.S. Treasury Obligations.........................................30
Treasury Receipts.................................................30
Common Stock......................................................30
Preferred Stock...................................................30
Investment Company Securities.....................................30
Convertible Securities............................................30
Warrants ......................................................30
Asset-Backed Securities...........................................31
Ohio Municipal Securities.........................................31
West Virginia Municipal Securities................................32
Kentucky Municipal Securities.....................................32
Texas Municipal Securities........................................32
Arizona Municipal Securities......................................33
Louisiana Municipal Securities....................................34
Investment Restrictions...........................................37
Portfolio Turnover................................................41
Additional Tax Information Concerning All Funds...................42
(ii)
<PAGE> 245
Additional Tax Information Concerning the Tax-Advantaged Funds....44
Additional Tax Information Concerning the International
Equity Index Fund.....................................45
Foreign Tax Credit................................................45
VALUATION ..................................................................46
Valuation of the Money Market and Institutional Money
Market Funds..........................................46
Valuation of the Equity Funds, the Bond Funds and the
Municipal Bond Funds..................................46
ADDITIONAL INFORMATION REGARDING THE
CALCULATION OF PER SHARE NET ASSET VALUE..........................47
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION................................47
MANAGEMENT OF THE TRUST.......................................................50
Trustees & Officers...............................................50
Investment Advisor................................................53
Glass-Steagall Act................................................55
Portfolio Transactions............................................56
Administrator.....................................................57
Distributor ......................................................62
Distribution Plan.................................................62
Custodian and Transfer Agent......................................65
Experts ......................................................65
ADDITIONAL INFORMATION........................................................66
Description of Shares.............................................66
Shareholder and Trustee Liability.................................66
Performance.......................................................67
Calculation of Performance Data...................................67
Miscellaneous.....................................................75
(iii)
<PAGE> 246
THE TRUST
The One Group (the "Trust") is an open-end management investment
company. The Trust consists of forty series of units of beneficial interest
("Shares") each representing interests in one of forty separate investment
portfolios ("Funds"), i.e., the U.S. Treasury Securities Money Market Fund
(formerly the U.S. Treasury Money Market Portfolio), the Prime Money Market
Fund, the Municipal Money Market Fund (formerly the Tax-Free Obligations
Portfolio) and the Ohio Municipal Money Market Fund (these four Funds being
collectively referred to as the "Money Market Funds"), the Income Equity Fund,
the Disciplined Value Fund, the Growth Opportunities Fund (formerly the Small
Company Growth Fund and the Growth Equity Portfolio), the Equity Index Fund, the
International Equity Index Fund, the Large Company Value Fund (formerly, the
Quantitative Equity Portfolio), the Large Company Growth Fund, the Asset
Allocation Fund (formerly, the Flexible Balanced Portfolio), the Value Growth
Fund and the Small Capitalization Fund (formerly the Gulf South Growth
Fund)(these ten Funds being collectively referred to as the "Equity Funds"), the
Income Bond Fund (formerly the Income Portfolio), the Limited Volatility Bond
Fund, the Intermediate Bond Fund, the Treasury & Agency Fund, the Government
Bond Fund, the Income Fund and the Ultra Short-Term Income Fund (formerly the
Government ARM Fund) (these seven Funds being collectively referred to as the
"Bond Funds"), the Intermediate Tax-Free Bond Fund, the Municipal Income Fund
(formerly the Tax-Free Bond Fund), the Ohio Municipal Bond Fund, the Texas
Tax-Free Bond Fund, the West Virginia Municipal Bond Fund, the Kentucky
Municipal Bond Fund, the Arizona Municipal Bond Fund, and the Louisiana
Municipal Bond Fund (these eight Funds being collectively referred to as the
"Municipal Bond Funds"), the Treasury Money Market Fund, the Treasury Only Money
Market Fund, the Government Money Market Fund, the Tax Exempt Money Market Fund,
and the Institutional Prime Money Market Fund (these five Funds being
collectively referred to as the "Institutional Money Market Funds"), the
Investor Growth Fund, the Investor Growth & Income Fund, the Investor Aggressive
Growth Fund, the Investor Fixed Income Fund, the Investor Conservative Growth
Fund, and the Investor Balanced Fund (these six Funds being collectively
referred to as the "Funds of Funds"). The Municipal Money Market Fund, the Ohio
Municipal Money Market Fund, the Municipal Bond Funds, and the Tax Exempt Money
Market Fund are also referred to as the "Tax-Advantaged Funds."
All of the Trust's Funds are diversified, as defined under the
Investment Company Act of 1940, as amended (the "1940 Act"), with the exception
of the Ohio Municipal Bond Fund, the Kentucky Municipal Bond Fund, the West
Virginia Municipal Bond Fund, the Texas Tax-Free Bond Fund, the Arizona
Municipal Bond Fund, the Ohio Municipal Money Market Fund, and the Louisiana
Municipal Bond Fund, which are non-diversified. Shares in the Funds of the Trust
(other than the Institutional Money Market Funds, and the Money Market Funds)
are offered in four separate classes: Fiduciary Class Shares, Class A Shares,
Class B Shares and Class C Shares. The U.S. Treasury Securities Money Market
Fund and the Prime Money Market Fund offer Class A Shares, Class B Shares, Class
C Shares, Fiduciary Class Shares and Service Class Shares. The Ohio Municipal
Money Market Fund and the Municipal Money Market Fund offer Class A, Class C and
Fiduciary Class Shares. Much of the information contained herein expands upon
subjects discussed in the Prospectuses for the respective Funds. No investment
in a particular class of Shares of a Fund should be made without first reading
that Fund's Prospectus.
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<PAGE> 247
INVESTMENT OBJECTIVES AND POLICIES
The following policies supplement each Fund's investment objective and
policies as set forth in the respective Prospectus for that Fund.
ADDITIONAL INFORMATION ON FUND INSTRUMENTS
HIGH QUALITY INVESTMENTS WITH REGARD TO THE MONEY MARKET AND INSTITUTIONAL MONEY
MARKET FUNDS
The Money Market and Institutional Money Market Funds, may invest only
in obligations determined by the Fund's investment Advisor, Banc One Investment
Advisors Corporation ("Banc One Advisors") to present minimal credit risks under
guidelines adopted by the Trust's Board of Trustees.
The Treasury Money Market Fund and the Treasury Only Money Market Fund
may only invest in U.S. Treasury bills, notes and other U.S. Treasury
obligations issued or guaranteed by the U.S. government. Some of the securities
held by the Treasury Money Market Fund may be subject to repurchase agreements.
The Government Money Market Fund invests exclusively in securities
issued or guaranteed by the U.S. government or its agencies or
instrumentalities, some of which may be subject to repurchase agreements.
The Tax Exempt Money Market Fund may invest only in obligations which,
at the time of purchase, (i) possess the highest short-term ratings from a
nationally recognized statistical rating organization (an "NRSRO") in the case
of single-rated securities; or (ii) possess, in the case of multiple-rated
securities, the highest short-term ratings by at least two NRSROs; or (iii) do
not possess a rating (i.e., are unrated) but are determined by Banc One Advisors
to be of comparable quality to the rated instruments eligible for purchase by
the Fund under guidelines adopted by the Board of Trustees (collectively, "First
Tier Securities"). Some of the securities of the Tax Exempt Money Market Fund
may be subject to repurchase agreements.
With regard to the Money Market Funds and the Institutional Money
Market Funds other than the Tax Exempt Money Market Fund, investments will be
limited to those obligations which, at the time of purchase, (i) possess one of
the two highest short-term ratings from an NRSRO in the case of single-rated
securities; or (ii) possess, in the case of multiple-rated securities, one of
the two highest short-term ratings by at least two NRSROs or (iii) do not
possess a rating (i.e., are unrated) but are determined by Banc One Advisors to
be of comparable quality to the rated instruments eligible for purchase by the
Trust under guidelines adopted by the Board of Trustees (collectively, "Eligible
Securities"). A security that has not received a rating will be deemed to
possess the rating assigned to an outstanding class of the issuer's short-term
debt obligations if determined by Banc One Advisors to be comparable in priority
and security to the obligation selected for purchase by the Trust.
A security subject to a tender or demand feature will be considered an
Eligible Security only if both the demand feature and the underlying security
possess a high quality rating or, if such do not possess a rating, are
determined by Banc One Advisers to be of comparable quality; provided, however,
that where the demand feature would be readily exercisable in the event of a
default in payment of principal or interest on the underlying security, the
obligation may be acquired based on the rating possessed by the demand feature
or, if the demand feature does not possess a rating, a determination of
comparable quality by Banc One Advisors. A security which at the time of
issuance had a maturity exceeding 397 days but, at the time of purchase, has a
remaining maturity of 397 days or less, is not considered an Eligible Security
if it does not possess a high quality rating and the long-term rating, if any,
is not within the two highest rating categories.
Eligible Securities include First-Tier Securities and Second-Tier
Securities. First-Tier Securities include those that possess a rating in the
highest category, in the case of a single-rated security, or at least two
ratings in the highest rating category, in the case of multiple-rated
securities, or, if the securities do not possess a rating, are determined to be
of comparable quality by Banc One Advisors pursuant to the guidelines adopted by
the Board of Trustees. Second-Tier Securities are all other Eligible Securities.
Each Money Market and Institutional Money Market Fund other than the
Ohio Municipal Money Market, the Municipal Money Market and the Tax Exempt Money
Market Funds will not invest more than 5% of its total assets in the First Tier
Securities of any one issuer. In addition, each Fund other than the Municipal
Money Market Fund, the Ohio Municipal Money Market Fund, and the Tax Exempt
Money Market Fund may not invest more than 5% of its total assets in Second Tier
Securities, with investment in the Second Tier Securities of any one issuer
further limited to the greater of 1% of the Fund's total assets or $1.0 million.
If a percentage limitation is satisfied at the time of purchase, a later
increase in such percentage resulting from a change in the Fund's net asset
value or a subsequent change in a security's qualification as a First Tier or
Second Tier Security will not constitute a violation of the limitation. In
addition, there is no limit on the percentage of a Fund's assets that may be
invested in obligations issued or guaranteed by the U.S. government, its
agencies,
2
<PAGE> 248
or instrumentalities and, with respect to each Money Market Fund and each
Institutional Money Market Fund other than the Treasury Only Money Market Fund,
repurchase agreements fully collateralized by such obligations.
Under the guidelines adopted by the Trust's Board of Trustees and in
accordance with Rule 2a-7 under the 1940 Act, Banc One Advisors may be required
to promptly dispose of an obligation held in a Fund's portfolio in the event of
certain developments that indicate a diminishment of the instrument's credit
quality, such as where an NRSRO downgrades an obligation below the second
highest rating category, or in the event of a default relating to the financial
condition of the issuer.
A rating by an NRSRO may be utilized only where the NRSRO is neither
controlling, controlled by, or under common control with the issuer of, or any
issuer, guarantor, or provider of credit support for, the instrument.
BANK OBLIGATIONS
Bank obligations consist of bankers' acceptances, certificates of
deposit, and demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange
typically drawn by an importer or exporter to pay for specific merchandise,
which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Bankers' acceptances invested in by the Funds will be those guaranteed by
domestic and foreign banks and savings and loan associations having, at the time
of investment, total assets in excess of $1 billion (as of the date of their
most recently published financial statements).
Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return. Certificates of deposit
will be those of domestic and foreign branches of U.S. commercial banks which
are members of the Federal Reserve System or the deposits of which are insured
by the Federal Deposit Insurance Corporation, and in certificates of deposit of
domestic savings and loan associations the deposits of which are insured by the
Federal Deposit Insurance Corporation if, at the time of purchase, such
institutions have total assets in excess of $1 billion (as of the date of their
most recently published financial statements). Certificates of deposit may also
include those issued by foreign banks outside the United States with total
assets at the time of purchase in excess of the equivalent of $1 billion. The
Funds may also invest in Eurodollar certificates of deposit, which are U.S.
dollar-denominated certificates of deposit issued by branches of foreign and
domestic banks located outside the United States, and Yankee certificates of
deposit, which are certificates of deposit issued by a U.S. branch of a foreign
bank denominated in U.S. dollars and held in the United States. The
International Equity Index Fund may also invest in obligations (including
banker's acceptances and certificates of deposit) denominated in foreign
currencies (see "Foreign Investments" herein).
Time deposits are interest-bearing non-negotiable deposits at a bank or
a savings and loan association that have a specific maturity date. A time
deposit earns a specific rate of interest over a definite period of time. Time
deposits cannot be traded on the secondary market and those exceeding seven days
and with a withdrawal penalty are considered to be illiquid. Demand deposits are
funds deposited in a commercial bank or a savings and loan association which,
without prior notice to the bank, may be withdrawn generally by negotiable
draft. Time and demand deposits will be maintained only at banks or savings and
loan associations from which a Fund could purchase certificates of deposit.
COMMERCIAL PAPER
Commercial paper consists of secured and unsecured promissory notes
issued by corporations. Except as noted below with respect to variable amount
master demand notes, issues of commercial paper normally have maturities of less
than nine months and fixed rates of return.
The Limited Volatility Bond Fund may purchase commercial paper
consisting of issues rated at the time of purchase in the highest rating
category by at least one NRSRO (such as A-1 by Standard & Poor's Corporation
("S&P"), P-1 by Moody's Investors Service, Inc. ("Moody's") or F-1 by Fitch
Investors Service, L.P. ("Fitch")) or if unrated, determined by Banc One
Advisors to be of comparable quality. The Money Market Funds (other than the
U.S. Treasury Securities Money Market Fund), the Asset Allocation Fund, the
Equity Funds other than the International Equity Index Fund, the Municipal Bond
Funds, the Income Bond Fund, the Intermediate Bond Fund, and the Ultra
Short-Term Income Fund may purchase commercial paper consisting of issues rated
at the time of purchase in the highest or second highest rating category by at
least one NRSRO (such as A-2 or better by S&P, P-2 or better by Moody's or F-2
or better by Fitch) or if unrated, determined by Banc One Advisors to be of
comparable quality. The Income Fund may purchase commercial paper consisting of
issues rated at the time of purchase in all rating categories by at least one
NRSRO, or, if unrated, determined by Banc One Advisors to be of comparable
quality.
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<PAGE> 249
REPURCHASE AGREEMENTS
Under the terms of a repurchase agreement, a Fund would acquire
securities from member banks of the Federal Deposit Insurance Corporation (or in
the case of the International Equity Index Fund, such banks or foreign banks)
with total assets in excess of $1 billion (or in the case of the International
Equity Index Fund, the equivalent of $1 billion) and registered broker-dealers
(or in the case of the International Equity Index Fund, broker-dealers which may
or may not be registered) which Banc One Advisors deems creditworthy under
guidelines approved by the Board of Trustees, subject to the seller's agreement
to repurchase such securities at a mutually agreed-upon date and price. The
repurchase price would generally equal the price paid by the Fund plus interest
negotiated on the basis of current short-term rates, which may be more or less
than the rate on the underlying portfolio securities. The seller under a
repurchase agreement will be required to maintain the value of collateral held
pursuant to the agreement at not less than the repurchase price (including
accrued interest). If the seller were to default on its repurchase obligation or
become insolvent, the Fund holding such obligation would suffer a loss to the
extent that the proceeds from a sale of the underlying portfolio securities were
less than the repurchase price under the agreement, or to the extent that the
disposition of such securities by the Fund were delayed pending court action.
Additionally, there is no controlling legal precedent under U.S. law and there
may be no controlling legal precedents under the laws of certain foreign
jurisdictions confirming that a Fund would be entitled, as against a claim by
such seller or its receiver or trustee in bankruptcy, to retain the underlying
securities, although (with respect to repurchase agreements subject to U.S. law)
the Board of Trustees of the Trust believes that, under the regular procedures
normally in effect for custody of a Fund's securities subject to repurchase
agreements and under federal laws, a court of competent jurisdiction would rule
in favor of the Trust if presented with the question. Securities subject to
repurchase agreements will be held by the Trust's custodian or another qualified
custodian or in the Federal Reserve/Treasury book-entry system. Although there
is no current intention to do so, the International Equity Index Fund reserves
the right in the future to enter into repurchase agreements. Repurchase
agreements are considered by the Securities and Exchange Commission to be loans
by a Fund under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS
Funds may borrow money for temporary purposes by entering into reverse
repurchase agreements. Pursuant to such agreements, a Fund would sell portfolio
securities to financial institutions such as banks and broker-dealers, and agree
to repurchase them at a mutually agreed-upon date and price. A Fund would enter
into reverse repurchase agreements only to avoid otherwise selling securities
during unfavorable market conditions to meet redemptions. At the time a Fund
entered into a reverse repurchase agreement, it would place in a segregated
custodial account assets, such as cash or liquid securities consistent with the
Fund's investment restrictions and having a value equal to the repurchase price
(including accrued interest), and would subsequently monitor the account to
ensure that such equivalent value was maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price at which the Fund is obligated to repurchase the
securities. Reverse repurchase agreements are considered by the Securities and
Exchange Commission to be borrowings by a Fund under the 1940 Act.
GOVERNMENT SECURITIES
Obligations of certain agencies and instrumentalities of the U.S.
government, such as the Government National Mortgage Association (Ginnie Mae")
and the Export-Import Bank, are supported by the full faith and credit of the
U.S. Treasury; others, such as the Federal National Mortgage Association
("Fannie Mae"), are supported by the right of the issuer to borrow from the
Treasury; others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations; and still others, such as the
Federal Farm Credit Banks and the Federal Home Loan Mortgage Corporation
("Freddie Mac") are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. government would provide financial support
to U.S. government-sponsored agencies or instrumentalities if it is not
obligated to do so by law. A Fund will invest in the obligations of such
agencies or instrumentalities only when Banc One Advisors or the Investment
Sub-Advisor ("Sub-Advisor") believes that the credit risk with respect thereto
is minimal. For information on mortgage-related securities issued by certain
agencies or instrumentalities of the U.S. government, see "Investment Objectives
and Policies--Mortgage-Related Securities" in this Statement of Additional
Information.
LOAN PARTICIPATIONS AND ASSIGNMENTS
Some of the Funds may invest in fixed and floating rate loans ("Loans")
arranged through private negotiations between an issuer of Sovereign Debt
Obligations and one or more financial institutions ("Lenders"). Investments in
loans are expected in most instances to be in the form of participations in
Loans ("Participations") and assignments of all or a portion of Loans
("Assignments") from third parties. Because loan participants and assignments
may be illiquid, a Fund will invest no more than 15% (10% for the Money Market
Funds) of its net assets in loan participations and other illiquid assets. The
government that is the borrower on the Loan will be considered by the Fund to be
the issuer of a Participations or Assignment for purposes of the fund's
fundamental investment policy that it will not invest 25% or more of its total
assets in securities of issuers conducting their principal business activities
in the same industry (i.e., foreign government). The
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Funds investment in Participations typically will result in the Fund having a
contractual relationship only with the Lender and not with the borrower.
When a Fund purchases Assignments from Lenders it will acquire direct
rights against the borrower on the Loan. Because Assignments are arranged
through private negotiations between potential assignees and potential
assignors, however, the rights and obligations acquired by a Fund as the
purchaser of an Assignment may differ from, and be more limited than, those held
by the assigning Lender. The assignability of certain Sovereign Debt Obligations
is restricted by the governing documentation as to the nature of the assignee
such that the only way in which a Fund may acquire an interest in a Loan is
through a Participations and not an Assignment. A Fund may have difficulty
disposing of Assignments and Participations because to do so it will have to
assign such securities to a third party. Because there is no liquid market for
such securities, the Funds anticipate that such securities could be sold only to
a limited number of institutional investors. The lack of a liquid secondary
market may have an adverse impact on the value of such securities and a Fund's
ability to dispose of particular Assignments or Participations when necessary to
meet a Fund's liquidity needs in response to a specific economic event such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for a Fund to assign a value to those securities for purposes of
valuing a Fund's portfolio and calculating its net asset value.
FUTURES AND OPTIONS TRADING
Some of the Funds may enter into futures contracts, options, options on
futures contracts and stock index futures contracts and options thereon for the
purposes of remaining fully invested, reducing transaction costs, or managing
interest rate risk.
FUTURES CONTRACTS
Futures contracts provide for the future sale by one party and purchase
by another party of a specified amount of a specific security, class of
securities, or an index at a specified future time and at a specified price. A
stock index futures contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading of the contracts and the price at which the futures contract is
originally struck. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"), a U.S. government agency.
Although most futures contracts by their terms call for actual delivery
and acceptance of the underlying securities, in most cases the contracts are
closed out before the settlement date without the making or taking of delivery.
Closing out an open futures position is done by taking an opposite position
("buying" a contract which has previously been "sold," or "selling" a contract
previously purchased) in an identical contract to terminate the position. The
acquisition of put and call options on futures contracts will, respectively,
give a Fund the right (but not the obligation), for a specified price, to sell
or to purchase the underlying futures contract, upon exercise of the option, at
any time during the option period. Brokerage commissions are incurred when a
futures contract is bought or sold.
When making future trades, the Funds are required to make a good faith
margin deposit in cash or government securities with a broker or custodian to
initiate and maintain open positions in futures contracts. A margin deposit is
intended to assure completion of the contract (delivery or acceptance of the
underlying security) if it is not terminated prior to the specified delivery
date. Minimal initial margin requirements are established by the futures
exchange and may be changed. Brokers may establish deposit requirements which
are higher than the exchange minimums. Initial margin deposits on futures
contracts are customarily set at levels much lower than the prices at which the
underlying securities are purchased and sold, typically ranging upward from less
than 5% of the value of the contract being traded.
After a futures contract position is opened, the value of the contract
is marked to market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Funds
expect to earn interest income on their margin deposits.
Traders in futures contracts may be broadly classified as either
"hedgers" or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations in
the prices of underlying securities. The Funds intend to enter into futures
contracts, options on futures contracts, index futures and options thereon that
are traded on an exchange regulated by the CFTC if, to the extent that such
futures and options are not for "bona fide hedging purposes" (as defined by the
CFTC), the aggregate initial margin and premiums on such positions (excluding
the amount by which
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options are in the money) do not exceed 5% of the Fund's total assets at current
value. A Fund, however, may invest more than such amount for bona fide hedging
purposes, and also may invest more than such amount if it obtains authority to
do so from the CFTC without rendering the fund a commodity pool operator or
adversely affecting its status as an investment company for federal securities
laws or income tax purposes.
A Fund may buy and sell futures contracts and related options to manage
its exposure to changing interest rates and security prices. When interest rates
are expected to rise or market values of portfolio securities are expected to
fall, a Fund can seek through the sale of futures contracts to offset a decline
in the value of its portfolio securities. When interest rates are expected to
fall or market values are expected to rise, a Fund, through the purchase of such
contracts, can attempt to secure better rates or prices for the Fund than might
later be available in the market when it effects anticipated purchases.
Although techniques other than the sale and purchase of futures
contracts could be used to control the Funds' exposure to market fluctuations,
the use of futures contracts may be a more effective means of managing this
exposure. While the Funds will incur commission expenses in both opening and
closing out futures positions, these costs may be lower than transaction costs
that would be incurred in the purchase and sale of the underlying securities.
A Fund's ability to effectively utilize futures trading depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying reference
security or index. Second, it is possible that a lack of liquidity for futures
contracts could exist in the secondary market, resulting in an inability to
close a futures position prior to its maturity date. Third, the purchase of a
futures contract involves the risk that a Fund could lose more than the original
margin deposit required to initiate a futures transaction.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS
None of the Funds will enter into futures contract transactions for
purposes other than bona fide hedging purposes to the extent that, immediately
thereafter, the sum of its initial margin deposits and premiums on open
contracts exceeds 5% of the market value of the respective Fund's total assets.
The Funds of Funds will not enter into futures contract transactions, however,
the One Group mutual funds in which they invest may do so as described herein.
In addition, none of the Equity Funds will enter into futures contracts to the
extent that the value of the futures contracts held would exceed 25% of the
respective Fund's total assets. Futures transactions will be limited to the
extent necessary to maintain each Fund's qualification as a regulated investment
company.
The Funds have undertaken to restrict their futures contract trading as
follows: first, the Funds will not engage in transactions in futures contracts
for speculative purposes; second, the Funds will not market themselves to the
public as commodity pools or otherwise as vehicles for trading in the
commodities futures or commodity options markets; third, the Funds will disclose
to all prospective Shareholders the purpose of and limitations on their
commodity futures trading; fourth, the Funds will submit to the CFTC special
calls for information. Accordingly, registration as a commodities pool operator
with the CFTC is not required.
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to requirements
imposed by the Securities and Exchange Commission. Under those requirements,
where a Fund has a long position in a futures contract, it may be required to
establish a segregated account (not with a futures commission merchant or
broker) containing cash or certain liquid assets equal to the purchase price of
the contract (less any margin on deposit). For a short position in futures or
forward contracts held by a Fund, those requirements may mandate the
establishment of a segregated account (not with a futures commission merchant or
broker) with cash or certain liquid assets that, when added to the amounts
deposited as margin, equal the market value of the instruments underlying the
futures contracts (but are not less than the price at which the short positions
were established). However, segregation of assets is not required if a Fund
"covers" a long position. For example, instead of segregating assets, a Fund,
when holding a long position in a futures contract, could purchase a put option
on the same futures contract with a strike price as high or higher than the
price of the contract held by the Fund. In addition, where a Fund takes short
positions, or engages in sales of call options, it need not segregate assets if
it "covers" these positions. For example, where a Fund holds a short position in
a futures contract, it may cover by owning the instruments underlying the
contract. The Funds may also cover such a position by holding a call option
permitting it to purchase the same futures contract at a price no higher than
the price at which the short position was established. Where a Fund sells a call
option on a futures contract, it may cover either by entering into a long
position in the same contract at a price no higher than the strike price of the
call option or by owning the instruments underlying the futures contract. A Fund
could also cover this position by holding a separate call option permitting it
to purchase the same futures contract at a price no higher than the strike price
of the call option sold by the Fund.
The Funds also may engage in straddles and spreads. In a straddle
transaction, the Fund either buys a call and a put or sells a call and a put on
the same security. In a spread, the Fund purchases and sells a call or a put.
The Fund will sell a straddle when Banc One Advisors believes the price of a
security will be stable. The Fund will receive a premium on the sale
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of the put and the call. A spread permits the Fund to make a hedged investment
that the price of a security will increase or decline.
In addition, the extent to which a Fund may enter into transactions
involving futures contracts may be limited by the Internal Revenue Code's
requirements for qualification as a registered investment company and the
Trust's intention to qualify as such. In certain circumstances, entry into a
futures contract that substantially eliminates risk of loss and the opportunity
for gain in an "appreciated financial position" will also accelerate gain to the
Funds.
RISK FACTORS IN FUTURES TRANSACTIONS
Positions in futures contracts may be closed out only on an exchange
which provides a secondary market for such futures. However, there can be no
assurance that a liquid secondary market will exist for any particular futures
contract at any specific time. Thus, it may not be possible to close a futures
position. In the event of adverse price movements, a Fund would continue to be
required to make daily cash payments to maintain the required margin. In such
situations, if a Fund has insufficient cash, it may have to sell portfolio
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, a Fund may be required to make delivery
of the instruments underlying futures contracts it holds. The inability to close
options and futures positions also could have an adverse impact on the ability
to effectively hedge such positions. The Funds will minimize the risk that they
will be unable to close out a futures contract by only entering into futures
contracts which are traded on national futures exchanges and for which there
appears to be a liquid secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. Because the deposit
requirements in the futures markets are less onerous than margin requirements in
the securities market, there may be increased Participations by speculators in
the futures market which may also cause temporary price distortions. A
relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the contract. However, because the
futures strategies engaged in by the Funds are only for risk management
purposes, Banc One Advisors and the Sub-Advisor do not believe that the Funds
are subject to the risks of loss frequently associated with futures
transactions. Each Fund would presumably have sustained comparable losses if,
instead of the futures contract, it had invested in the underlying financial
instrument and sold it after the decline.
Utilization of futures transactions by a Fund does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the portfolio securities being hedged. It is also
possible that a Fund could both lose money on futures contracts and also
experience a decline in value of its portfolio securities. There is also the
risk of loss by a Fund of margin deposits in the event of bankruptcy of a broker
with whom the Fund has an open position in a futures contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of a trading session.
Once the daily limit has been reached in a particular type of contract, no
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movement during a particular trading day and therefore does
not limit potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of future positions and subjecting some
futures traders to substantial losses.
Some futures strategies, including selling futures, buying puts and
writing covered calls, may reduce the Fund's exposure to price fluctuations.
Other strategies, including buying futures, and buying calls, tend to increase
market exposure. Futures and options may be combined with each other in order to
adjust the risk and return characteristics of the overall portfolio. The Fund
expects to enter into these transactions to manage a return or spread on a
particular investment or portion of its assets, to protect against any increase
in the price of securities the Fund anticipates purchasing at a later date, or
for other risk management strategies.
OPTIONS CONTRACTS
Some of the Funds may use trading of options on securities or futures
contracts as a hedging device. An option on a futures contract gives the
purchaser of the option the right (but not the obligation) to take a position at
a specified price (the "striking," "strike" or "exercise" price) in the
underlying futures contract or security. A "call" option gives the purchaser the
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right to take a long (buy) position in the underlying futures contract or
security, and the purchaser of a "put" option acquires the right to take a short
(sell) position in the underlying futures contract or security. The purchase
price of an option is referred to as its "premium." The seller (or "writer") of
an option is obligated to take a futures or securities position at a specified
price if the option is exercised. In the case of a call option, the seller must
stand ready to take a short position (i.e., sell the futures contract or
security) in the underlying futures contract or security at the strike price if
the option is exercised. A seller of a put option, on the other hand, stands
ready to take a long position (i.e., buy the contract or security) in the
underlying futures contract or security at the strike price if the option is
exercised.
A "naked" option refers to an option written by a party which does not
possess the underlying futures contract or security. A "covered" option refers
to an option written by a party which does possess the underlying position. The
initial purchase (sale) of an option is an "opening transaction." In order to
close out an option position, the Fund may enter into a "closing transaction".
This involves the sale (purchase) of an option contract on the same security
with the same exercise price and expiration date as the option contract
originally opened.
A call option on a futures contract or security is said to be
"in-the-money" if the strike price is below current market levels. Similarly, a
put option on a futures contract or security is said to be "out-of-the-money" if
the strike price is below current market levels. On the other hand, a put option
is "in-the-money" if the strike price is above current market levels, and
"out-of-the-money" if the strike price is below current market levels.
Options have limited life spans, usually tied to the delivery or
settlement date of the underlying futures contract or security. Some options,
however, expire significantly in advance of such dates. An option that is
"out-of-the-money" and not offset by the time it expires becomes worthless. On
certain exchanges "in-the-money" options are automatically exercised on their
expiration date, but on others unexercised options simply become worthless after
their expiration date. Options usually trade at a premium (referred to as the
"time value" of the option) above their intrinsic value (the difference between
the market price for the underlying futures contract or equity security and the
strike price). As an option nears its expiration date, the market value and the
intrinsic value move into parity as the time value diminishes.
Some Funds may enter into over-the-counter option transactions. There
will be an active over-the-counter market for such options which will establish
their pricing and liquidity. Broker/Dealers with whom the Trust will enter into
such option transactions shall have a minimum net worth of $20,000,000. Each
Fund will limit the writing of put and call options to 25% of its net assets.
Increased market volatility generally increases the value of options by
increasing the probability of favorable market swings, putting outstanding
options "in-the-money." Although purchasing options is a limited risk trading
approach, significant losses can be incurred by doing so.
COVERED CALLS
Some of the Funds may write (sell) "covered" call options and purchase
options to close out options previously written by the Fund. The Funds' purpose
in writing covered call options is to generate additional premium income. This
premium income will serve to enhance a Fund's total return and will reduce the
effect of any price decline of the security involved in the option. Although the
International Equity Index Fund has no current intention to write such options,
it reserves the right to do so from time to time when such activity will further
its investment objective. Covered call options will generally be written on
securities which, in the opinion of Banc One Advisors or the Sub-Advisor, are
not expected to make any major price moves in the near future but which, over
the long term, are deemed to be attractive investments for the Fund.
A call option gives the holder (buyer) the "right to purchase" a
security at a specified price (the exercise price) at any time until a certain
date (the expiration date). So long as the obligation of the writer of a call
option continues, the writer may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring the writer to deliver
the underlying security against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by repurchasing an option
identical to that previously sold. To secure the writer's obligation to deliver
the underlying security in the case of a call option, subject to the rules of
the Options Clearing Corporation, a writer is required to deposit in escrow the
underlying security or other assets in accordance with such rules. The Funds
will write only covered call options. This means that a Fund will only write a
call option on a security which a Fund already owns.
Fund securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with each Fund's
investment objectives. The writing of covered call options is a conservative
investment technique believed to involve relatively little risk (in contrast to
the writing of naked options, which a Fund will not do), but capable of
enhancing the Fund's total return. When writing a covered call option, a Fund,
in return for the premium, gives up the opportunity for profit from a price
increase in the underlying security above the exercise price, but conversely
retains the risk of loss should the price of the security decline. Unlike one
who owns securities not subject to an
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option, a Fund has no control over when it may be required to sell the
underlying securities, since it may be assigned an exercise notice at any time
prior to the expiration of its obligation as a writer. Thus, the security could
be "called away" at a price substantially below the fair market value of the
security. If a call option which a Fund has written expires, a Fund will realize
a gain in the amount of the premium; however, such gain may be offset by a
decline in the market value of the underlying security during the option period.
If the call option is exercised, a Fund will realize a gain or loss from the
sale of the underlying security. The security covering the call will be
maintained in a segregated account of the Fund's custodian. The Funds do not
consider a security covered by a call to be "pledged" as that term is used in
each Fund's policy which limits the pledging or mortgaging of its assets.
The premium received is the market value of an option. The premium each
Fund will receive from writing a call option will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying security, and the length of the option period. Once the decision to
write a call option has been made, the Fund's Advisor or Sub-Advisor, in
determining whether a particular call option should be written on a particular
security, will consider the reasonableness of the anticipated premium and the
likelihood that a liquid secondary market will exist for those options. The
premium received by a Fund for writing covered call options will be recorded as
a liability in the Trust's statement of assets and liabilities. This liability
will be adjusted daily to the option's current market value, which will be the
latest sale price at the time at which the net asset value per Share of the Fund
is computed (close of the New York Stock Exchange), or, in the absence of such
sale, the latest asked price. The liability will be extinguished upon expiration
of the option, the purchase of an identical option in the closing transaction,
or delivery of the underlying security upon the exercise of the option.
Generally, a Fund, in order to avoid the exercise of an option sold by
it, will be able to cancel its obligation under the option by entering into a
closing purchase transaction, if available, unless selling (in the case of a
call option) or purchasing (in the case of a put option) the underlying
securities is determined to be in a Fund's best interest. A closing purchase
transaction consists of a Fund purchasing an option having the same terms as the
option sold by a Fund, and has the effect of cancelling a Fund's position as a
seller. The premium which a Fund will pay in executing a closing purchase
transaction may be higher (or lower) than the premium received when the option
was sold, depending in large part upon the relative price of the underlying
security at the time of each transaction. To the extent options sold by a Fund
are exercised and a Fund delivers securities to the holder of a call option, a
Fund's turnover rate will increase, which would cause a Fund to incur additional
brokerage expenses.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
or to permit the sale of the underlying security. Furthermore, effecting a
closing transaction will permit a Fund to write another call option on the
underlying security with either a different exercise price or expiration date or
both. If a Fund desires to sell a particular security from its portfolio on
which it has written a call option it will seek to effect a closing transaction
prior to, or concurrently with, the sale of the security. There is, of course,
no assurance that a Fund will be able to effect such closing transactions at a
favorable price. If a Fund cannot enter into such a transaction, it may be
required to hold a security that it might otherwise have sold, in which case it
would continue to be at market risk on the security. This could result in higher
transaction costs. A Fund will pay transaction costs in connection with the
writing of options to close out previously written options. Such transaction
costs are normally higher than those applicable to purchases and sales of
portfolio securities.
Call options written by a Fund will normally have expiration dates of
less than nine months from the date written. The exercise price of the options
may be below, equal to, or above the current market values of the underlying
securities at the time the options are written. From time to time, a Fund may
purchase an underlying security for delivery in accordance with an exercise
notice of a call option assigned to it, rather than delivering such security
from its portfolio. In such cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market price
of a call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
PURCHASING CALL OPTIONS
Certain Funds may purchase call options to hedge against an increase in
the price of securities that the Fund wants ultimately to buy. Such hedge
protection is provided during the life of the call option since the Fund, as
holder of the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying security's market
price. In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover the
premium and transaction costs. These costs will reduce any profit the Fund might
have realized had it bought the underlying security at the time it purchased the
call option. In the event that paying premiums for a call
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option, together with a price movement in the underlying security, is such that
exercise of the option would not be profitable to the Fund, loss of the premium
may be offset by a decrease in the acquisition cost of securities by the Fund.
PURCHASING PUT OPTIONS
Certain Funds may also purchase put options to protect their portfolio
holdings in an underlying security against a decline in market value. Such hedge
protection is provided during the life of the put option since the Fund, as
holder of the put option, is able to sell the underlying security at the put
exercise price regardless of any decline in the underlying security's market
price. For a put option to be profitable, the market price of the underlying
security must decline sufficiently below the exercise price to cover the premium
and transaction costs. By using put options in this manner, the Fund will reduce
any profit it might otherwise have realized from appreciation of the underlying
security by the premium paid for the put option and by transaction cost.
However, any loss of premium may be offset by an increase in the value of the
Fund's securities.
SECURED PUTS
Certain Funds may write secured puts. For the secured put writer,
substantial depreciation in the value of the underlying security would result in
the security being "put to" the writer at the strike price of the option which
may be substantially in excess of the fair market value of the security. If a
secured put option expires unexercised, the writer realizes a gain in the amount
of the premium.
RISK FACTORS IN OPTIONS TRANSACTIONS
The successful use of the options strategies depends on the ability of
Banc One Advisors or, in the case of the International Equity Index Fund, the
Sub-Advisor, to assess interest rate and market movements correctly and to
accurately calculate the fair price of the option. In addition, there may be
imperfect or no correlation between the changes in market value of the
securities held by the Funds and the prices of the options.
When it purchases an option, a Fund runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless the
Fund exercises the option or enters into a closing sale transaction with respect
to the option during the life of the option. If the price of the underlying
security does not rise (in the case of a call) or fall (in the case of a put) to
an extent sufficient to cover the option premium and transaction costs, a Fund
will lose part or all of its investment in the option. This contrasts with an
investment by a Fund in the underlying securities, since the Fund may continue
to hold its investment in those securities notwithstanding the lack of a change
in price of those securities.
The effective use of options also depends on a Fund's ability to
terminate option positions at times when Banc One Advisors or, in the case of
the International Equity Index Fund, the Sub-Advisor, deems it desirable to do
so. A Fund will take an option position only if Banc One Advisors or, in the
case of the International Equity Index Fund, the Sub-Advisor, believes there is
a liquid secondary market for the option, however, there is no assurance that a
Fund will be able to effect closing transactions at any particular time or at an
acceptable price.
If a secondary trading market in options were to become unavailable, a
Fund could no longer engage in closing transactions. Lack of investor interest
might adversely affect the liquidity of the market for particular options or
series of options. A marketplace may discontinue trading of a particular option
or options generally. In addition, a market could become temporarily unavailable
if unusual events, such as volume in excess of trading or clearing capability,
were to interrupt normal market operations. A marketplace may at times find it
necessary to impose restrictions on particular types of options transactions,
which may limit a Fund's ability to realize its profits or limit its losses.
Disruptions in the markets for the securities underlying options
purchased or sold by a Fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, a Fund as purchaser or writer of an
option will be unable to close out its positions until option trading resumes,
and it may be faced with losses if trading in the security reopens at a
substantially different price. In addition, the Options Clearing Corporation
("OCC") or other options markets may impose exercise restrictions. If a
prohibition on exercise is imposed at the time when trading in the option has
also been halted, a Fund as purchaser or writer of an option will be locked into
its position until one of the two restrictions has been lifted. If a prohibition
on exercise remains in effect until an option owned by a Fund has expired, the
Fund could lose the entire value of its option.
Special risks are presented by internationally-traded options. Because
of time differences between the United States and the various foreign countries,
and because different holidays are observed in different countries, foreign
option markets may be open for trading during hours or on days when U.S. markets
are closed. As a result, option premiums may not reflect the current prices of
the underlying interest in the United States.
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MORTGAGE-RELATED SECURITIES
Certain of the Funds may, consistent with their investment objectives
and policies, invest in mortgage-backed securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities.
Mortgage-backed securities, for purposes of the Trust's Prospectuses
and this Statement of Additional Information, represent pools of mortgage loans
assembled for sale to investors by various governmental agencies such as the
Government National Mortgage Association ("Ginnie Mae") and government-related
organizations such as the Federal National Mortgage Association ("Fannie Mae")
and the Federal Home Loan Mortgage Corporation ("Freddie Mac"), as well as by
nongovernmental issuers such as commercial banks, savings and loan institutions,
mortgage bankers, and private mortgage insurance companies. Such
non-governmental mortgage securities cannot be treated as U.S. government
securities for purposes of investment policies. The Government Bond Fund, the
Government Money Market Fund and the Treasury & Agency Fund may only invest in
mortgage-backed securities issued or guaranteed by the U.S. government, or its
agencies or instrumentalities. The other Funds listed above also may invest in
mortgage-backed securities issued by non-government entities, which consist of
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS") and REAL ESTATE MORTGAGE INVESTMENT
CONDUITS ("REMICS") that are rated in one of the four highest rating categories
by at least one NRSRO at the time of investment or, if unrated, determined by
Banc One Advisors to be of comparable quality. The Funds, including the
Government Bond Fund and Government Money Market Fund, also may invest in
multiple class securities issued by U.S. government agencies and
instrumentalities such as Fannie Mae, Freddie Mac and Ginnie Mae. The Funds,
except the Government Bond Fund, the Government Money Market Fund and the
Treasury & Agency Fund may invest in multiple class securities issued by private
issuers including guaranteed CMOs and REMIC pass-through or Participations
certificates, when consistent with a Fund's investment objective, policies and
limitations. A REMIC is a CMO that qualifies for special tax treatment under the
Code and invests in certain mortgages principally secured by interests in real
property and other permitted investments.
CMOs and guaranteed REMIC pass-through certificates ("REMIC
Certificates") issued by Fannie Mae, Freddie Mac, Ginnie Mae and private issuers
are types of multiple class pass-through securities. Investors may purchase
beneficial interests in REMICs, which are known as "regular" interests or
"residual" interests. The Funds do not currently intend to purchase residual
interests in REMICs. The REMIC Certificates represent beneficial ownership
interests in a REMIC Trust, generally consisting of mortgage loans or Fannie
Mae, Freddie Mac or Ginnie Mae guaranteed mortgage pass-through certificates
(the "Mortgage Assets"). The obligations of Fannie Mae, Freddie Mac or Ginnie
Mae under their respective guaranty of the REMIC Certificates are obligations
solely of Fannie Mae, Freddie Mac or Ginnie Mae, respectively.
Fannie Mae REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by Fannie Mae. In addition, Fannie Mae
will be obligated to distribute the principal balance of each class of REMIC
Certificates in full, whether or not sufficient funds are otherwise available.
For Freddie Mac REMIC Certificates, Freddie Mac guarantees the timely
payment of interest, and also guarantees the payment of principal as payments
are required to be made on the underlying mortgage participation certificates
("PCS"). PCS represent undivided interests in specified residential mortgages or
participation therein purchased by Freddie Mac and placed in a PC pool. With
respect to principal payments on PCS, Freddie Mac generally guarantees ultimate
collection of all principal of the related mortgage loans without offset or
deduction. Freddie Mac also guarantees timely payment of principal on certain
PCS referred to as "Gold PCS."
Ginnie Mae REMIC Certificates guarantee the full and timely payment of
interest and principal on each class of securities (in accordance with the terms
of those classes as specified in the related offering circular supplement). The
Ginnie Mae guarantee is backed by the full faith and credit of the United States
of America.
REMIC Certificates issued by Fannie Mae, Freddie Mac and Ginnie Mae are
treated as U.S. government securities for purposes of investment policies. CMOs
and REMIC Certificates provide for the redistribution of cash flow to multiple
classes. Each class of CMOs or REMIC Certificates, often referred to as a
"tranche," is issued at a specific adjustable or fixed interest rate and must be
fully retired no later than its final distribution date. This reallocation of
interest and principal results in the redistribution of prepayment risk across
to different classes. This allows for the creation of bonds with more or less
risk than the underlying collateral exhibits. Principal prepayments on the
mortgage loans or the Mortgage Assets underlying the CMOs or REMIC Certificates
may cause some or all of the classes of CMOs or REMIC Certificates to be retired
substantially earlier than their final distribution dates. Generally, interest
is paid or accrues on all classes of CMOs or REMIC Certificates on a monthly
basis.
The principal of and interest on the Mortgage Assets may be allocated
among the several classes of CMOs or REMIC Certificates in various ways. In
certain structures (known as "sequential pay" CMOs or REMIC Certificates),
payments of principal, including any principal prepayments, on the Mortgage
Assets generally are applied to the classes of CMOs or REMIC Certificates in the
order of their respective final distribution dates. Thus, no payment of
principal will be made on
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any class of sequential pay CMOs or REMIC Certificates until all other classes
having an earlier final distribution date have been paid in full.
Additional structures of CMOs and REMIC Certificates include, among
others, "parallel pay" CMOs and REMIC Certificates. Parallel pay CMOs or REMIC
Certificates are those which are structured to apply principal payments and
prepayments of the Mortgage Assets to two or more classes concurrently on a
proportionate or disproportionate basis. These simultaneous payments are taken
into account in calculating the final distribution date of each class.
A wide variety of REMIC Certificates may be issued in the parallel pay
or sequential pay structures. These securities include accrual certificates
(also know as "Z-Bonds"), which only accrue interest at a specified rate until
all other certificates having an earlier final distribution date have been
retired and are converted thereafter to an interest-paying security, and planned
amortization class ("PAC") certificates, which are parallel pay REMIC
Certificates which generally require that specified amounts of principal be
applied on each payment date to one or more classes of REMIC Certificates (the
"PAC Certificates"), even though all other principal payments and prepayments of
the Mortgage Assets are then required to be applied to one or more other classes
of the certificates. The scheduled principal payments for the PAC Certificates
generally have the highest priority on each payment date after interest due has
been paid to all classes entitled to receive interest currently. Shortfalls, if
any, are added to the amount of principal payable on the next payment date. The
PAC Certificate payment schedule is taken into account in calculating the final
distribution date of each class of PAC. In order to create PAC tranches, one or
more tranches generally must be created that absorb most of the volatility in
the underlying Mortgage Assets. These tranches tend to have market prices and
yields that are much more volatile than the PAC classes.
The Z-Bonds in which the Funds may invest may bear the same non-credit-
related risks as do other types of Z-Bonds. Z-Bonds in which the Fund may invest
will not include residual interest.
There can be no assurance that the U.S. government would provide
financial support to Fannie Mae, Freddie Mac or Ginnie Mae if necessary in the
future.
Although certain mortgage-related securities are guaranteed by a third
party or otherwise similarly secured, the market value of the security, which
may fluctuate, is not so secured. If a Fund of the Trust purchases a
mortgage-related security at a premium, that portion may be lost if there is a
decline in the market value of the security whether resulting from changes in
interest rates or prepayments in the underlying mortgage collateral. As with
other interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true since in periods of declining interest rates the mortgages
underlying the securities are prone to prepayment. For this and other reasons, a
mortgage-related security's stated maturity may be shortened by unscheduled
prepayments on the underlying mortgages and, therefore, it is not possible to
predict accurately the security's return to the Trust's Funds. In addition,
regular payments received in respect of mortgage-related securities include both
interest and principal. No assurance can be given as to the return the Funds of
the Trust will receive when these amounts are reinvested.
The market value of the Fund's adjustable rate Mortgage-Backed
Securities may be adversely affected if interest rates increase faster than the
rates of interest payable on such securities or by the adjustable rate mortgage
loans underlying such securities. Furthermore, adjustable rate Mortgage-Backed
Securities or the mortgage loans underlying such securities may contain
provisions limiting the amount by which rates may be adjusted upward and
downward and may limit the amount by which monthly payments may be increased or
decreased to accommodate upward and downward adjustments in interest rates.
Certain adjustable rate mortgage loans may provide for periodic
adjustments of scheduled payments in order to amortize fully the mortgage loan
by its stated maturity. Other adjustable rate mortgage loans may permit their
stated maturity to be extended or shortened in accordance with the portion of
each payment that is applied to interest as affected by the periodic interest
rate adjustments.
Although having less risk of decline during periods of rising interest
rates, adjustable rate Mortgage-Backed Securities have less potential for
capital appreciation than fixed rate Mortgage-Backed Securities because their
coupon rates will decline in response to market interest rate declines. The
market value of fixed rate Mortgage-Backed Securities may be adversely affected
as a result of increases in interest rates and, because of the risk of
unscheduled principal prepayments, may benefit less than other fixed rate
securities of similar maturity from declining interest rates. Finally, to the
extent Mortgage-Backed Securities are purchased at a premium, mortgage
foreclosures and unscheduled principal prepayments may result in some loss of
the Fund's principal investment to the extent of the premium paid. On the other
hand, if such securities are purchased at a discount, both a scheduled payment
of principal and an unscheduled prepayment of principal will increase current
and total returns and will accelerate the recognition of income.
The Bond Funds and the Asset Allocation Fund may invest in
mortgage-related securities which are collateralized mortgage obligations
structured on pools of mortgage pass-through certificates or mortgage loans.
Collateralized mortgage
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obligations will be purchased only if rated in the four highest rating
categories by a nationally recognized rating organization such as Moody's or
S&P.
There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities issued by
Ginnie Mae include Ginnie Mae Mortgage Pass-Through Certificates which are
guaranteed as to the timely payment of principal and interest by Ginnie Mae and
such guarantee is backed by the full faith and credit of the United States.
Ginnie Mae is a wholly-owned U.S. government corporation within the Department
of Housing and Urban Development. Ginnie Mae certificates also are supported by
the authority of Ginnie Mae to borrow funds from the U.S. Treasury to make
payments under its guarantee. Mortgage-related securities issued by 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 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 payment of principal, Freddie Mac may
remit the amount due on account of its guarantee of ultimate payment of
principal at any time after default on an underlying mortgage, but in no event
later than one year after it becomes payable.
The Funds may enter into MORTGAGE DOLLAR ROLLS in which the Funds sell
securities for delivery in the current month and simultaneously contract with
the same counterparty to repurchase similar (same type, coupon and maturity) but
not identical securities on a specified future date. When a Fund enters into
mortgage dollar rolls, the Fund will hold and maintain a segregated account
until the settlement date, cash or liquid, high grade debt securities in an
amount equal to the forward purchase price. The Funds benefit to the extent of
any difference between the price received for the securities sold and the lower
forward price for the future purchase (often referred to as the "drop") or fee
income plus the interest earned on the cash proceeds of the securities sold
until the settlement date of the forward purchase. Unless such benefits exceed
the income, capital appreciation and gain or loss due to mortgage prepayments
that would have been realized on the securities sold as part of the mortgage
dollar roll, the use of this technique will diminish the investment performance
of the Funds compared with what such performance would have been without the use
of mortgage dollar rolls. The benefits derived from the use of mortgage dollar
rolls may depend upon Banc One Advisors' ability to predict correctly mortgage
prepayments and interest rates. There is no assurance that mortgage dollar rolls
can be successfully employed. The Funds currently intend to enter into mortgage
dollar rolls that are accounted for as a financing transaction. For purposes of
diversification and investment limitations, mortgage dollar rolls are considered
to be mortgage-backed securities.
The Bond Funds, (other than the Limited Volatility Bond Fund and the
Treasury & Agency Fund), and the Asset Allocation Fund may invest in certain
STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS") that are extremely sensitive to
changes in prepayments and interest rates. Even though such securities have been
guaranteed by an agency or instrumentality of the U.S. government, under certain
interest rate or prepayment rate scenarios, the Funds may fail to fully recover
their investment in such securities. The Funds may invest in SMBS to enhance
revenues or hedge against interest rate risk. SMBS are derivative multi-class
mortgage securities. The Funds may only invest in SMBS issued or guaranteed by
the U.S. government, its agencies or instrumentalities. SMBS are usually
structured with two classes that receive different proportions of the interest
and principal distributions from a pool of mortgage assets. A common type of
SMBS will have one class receiving all of the interest from the mortgage assets
(" IOs"), while the other class will receive all of the principal ("POs").
Mortgage IOs receive monthly interest payments based upon a notional amount that
declines over time as a result of the normal monthly amortization and
unscheduled prepayments of principal on the associated mortgage POs. Changes in
prepayment rates can cause the return on investment in IOs to be highly
volatile, and under extremely high prepayment conditions IOs can incur
significant losses. POs are bought at a discount to the ultimate principal
repayment value. The rate of return on a PO will vary with prepayments, rising
as prepayment increase and falling as prepayments decrease. Although the market
for such securities is increasingly liquid, certain SMBS may not be readily
marketable and will be considered illiquid for purposes of the Funds'
limitations on investments in illiquid securities. The market value of the class
consisting entirely of principal payments generally is unusually volatile in
response to changes in interest rates. The yields on a class of SMBS that
receives all or most of the interest from mortgage assets are generally higher
than prevailing market yields on other mortgage-backed securities because their
cash flow patterns are more volatile and there is a greater risk that any
premium paid will not be fully recouped. Banc One Advisors will seek to manage
these risks (and potential benefits) by investing in a variety of such
securities and by using certain analytical and hedging techniques.
The yield characteristics of Mortgage-Backed Securities differ from
those of traditional fixed income securities. The major differences typically
include more frequent interest and principal payments, usually monthly, and the
possibility that prepayments of principal may be made at any time. Prepayment
rates are influenced by changes in current interest rates and
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a variety of economic, geographic, social and other factors and cannot be
predicted with certainty. As with fixed rate mortgage loans, adjustable rate
mortgage loans may be subject to a greater prepayment rate in a declining
interest rate environment. The yields to maturity of the Mortgage-Backed
Securities in which the Trust invests will be affected by the actual rate of
payment (including prepayments) of principal of the underlying mortgage loans.
The mortgage loans underlying such securities generally may be prepaid at any
time without penalty. In a fluctuating interest rate environment, a predominant
factor affecting the prepayment rate on a pool of mortgage loans is the
difference between the interest rates on the mortgage loans and prevailing
mortgage loan interest rates (giving consideration to the cost of any
refinancing). In general, if mortgage loan interest rates fall sufficiently
below the interest rates on fixed rate mortgage loans underlying mortgage
pass-through securities, the rate of prepayment would be expected to increase.
Conversely, if mortgage loan interest rates rise above the interest rates on the
fixed rate mortgage loans underlying the mortgage pass-through securities, the
rate of prepayment may be expected to decrease.
The Bond Funds and the Asset Allocation Fund, may invest in ADJUSTABLE
RATE MORTGAGE LOANS ("ARMS"). The Treasury & Agency Fund will buy only
government ARMs. ARMs eligible for inclusion in a mortgage pool will generally
provide for a fixed initial mortgage interest rate for a specified period of
time. Thereafter, the interest rates (the "Mortgage Interest Rates") may be
subject to periodic adjustment based on changes in the applicable index rate
(the "Index Rate"). The adjusted rate would be equal to the Index Rate plus a
gross margin, which is a fixed percentage spread over the Index Rate established
for each ARM at the time of its origination.
Adjustable interest rates can cause payment increases that some
borrowers may find difficult to make. However, certain ARMs may provide that the
Mortgage Interest Rate may not be adjusted to a rate above an applicable
lifetime maximum rate or below an applicable lifetime minimum rate for such ARM.
Certain ARMs may also be subject to limitations on the maximum amount by which
the Mortgage Interest Rate may adjust for any single adjustment period (the
"Maximum Adjustment"). Other ARMs ("Negatively Amortizing ARMs") may provide
instead or as well for limitations on changes in the monthly payment on such
ARMs. Limitations on monthly payments can result in monthly payments which are
greater or less than the amount necessary to amortize a Negatively Amortizing
ARM by its maturity at the Mortgage Interest Rate in effect in any particular
month. In the event that a monthly payment is not sufficient to pay the interest
accruing on a Negatively Amortizing ARM, any such excess interest is added to
the principal balance of the loan, causing negative amortization and will be
repaid through future monthly payments. It may take borrowers under Negatively
Amortizing ARMs longer periods of time to achieve equity and may increase the
likelihood of default by such borrowers. In the event that a monthly payment
exceeds the sum of the interest accrued at the applicable Mortgage Interest Rate
and the principal payment which would have been necessary to amortize the
outstanding principal balance over the remaining term of the loan, the excess
(or "accelerated amortization") further reduces the principal balance of the
ARM. Negatively Amortizing ARMs do not provide for the extension of their
original maturity to accommodate changes in their Mortgage Interest Rate. As a
result, unless there is a periodic recalculation of the payment amount (which
there generally is), the final payment may be substantially larger than the
other payments. These limitations on periodic increases in interest rates and on
changes in monthly payment protect borrowers from unlimited interest rate and
payment increases.
There are two main categories of indices which provide the basis for
rate adjustments on ARMs: those based on U.S. Treasury securities and those
derived from a calculated measure such as a cost of funds index or a moving
average of mortgage rates. Commonly utilized indices include the one-year,
three-year and five-year constant maturity Treasury bill rates, the three-month
Treasury bill rate, the 180-day Treasury bill rate, rates on longer-term
Treasury securities, the 11th District Federal Home Loan Bank Cost of Funds, the
National Median Cost of Funds, the one-month, three-month, six-month or one-year
London Interbank Offered Rate ("LIBOR"), the prime rate of a specific bank, or
commercial paper rates. Some indices, such as the one-year constant maturity
Treasury rate, closely mirror changes in market interest rate levels. Others,
such as the 11th District Federal Home Loan Bank Cost of Funds index, tend to
lag behind changes in market rate levels and tend to be somewhat less volatile.
The degree of volatility in the market value of the Fund's portfolio and
therefore in the net asset value of the Fund's shares will be a function of the
length of the interest rate reset periods and the degree of volatility in the
applicable indices.
In general, changes in both prepayment rates and interest rates will
change the yield on Mortgage-Backed Securities. The rate of principal
prepayments with respect to ARMs has fluctuated in recent years. As is the case
with fixed mortgage loans, ARMs may be subject to a greater rate of principal
prepayments in a declining interest rate environment. For example, if prevailing
interest rates fall significantly, ARMs could be subject to higher prepayment
rates than if prevailing interest rates remain constant because the availability
of fixed rate mortgage loans at competitive interest rates may encourage
mortgagors to refinance their ARMs to "lock-in" a lower fixed interest rate.
Conversely, if prevailing interest rates rise significantly, ARMs may prepay at
lower rates than if prevailing rates remain at or below those in effect at the
time such ARMs were originated. As with fixed rate mortgages, there can be no
certainty as to the rate of prepayments on the ARMs in either stable or changing
interest rate environments. In addition, there can be no certainty as to whether
increases in the principal balances of the ARMs due to the addition of deferred
interest may result in a default rate higher than that on ARMs that do not
provide for negative amortization. Other factors affecting prepayment of ARMs
include changes in mortgagors' housing needs, job transfers, unemployment,
mortgagors' net equity in the mortgage properties and servicing decisions.
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REAL ESTATE INVESTMENT TRUSTS ("REITS")
Certain of the Funds may invest without limitation in shares of REITs.
REITs are pooled investment vehicles which invest primarily in income producing
real estate or real estate related loans or interest. REITs are generally
classified as equity REITs, mortgage REITs or a combination of equity and
mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents. Equity
REITs can also realize capital gains by selling property that have appreciated
in value. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive income from the collection of interest payments. Similar to
investment companies, REITs are not taxed on income distributed to shareholders
provided they comply with several requirements of the Internal Revenue Code of
1986, as amended (the "Code"). A Fund will indirectly bear its proportionate
share of expenses incurred by REITs in which a Fund invests in addition to the
expenses incurred directly by a Fund.
Investing in REITS involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITS may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, are
subject to heavy cash flow dependency, default by borrowers and
self-liquidation. REITs are also subject to the possibilities of failing to
qualify for tax free pass-through of income under the Code and failing to
maintain their exemption from registration under the Act.
REITs (especially mortgage REITs) are also subject to interest rate
risks. When interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates rise,
the value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investment in REITs involves risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be subject
to more abrupt or erratic price movements than larger company securities.
Historically, small capitalization stocks, such as REITs, have been more
volatile in price than the larger capitalization stocks included in the S&P
Index of 500 Common Stocks.
FOREIGN INVESTMENTS
Some of the Funds may invest in certain obligations or securities of
foreign issuers. Possible investments include equity securities of foreign
entities, obligations of foreign branches of U.S. banks and of foreign banks,
including, without limitation, European Certificates of Deposit, European Time
Deposits, European Banker's Acceptances, Canadian Time Deposits and Yankee
Certificates of Deposits, and investments in Canadian Commercial Paper, foreign
securities and Europaper (as those terms are defined in the relevant
Prospectuses of the Trust). Securities of foreign issuers may include sponsored
and unsponsored American Depository Receipts ("ADRs"). Sponsored ADRs are listed
on the New York Stock Exchange; unsponsored ADRs are not. Therefore, there may
be less information available about the issuers of unsponsored ADRs than the
issuers of sponsored ADRs. Unsponsored ADRs are restricted securities. These
instruments may subject a Fund to investment risks that differ in some respects
from those related to investments in obligations of U.S. domestic issuers. Such
risks include future adverse political and economic developments, the possible
imposition of withholding taxes on interest or other income, possible seizure,
nationalization or expropriation of foreign deposits, the possible establishment
of exchange controls or taxation at the source, greater fluctuations in value
due to changes in exchange rates, or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and interest
on such obligations. Such investments may also entail higher custodial fees and
sales commissions than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks are not
regulated by U.S. banking authorities and may be subject to less stringent
reserve requirements than those applicable to domestic branches of U.S. banks.
In addition, foreign banks generally are not bound by the accounting, auditing,
and financial reporting standards comparable to those applicable to U.S. banks.
Investments in all types of foreign obligations or securities will not exceed
25% of the net assets of the Asset Allocation Fund, the Equity Funds (with the
exception of the International Equity Index Fund) and the Income Bond and
Limited Volatility Bond Funds.
By investing in foreign securities, the International Equity Index Fund
attempts to take advantage of differences between both economic trends and the
performance of securities markets in the various countries, regions and
geographic areas as prescribed by the Fund's investment objective and policies.
During certain periods the investment return on securities in some or all
countries may exceed the return on similar investments in the United States,
while at other times the investment return may be less than that on similar U.S.
securities. Shares of the International Equity Index Fund, when included in
appropriate amounts in a portfolio otherwise consisting of domestic securities,
will provide a source of increased diversification. The International Equity
Index Fund itself seeks increased diversification by combining securities from
various countries and geographic areas that offer different investment
opportunities and are affected by different economic
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trends. The international investments of the International Equity Index Fund may
reduce the effect that events in any one country or geographic area will have on
its investment holdings. Of course, negative movement by one of a Fund's
investments in one foreign market represented in its portfolio may offset
potential gains from the Fund's investments in another country's markets.
PERCS*
The Equity Funds may invest in Preferred Equity Redemption Cumulative
Stock ("PERCS") which is a form of convertible preferred stock that actually has
more of an equity component than it does fixed income characteristics. These
instruments permit companies to raise capital via a surrogate for common equity.
PERCS are preferred stock which convert to common stock after a specified period
of time, usually three years, and are considered the equivalent of equity by the
ratings agencies. Issuers pay holders a substantially higher dividend yield than
that on the underlying common, and in exchange, the holder's appreciation is
capped, usually at about 30 percent. PERCS are callable at any time. The PERC is
mandatorily convertible into common stock, but is callable at any time at an
initial call price that reflects a substantial premium to the stock's issue
price. PERCS offer a higher dividend than that available on the common stock,
but in exchange the investors agree to the company placing a cap on the
potential price appreciation. The call price declines daily in an amount that
reflects the incremental dividend that holders enjoy. PERCS are listed on an
exchange where the common stock is listed.
*PERCS is a registered trademark of Morgan Stanley, which does not
sponsor and is in no way affiliated with The One Group.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
Some funds may purchase securities on a "when-issued" and forward
commitment basis. When a Fund agrees to purchase securities, the Fund's
custodian will set aside cash or liquid portfolio securities equal to the amount
of the commitment in a separate account. The Funds may purchase securities on a
when-issued basis when deemed by Banc One Advisors to present attractive
investment opportunities. When-issued securities are purchased for delivery
beyond the normal settlement date at a stated price and yield, thereby involving
the risk that the yield obtained will be less than that available in the market
at delivery. The Funds generally will not pay for such securities or earn
interest on them until received. Although the purchase of securities on a
when-issued basis is not considered to be leveraging, it has the effect of
leveraging. When Banc One Advisors purchases a when-issued security, the
Custodian will set aside cash or liquid securities to satisfy the purchase
commitment. In such a case, a Fund may be required subsequently to place
additional assets in the separate account in order to assure that the value of
the account remains equal to the amount of the Fund's commitment. It may be
expected that a Fund's net assets will fluctuate to a greater degree when it
sets aside portfolio securities to cover such purchase commitments than when it
sets aside cash. No Fund intends to purchase "when-issued" securities for
speculative purposes but only for the purpose of acquiring portfolio securities.
Because a Fund will set aside cash or liquid portfolio securities to satisfy its
purchase commitments in the manner described, the Fund's liquidity and the
ability of Banc One Advisors and the Sub-Advisor to manage the Fund might, as
described in the Prospectuses, be affected in the event its commitments to
purchase when-issued securities ever exceeded 40% of the value of its assets.
Commitments to purchase when-issued securities will not, under normal market
conditions, exceed 25% of a Fund's total assets, and a commitment will not
exceed 90 days. A Fund may dispose of a when-issued security or forward
commitment prior to settlement if Banc One Advisors deems it appropriate to do
so. When a Fund engages in "when-issued" transactions, it relies on the seller
to consummate the trade. Failure of the seller to do so may result in the Fund's
incurring a loss or missing the opportunity to obtain a price considered to be
advantageous.
In a forward commitment transaction, the Funds contract to purchase
securities for a fixed price at a future date beyond customary settlement time.
The Funds are required to hold and maintain in a segregated account until the
settlement date, cash, U.S. government securities or liquid high-grade debt
obligations in an amount sufficient to meet the purchase price. Alternatively,
the Funds may enter into offsetting contracts for the forward sale of other
securities that they own. The purchase of securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date.
SECURITIES LENDING
In order to generate additional income, each of the Funds, except the
Funds of Funds, may lend up to 33% of the securities in which they are invested
pursuant to agreements requiring that the loan be continuously secured by cash,
securities of the U.S. government or its agencies, shares of an investment trust
or mutual fund or any combination of cash and such securities as collateral
equal at all times to at least 100% of the market value plus accrued interest on
the securities lent. The Funds will continue to receive interest on the
securities lent while simultaneously seeking to earn interest on the investment
of cash collateral in U.S. government securities, shares of an investment trust
or mutual fund, or other short-term, highly liquid investments. Collateral is
marked to market daily to provide a level of collateral at least equal to the
market value of the securities lent. There may be risks of delay in recovery of
the securities or even loss of rights in the collateral
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should the borrower of the securities fail financially. However, loans will only
be made to borrowers deemed by Banc One Advisors to be of good standing under
guidelines established by the Trust's Board of Trustees and when, in the
judgment of Banc One Advisors, the consideration which can be earned currently
from such securities loans justifies the attendant risk. Loans are subject to
termination by the Funds or the borrower at any time, and are therefore, not
considered to be illiquid investments.
INDEX INVESTING BY THE EQUITY INDEX AND INTERNATIONAL EQUITY INDEX FUNDS
It is anticipated that the indexing approach that will be employed by
the Equity Index Fund will be an effective method of substantially tracking
percentage changes in the S&P 500 Index (the "Index"). It is a reasonable
expectation that there will be a close correlation between the Fund's
performance and that of the Index in both rising and falling markets. The Fund
will attempt to achieve a correlation between the performance of its portfolio
and that of the Index of at least 0.95, without taking into account expenses. A
correlation of 1.00 would indicate perfect correlation, which would be achieved
when the Fund's net asset value, including the value of its dividend and capital
gains distributions, increases or decreases in exact proportion to changes in
the Index. The Fund's ability to correlate its performance with the Index,
however, may be affected by, among other things, changes in securities markets,
the manner in which the Index is calculated by Standard & Poor's Corporation
("S&P") and the timing of purchases and redemptions. In the future, the Trustees
of the Trust, subject to the approval of Shareholders, may select another index
if such a standard of comparison is deemed to be more representative of the
performance of common stocks.
S&P chooses the stocks to be included in the Index largely on a
statistical basis. Inclusion of a stock in the Index in no way implies an
opinion by S&P as to its attractiveness as an investment. The Index is
determined, composed and calculated by S&P without regard to the Equity Index
Fund. S&P is neither a sponsor of, nor in any way affiliated with the Equity
Index Fund, and S&P makes no representation or warranty, expressed or implied on
the advisability of investing in the Equity Index Fund or as to the ability of
the Index to track general stock market performance, and S&P disclaims all
warranties of merchantability or fitness for a particular purpose or use with
respect to the Index or any data included therein. "Standard and Poor's 500" is
a service mark of S&P.
The weightings of stocks in the Index are based on each stock's
relative total market value, i.e., market price per share times the number of
Shares outstanding. Because of this weighting, approximately 50% of the Index is
currently composed of the 50 largest companies in the Index, and the Index
currently represents over 65% of the market value of all U.S. common stocks
listed on the New York Stock Exchange. Typically, companies included in the
Index are the largest and most dominant firms in their respective industries.
Banc One Advisors generally selects stocks for the Equity Index Fund in
the order of their weightings in the Index beginning with the heaviest weighted
stocks. The percentage of the Equity Index Fund's assets to be invested in each
stock is approximately the same as the percentage it represents in the Index. No
attempt is made to manage the Equity Index Fund in the traditional sense using
economic, financial and market analysis. The Equity Index Fund is managed using
a computer program to determine which stocks are to be purchased and sold to
replicate the Index to the extent feasible. From time to time, administrative
adjustments may be made in the Fund because of changes in the composition of the
Index, but such changes should be infrequent.
It is anticipated that the indexing approach that will be employed by
the International Equity Index Fund will be an effective method of substantially
tracking percentage changes in the GDP weighted MSCI EAFE Index (the
"International Index"). The Fund will attempt to achieve a correlation between
the performance of its portfolio and that of the International Index of at least
0.95, without taking into account expenses. It is a reasonable expectation that
there will be a close correlation between the Fund's performance and that of the
International Index in both rising and falling markets. A correlation of 1.00
would indicate perfect correlation, which would be achieved when the Fund's net
asset value, including the value of its dividend and capital gains
distributions, increases or decreases in exact proportion to changes in the
International Index. The Fund's ability to correlate its performance with the
International Index, however, may be affected by, among other things, changes in
securities markets, the manner in which the International Index is calculated by
Morgan Stanley International ("MSCI") and the timing of purchases and
redemptions. In the future, the Trustees of the Trust, subject to the approval
of Shareholders, may select another index if such a standard of comparison is
deemed to be more representative of the performance of common stocks.
MSCI computes and publishes the International Index. MSCI also computes
the country weights which are established based on annual GDP data. Gross
Domestic Product is defined as a country's Gross National Product, or total
output of goods and services, adjusted by the following two factors: net labor
income (labor income of domestic residents working abroad less labor income of
foreigners working domestically) plus net interest income (interest income
earned from foreign investments less interest income earned from domestic
investments by foreigners). Country weights are thus established in proportion
to the size of their economies as measured by Gross Domestic Product, which
results in a more
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uniform distribution of capital across the EAFE markets than if capitalization
weights were used as the basis. The country weights within the International
Index are systematically rebalanced annually to the most recent GDP weights.
MSCI chooses the stocks to be included in the International Index
largely on a statistical basis. Inclusion of a stock in the International Index
in no way implies an opinion by MSCI as to its attractiveness as an investment.
The International Index is determined, composed and calculated by MSCI without
regard to the International Equity Index Fund. MSCI is neither a sponsor of, nor
in any way affiliated with the International Equity Index Fund, and MSCI makes
no representation or warranty, expressed or implied on the advisability of
investing in the International Equity Index Fund or as to the ability of the
International Index to track general stock market performance, and MSCI
disclaims all warranties of merchantability or fitness for a particular purpose
or use with respect to the International Index or any data included therein.
"MSCI EAFE Index" is a service mark of MSCI.
FOREIGN CURRENCY TRANSACTIONS OF THE INTERNATIONAL EQUITY INDEX FUND
Banc One Advisors or the Sub-Advisor of the International Equity Index
Fund may, if it so chooses, engage in various strategies to hedge against
interest rate and currency risks. These strategies may consist of use of any of
the following, some of which also have been described above: options on Fund
positions or currencies, financial and currency futures, options on such
futures, forward foreign currency transactions, forward rate agreements and
interest rate and currency swaps, caps and floors. The Fund may engage in such
transactions in both U.S. and non-U.S. markets. To the extent the Fund enters
into such transactions in markets other than in the United States, the Fund may
be subject to certain currency, settlement, liquidity, trading and other risks
similar to those described above with respect to the Fund's investments in
foreign securities. The Fund may enter into such transactions only in connection
with hedging strategies. While the Fund's use of hedging strategies is intended
to reduce the volatility of the net asset value of Fund shares, the net asset
value of the Fund will fluctuate. There can be no assurance that the Fund's
hedging transactions will be effective. Furthermore, the Fund may only engage in
hedging activities from time to time and may not necessarily be engaging in
hedging activities when movements in interest rates or currency exchange rates
occur. Tax requirements may limit the Fund's ability to engage in the hedging
transactions and strategies described below.
A substantial portion of the securities of the Fund will be denominated
in foreign currencies, and the Fund may hold funds in foreign currencies. Thus,
the value of the Fund's shares will be affected by changes in currency exchange
rates. The value of the Fund's investments denominated in foreign currencies and
any funds held in foreign currencies will depend on the relative strength of
those currencies and the U.S. Dollar, and the funds may be affected favorably or
unfavorably by exchange control regulations or changes in exchange rates between
foreign currencies and the U.S. Dollar. Changes in the foreign currency exchange
rates also may affect the value of dividends and interest earned, gains and
losses realized on the sale of securities and net investment income and gains,
if any, to be distributed to Shareholders by the Fund. The exchange rates
between the U.S. Dollar and other currencies are determined by the forces of
supply and demand in foreign exchange markets. Accordingly, the ability of the
Fund to achieve its investment objective may depend, to a certain extent, on
exchange rate movements.
The Fund is authorized to deal in forward foreign exchange between
currencies of the different countries in which the Fund will invest and
multi-national currency units as a hedge against possible variations in the
foreign exchange rate between these currencies. This is accomplished through
contractual agreements entered into in the interbank market to purchase or sell
one specified currency for another currency at a specified future date (up to
one year) and price at the time of the contract. The Fund's dealings in forward
foreign exchange will be limited to hedging involving either specific
transactions or portfolio positions.
Transaction Hedging. When the Fund engages in transaction hedging, it
enters into foreign currency transactions with respect to specific receivables
or payables of the Fund generally arising in connection with the purchase or
sale of its portfolio securities. The International Equity Index Fund will
engage in transaction hedging when it desires to "lock in" the U.S. dollar price
of a security it has agreed to purchase or sell, or the U.S. dollar equivalent
of a dividend or interest payment in a foreign currency. By transaction hedging,
the International Equity Index Fund will attempt to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
The International Equity Index Fund may purchase or sell a foreign
currency on a spot (or cash) basis at the prevailing spot rate in connection
with the settlement of transactions in portfolio securities denominated in that
foreign currency. The Fund may also enter into contracts to purchase or sell
foreign currencies at a future date ("forward contracts"). Although there is no
current intention to do so, the International Equity Index Fund reserves the
right to purchase and sell foreign currency futures contracts traded in the
United States and subject to regulation by the CFTC.
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For transaction hedging purposes the International Equity Index Fund
may also purchase U.S. exchange-listed call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives the Fund the right to assume a short position in the futures contract
until expiration of the option. A put option on currency gives the Fund the
right to sell a currency at an exercise price until the expiration of the
option. A call option on a futures contract gives the Fund the right to assume a
long position in the futures contract until the expiration of the option. A call
option on currency gives the Fund the right to purchase a currency at the
exercise price until the expiration of the option.
Position Hedging. When it engages in position hedging, the
International Equity Index Fund enters into foreign currency exchange
transactions to protect against a decline in the values of the foreign
currencies in which its portfolio securities are denominated (or an increase in
the value of currency for securities which Banc One Advisors or the Sub-Advisor
expects to purchase, when the Fund holds cash or short-term investments). In
connection with the position hedging, the Fund may purchase or sell foreign
currency forward contracts or foreign currency on a spot basis. The
International Equity Index Fund may purchase U.S. exchange-listed put or call
options on foreign currency and foreign currency futures contracts and buy or
sell foreign currency futures contracts traded in the United States and subject
to regulation by the CFTC, although the International Equity Index Fund has no
current intention to do so.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward contract or
futures contract. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security or securities being hedged is less
than the amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security or
securities if the market value of such security or securities exceeds the amount
of foreign currency the Fund is obligated to deliver.
Although the Fund has no current intention to do so, the International
Equity Index Fund may write covered call options on up to 100% of the currencies
in its portfolio to offset some of the costs of hedging against fluctuations in
currency exchange rates.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the International Equity Index Fund
owns or expects to purchase or sell. They simply seek to maintain an investment
portfolio that is relatively neutral to fluctuations in the value of the U.S.
Dollar relative to major foreign currencies and establish a rate of exchange
which one can achieve at some future point in time. Additionally, although these
techniques tend to minimize the risk of loss due to a decline in the value of
the hedged currency, they tend to limit any potential gain which might result
from the increase in the value of such currency. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the anticipated devaluation level. The Fund will not speculate in
forward foreign exchange.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The International Equity Index Fund may purchase forward foreign
currency exchange contracts, which involve an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract as agreed by the parties, at a price set at the time of
the contract. In the case of a cancellable forward contract, the holder has the
unilateral right to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades.
The maturity date of a forward contract may be any fixed number of days
from the date of the contract agreed upon by the parties, rather than a
predetermined date in a given month. Forward contracts may be in any amounts
agreed upon by the parties rather than predetermined amounts. Also, forward
foreign exchange contracts are entered into directly between currency traders so
that no intermediary is required. A forward contract generally requires no
margin or other deposit.
At the maturity of a forward contract, the Fund may either accept or
make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected on
a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
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FOREIGN CURRENCY FUTURES CONTRACTS
The International Equity Index Fund may purchase forward foreign
currency exchange contracts, foreign currency futures contracts traded in the
United States are designed by and traded on exchanges regulated by the CFTC,
such as the New York Mercantile Exchange. The International Equity Index Fund
would enter into foreign currency futures contracts solely for bona fide hedging
or other appropriate risk management purposes as defined in CFTC regulations.
When a Fund purchases or sells a futures contract, it is required to
deposit with its custodian an amount of cash or U.S. Treasury bills known as
"initial margin." The nature of initial margin is different from that of margin
in security transactions in that it does not involve borrowing money to finance
transactions. Rather, initial margin is similar to a performance bond or good
faith deposit that is returned to the Fund upon termination of the contract,
assuming the Fund satisfies its contractual obligation.
Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market." These payments are called "variation
margin" and are made as the value of the underlying futures contract fluctuates.
For example, when a Fund sells a futures contract and the price of the
underlying currency rises above the delivery price, the Fund's position declines
in value. The Fund then pays a broker a variation margin payment equal to the
difference between the delivery price of the futures contract and the market
price of the currency underlying the futures contract. Conversely, if the price
of the underlying currency falls below the delivery price of the contract, the
Fund's futures position increases in value. The broker then must make a
variation margin payment equal to the difference between the delivery price of
the futures contract and the market price of the currency underlying the futures
contract.
When a Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
Fund, and the Fund realizes a loss or gain. Such closing transactions involve
additional commission costs.
In addition to the margin requirements discussed above, transactions in
currency futures contracts may involve the segregation of funds pursuant to
requirements imposed by the Securities and Exchange Commission. Under those
requirements, where a Fund has a long position in a futures or forward contract,
it may be required to establish a segregated account (not with a futures
commission merchant or broker) containing cash or certain liquid assets equal to
the purchase price of the contract (less any margin on deposit). For a short
position in futures or forward contracts held by a Fund, those requirements may
mandate the establishment of a segregated account (not with a futures commission
merchant or broker) with cash or certain liquid assets that, when added to the
amounts deposited as margin, equal the market value of the instruments or
currency underlying the futures or forward contracts (but are not less than the
price at which the short positions were established). However, segregation of
assets is not required if the Fund "covers" a long position. For example,
instead of segregating assets, a Fund, when holding a long position in a futures
or forward contract, could purchase a put option on the same futures or forward
contract with a strike price as high or higher than the price of the contract
held by the Fund. In addition, where a Fund takes short positions, or engages in
sales of call options, it need not segregate assets if it "covers" these
positions. For example, where a Fund holds a short position in a futures or
forward contract, it may cover by owning the instruments or currency underlying
the contract. A Fund may also cover such a position by holding a call option
permitting it to purchase the same futures or forward contract at a price no
higher than the price at which the short position was established. Where a Fund
sells a call option on a futures or forward contract, it may cover either by
entering into a long position in the same contract at a price no higher than the
strike price of the call option or by owning the instruments or currency
underlying the futures or forward contract. The Fund could also cover this
position by holding a separate call option permitting it to purchase the same
futures or forward contract at a price no higher than the strike price of the
call option sold by the Fund.
At the maturity of a futures contract, the Fund may either accept or
make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected on
a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
Positions in the foreign currency futures contracts may be closed out
only on an exchange or board of trade which provides a secondary market in such
contracts. Although the International Equity Index Fund intends to purchase or
sell foreign currency futures contracts only on exchanges or boards of trade
where there appears to be an active secondary market, there is no assurance that
a secondary market on an exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse price
movements, the Fund would continue to be required to make daily cash payments of
variation margin.
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FOREIGN CURRENCY OPTIONS
The International Equity Index Fund may purchase U.S. exchange-listed
call and put options on foreign currencies. Such options on foreign currencies
operate similarly to options on securities. Options on foreign currencies are
affected by all of those factors which influence foreign exchange rates and
investments generally.
The Fund is authorized to purchase or sell listed foreign currency
options, and currency swap contracts as a short or long hedge against possible
variations in foreign exchange rates. Such transactions may be effected with
respect to hedges on non-U.S. Dollar denominated securities (including
securities denominated in the ECU) owned by the Fund, sold by the Fund but not
yet delivered, committed or anticipated to be purchased by the Fund, or in
transaction or cross-hedging strategies. As an illustration, the Fund may use
such techniques to hedge the stated value in United States dollars of an
investment in a Japanese yen-dominated security. In such circumstances, for
example, the Fund may purchase a foreign currency put option enabling it to sell
a specified amount of yen for dollars at a specified price by a future date. To
the extent the hedge is successful, a loss in the value of the dollar relative
to the yen will tend to be offset by an increase in the value of the put option.
To offset, in whole or in part, the cost of acquiring such a put option, the
Fund also may sell a call option which, if exercised, requires it to sell a
specified amount of yen for dollars at a specified price by a future date (a
technique called a "straddle"). By selling such call option in this
illustration, the Fund gives up on the opportunity to profit without limit from
increases in the relative value of the yen to the dollar.
Certain differences exist between these foreign currency hedging
instruments. Foreign currency options provide the holder thereof the right to
buy or to sell a currency at a fixed price on a future date. Listed options are
third-party contracts (i.e., performance of the parties' obligations is
guaranteed by an exchange or clearing corporation) which are issued by a
clearing corporation, traded on an exchange and have standardized strike prices
and expiration dates. OTC options are two-party contracts and have negotiated
strike prices and expiration dates. Options on futures contracts are traded on
boards of trade or futures exchanges. Currency swap contacts are negotiated two
party agreements entered into in the interbank market whereby the parties
exchange two foreign currencies at the inception of the contract and agree to
reverse the exchange at a specified future time and at a specified exchange
rate. The Fund will not speculate in foreign currency options, futures or
related options or currency swap contracts. Accordingly, the Fund will not hedge
a currency substantially in excess (as determined by Banc One Advisors or the
Sub-Adviser) of the market value of the securities denominated in such currency
which it owns, the expected acquisition price of securities which it has
committed or anticipates to purchase which are denominated in such currency,
and, in the cases of securities which have been sold by the Fund but not yet
delivered, the proceeds thereof in its denominated currency. Further the Fund
will segregate, at its Custodian, U.S. government or other high quality
securities having a market value representing any subsequent net decrease in the
market value of such hedged positions including net positions with respect to
cross-currency hedges. The Fund may not incur potential net liabilities with
respect to currency and securities positions, including net liabilities with
respect to cross-currency hedges, of more than 33 1/3% of its total assets from
foreign currency options, futures, related options and forward currency
transactions.
The value of a foreign currency option is dependent upon the value of
the foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealer or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options market.
FOREIGN CURRENCY CONVERSION
Although foreign exchange dealers do not charge a fee for currency
conversion, they do realize a profit based on the difference (the "spread")
between prices at which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to a Fund at one rate, while
offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer.
RISK FACTORS IN HEDGING TRANSACTIONS
All of the foregoing hedging transactions present certain risks. In
particular, the variable degree of correlation between price movements of the
instruments used in hedging strategies and price movements in the security being
hedged
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creates the possibility that losses on the hedge may be greater than gains in
the value of the Fund's securities. In addition, these instruments may not be
liquid in all circumstances. As a result, in volatile markets, the Fund may not
be able to dispose of or offset a transaction without incurring losses. Although
the contemplated use of hedging instruments should tend to reduce the risk of
loss due to a decline in the value of the hedged security, at the same time the
use of these instruments could tend to limit any potential gain which might
result from an increase in the value of such security.
Successful use of hedging instruments by the Fund is subject to the
ability of the Banc One Advisors and/or the Sub-Adviser to predict correctly
movements in the direction of interest and currency rates and other factors
affecting markets for securities. If the expectations of the Banc One Advisors
or the Sub-Adviser are not met, the Fund would be in a worse position than if a
hedging strategy had not been pursued. For example, if the Fund has hedged
against the possibility of an increase in interest rates which would adversely
affect the price of securities in its portfolio and the price of such securities
increases instead, the Fund will lose part or all of the benefit of the
increased value of its securities because it will have offsetting losses in its
hedging positions. In addition, when hedging with instruments that require
variation margin payments, if the Fund has insufficient cash to meet daily
variation margin requirements, it may have to sell securities to meet such
requirements. Such sales of securities may, but will not necessarily, be at
increased prices which reflect the rising market. Thus, the Fund may have to
sell securities at a time when it is disadvantageous to do so.
The ability of the Fund to engage in hedging transactions may be
limited by tax considerations.
New options and futures contracts and other financial products, and
various combinations thereof, continue to be developed, and the Fund may invest
in any such options, contracts and products as may be developed to the extent
consistent with the Fund's investment objective and the regulatory requirements
applicable to investment companies, and subject to the supervision of the
Trust's Board of Trustees.
VARIABLE AND FLOATING RATE INSTRUMENTS
Certain obligations purchased by some of the Funds may carry variable
or floating rates of interest, may involve a conditional or unconditional
demand feature and may include variable amount master demand notes.
Variable amount master demand notes are demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Because master demand
notes are direct lending arrangements between a Fund and the issuer, they are
not normally traded. Although there is no secondary market in the notes, a Fund
may demand payment of principal and accrued interest at any time. While the
notes are not typically rated by credit rating agencies, issuers of variable
amount master demand notes (which are normally manufacturing, retail,
financial, and other business concerns) must satisfy the same criteria as set
forth above for commercial paper. Banc One Advisers or the Sub-Advisor will
consider the earning power, cash flow, and other liquidity ratios of the
issuers of such notes and will continuously monitor their financial status and
ability to meet payment on demand. In determining average weighted portfolio
maturity, a variable amount master demand note will be deemed to have a
maturity equal to the period of time remaining until the principal amount can
be recovered from the issuer through demand.
Some of the Funds subject to their investment objective policies and
restrictions, may acquire variable and floating rate instuments. A variable
rate instrument is one whose terms provide for the adjustment of its interest
rate on set dates and which, upon such adjustment, can reasonably be expected
to have a market value that approximates its par value. A floating rate
instrument is one whose terms provide for the adjustment of its interest rate
whenever a specified interest rate changes and which, at any time, can
reasonably be expected to have a market value that approximates its par value.
Such instrument are frequently not rated by credit rating agencies; however,
unrated variable and floating rate instruments purchased by a Fund will be
determined by Banc One Advisors or the Sub-Advisor under guidelines established
by the Trust's Board of Trustees to be of comparable quality at the time of
purchase to rated instruments eligible for purchase under the Fund's investment
policies. In making such determinations, Banc One Advisors or the Sub-Advisor
will consider the earning power, cash flow and other liquidity ratios of the
issuers of such instruments (such issuers include financial, merchandising,
bank holding and other companies) and will continuously monitor their financial
condition. Although there may be no active secondary market with respect to a
particular variable or floating rate instrument purchased by a Fund, the Fund
may re-sell the instrument at any time to a third party. The absence of such an
active secondary market, however, could make it difficult for the Fund to
dispose of the variable or floating rate instrument involved in the event the
issuer of the instrument defaulted on its payment obligations, and the Fund
could, for this or other reasons, suffer a loss to the extent of the default.
Variable or floating rate instruments may be secured by bank letters of credit.
A Fund will purchase a variable or floating rate instrument to facilitate
portfolio liquidity or to permit investment of the Fund's assets at a favorable
rate of return.
Variable or floating rate instruments with stated maturities of more
than 397 days may, under the Securities and Exchange Commission's amortized
cost rule, Rule 2a-7 under the 1940 Act, be deemed to have shorter maturities
as follows:
(1) Adjustable Rate Government Securities. A Government Security which
is a Variable Rate Security where the variable rate of interest is readjusted no
less frequently than every 762 days shall be deemed to have a maturity equal to
the period remaining until the next readjustment of the interest rate. A
Government Security which is a Floating Rate Security shall be deemed to have a
remaining maturity of one day.
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(2) Short-Term Variable Rate Securities. A Variable Rate Security, the
principal amount of which, in accordance with the terms of the security, must
unconditionally be paid in 397 calendar days or less shall be deemed to have
maturity equal to the earlier of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount can be recovered through demand.
(3) Long-Term Variable Rate Securities. A Variable Rate Security, the
principal amount of which is scheduled to be paid in more than 397 days, that is
subject to a Demand Feature shall be deemed to have a maturity equal to the
longer of the period remaining until the next readjustment of the interest rate
or the period remaining until the principal amount can be recovered through
demand.
(4) Short-Term Floating Rate Securities. A Floating Rate Security, the
principal amount of which, in accordance with the terms of the security, must
unconditionally be paid in 397 calendar days or less shall be deemed to have a
maturity of one day.
(5) Long-Term Floating Rate Securities. A Floating Rate Security, the
principal amount of which is scheduled to be paid in more than 397 days, that is
subject to a demand feature, shall be deemed to have a maturity equal to the
period remaining until the principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund
is entitled to receive the principal amount of the note either at any time on no
more than thirty days' notice or at specified intervals not exceeding 397
calendar days and upon no more than 30 days notice.
Variable and floating rate instruments for which no readily available
market exists will be purchased in an amount which, together with securities
with legal or contractual restrictions on resale or for which no readily
available market exists (including repurchase agreements providing for
settlement more than seven days after notice), exceeds 10% (with respect to the
Money Market and Institutional Money Market Funds) or 15% (with respect to all
Funds, other than the Money Market and Institutional Money Market Funds, which
can purchase such notes) of the Fund's net assets only if such instruments are
subject to a demand feature that will permit the Fund to demand payment of the
principal within seven days after demand by the Fund. There is no limit on the
extent to which a Fund may purchase demand instruments that are not illiquid.
If not rated, such instruments must be found by Banc One Advisors or the
Sub-Advisor, under guidelines established by the Trust's Board of Trustees, to
be of comparable quality to instruments that are rated high quality. A rating
may be relied upon only if it is provided by a nationally recognized
statistical rating organization that is not affiliated with the issuer or
guarantor of the instruments. For a description of the rating symbols of S&P,
Moody's, and Fitch used in this paragraph, see the Appendix. The above Funds
may also invest in Canadian Commercial Paper which is commercial paper issued
by a Canadian corporation or a Canadian counterpart of a U.S. corporation and
in Europaper which is U.S. dollar denominated commercial paper of a foreign
issuer.
MUNICIPAL SECURITIES
As a matter of fundamental policy, under normal market conditions, at
least 80% of the total assets (net assets in the case of the Louisiana Municipal
Bond Fund) of each of the Municipal Money Market Fund, the Ohio Municipal Money
Market Fund, the Municipal Income Fund, the Intermediate Tax-Free Bond Fund, the
Ohio Municipal Bond Fund, the Texas Tax-Free Bond Fund, the Kentucky Municipal
Bond Fund, the Louisiana Municipal Bond Fund, the West Virginia Municipal Bond
Fund, the Arizona Municipal Bond Fund, and the Tax Exempt Money Market Fund will
be invested in Municipal Securities. Other Funds may also invest in Municipal
Securities if Banc One Advisors determines that such Municipal Securities offer
attractive yields. Municipal Securities are issued to obtain funds for various
public purposes, including the construction of a wide range of public facilities
such as bridges, highways, roads, schools, water and sewer works, and other
utilities. Other public purposes for which Municipal Securities may be issued
include refunding outstanding obligations, obtaining funds for general operating
expenses and obtaining funds to lend to other public institutions and
facilities. In addition, certain debt obligations known as "private activity
bonds" may be issued by or on behalf of municipalities and public authorities to
obtain funds to provide certain water, sewage and solid waste facilities,
qualified residential rental projects, certain local electric, gas and other
heating or cooling facilities, qualified hazardous waste facilities, high-speed
intercity rail facilities, governmentally-owned airports, docks and wharves and
mass commuting facilities, certain qualified mortgages, student loan and
redevelopment bonds and bonds used for certain organizations exempt from federal
income taxation. Certain debt obligations known as "industrial development
bonds" under prior federal tax law may have been issued by or on behalf of
public authorities to obtain funds to provide certain privately operated housing
facilities, sports facilities, industrial parks, convention or trade show
facilities, airport, mass transit, port or parking facilities, air or water
pollution control facilities, sewage or solid waste disposal facilities, and
certain facilities for water supply. Other private activity bonds and industrial
development bonds issued to fund the construction, improvement, equipment or
repair of privately-operated industrial, distribution, research, or commercial
facilities may also be Municipal Securities, but the size of such issues is
limited under current and prior federal tax law. The aggregate amount of most
private activity bonds and industrial development bonds is limited (except in
the case of certain types of facilities) under federal tax law by an annual
"volume
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cap." The volume cap limits the annual aggregate principal amount of such
obligations issued by or on behalf of all governmental instrumentalities in the
state. The Tax-Free Funds may not be a desirable investment for "substantial
users" of facilities financed by private activity bonds or industrial
development bonds or for "related persons" of substantial users.
Private activity bonds that are issued by or on behalf of public
authorities to finance various privately-operated facilities are included within
the term "Municipal Securities" as used in the Prospectuses of the
Tax-Advantaged Funds (other than the Municipal Money Market Fund) and in this
Statement of Additional Information with respect to such Funds only if the
interest paid thereon is both exempt from federal income tax and not treated as
a preference item for individuals for purposes of the federal alternative
minimum tax. Private activity bonds that are subject to federal income tax and
are treated as a preference item for individuals for purposes of the federal
alternative minimum tax are included within the term "Taxable Obligations" as
used in the Prospectuses of the Tax-Advantaged Funds (other than the Ohio
Municipal Money Market Fund, the Ohio Municipal Bond Fund and Municipal Money
Market Fund). As used in the Prospectuses of the Ohio Municipal Money Market
Fund, the Ohio Municipal Bond Fund and the Municipal Money Market Fund and in
this Statement of Additional Information with respect to such Funds, the term
Municipal Securities includes private activity bonds that are issued by or on
behalf of public authorities to finance privately operated facilities only if
the interest paid thereon is exempt from federal income tax (other than the
Federal alternative minimum tax). Private activity bonds that are subject to
federal income tax are included within the term Taxable Obligations as used in
the Prospectuses of the Ohio Municipal Money Market Fund, the Ohio Municipal
Bond Fund, and the Municipal Money Market Fund. The payment of principal and
interest on private activity bonds generally is dependent solely on the ability
of the facility users to meet its financial obligations and the pledge, if any,
of real and personal property as security for said payment.
The two principal classifications of Municipal Securities consist of
"general obligation" and "limited" (or revenue) issues. General obligation bonds
are obligations involving the credit of an issuer possessing taxing power and
are payable from the issuer's general unrestricted revenues and not from any
particular fund or source. The characteristics and method of enforcement of
general obligation bonds vary according to the law applicable to the particular
issuer, and payment may be dependent upon appropriation by the issuer's
legislative body. Limited obligation bonds are payable only from the revenues
derived from a particular facility or class of facilities or, in some cases,
from the proceeds of a special excise or other specific revenue source. Private
activity bonds and industrial development bonds generally are revenue bonds and
thus not payable from the unrestricted revenues of the issuer. The credit and
quality of such bonds is generally related to the credit of the bank selected to
provide the letter of credit underlying the bond. Payment of principal of and
interest on industrial development revenue bonds is the responsibility of the
corporate user (and any guarantor).
The Funds may also acquire "moral obligation" issues, which are
normally issued by special purpose authorities, and in other tax-exempt
investments including pollution control bonds and tax-exempt commercial paper.
Each Fund may purchase short-term tax-exempt General Obligations Notes, Tax
Anticipation Notes, Bond Anticipation Notes, Revenue Anticipation Notes, Project
Notes, and other forms of short-term tax-exempt loans. Such notes are issued
with a short-term maturity in anticipation of the receipt of tax funds, the
proceeds of bond placements, or other revenues. Project Notes are issued by a
state or local housing agency and are sold by the Department of Housing and
Urban Development. While the issuing agency has the primary obligation with
respect to its Project Notes, they are also secured by the full faith and credit
of the United States through agreements with the issuing authority which provide
that, if required, the federal government will lend the issuer an amount equal
to the principal of and interest on the Project Notes.
There are, of course, variations in the quality of Municipal
Securities, both within a particular classification and between classifications,
and the yields on Municipal Securities depend upon a variety of factors,
including general money market conditions, the financial condition of the
issuer, general conditions of the municipal bond market, the size of a
particular offering, the maturity of the obligations, and the rating of the
issue. The ratings of Moody's and S&P represent their opinions as to the quality
of Municipal Securities. It should be emphasized, however, that ratings are
general and are not absolute standards of quality, and Municipal Securities with
the same maturity, interest rate and rating may have different yields while
Municipal Securities of the same maturity and interest rate with different
ratings may have the same yield. Subsequent to its purchase by a Fund, an issue
of Municipal Securities may cease to be rated or its rating may be reduced below
the minimum rating required for purchase by the Fund. Banc One Advisors will
consider such an event in determining whether the Fund should continue to hold
the obligations.
Municipal securities may include obligations of municipal housing
authorities and single-family mortgage revenue bonds. Weaknesses in Federal
housing subsidy programs and their administration may result in a decrease of
subsidies available for payment of principal and interest on housing authority
bonds. Economic developments, including fluctuations in interest rates and
increasing construction and operating costs, may also adversely impact revenues
of housing authorities. In the case of some housing authorities, inability to
obtain additional financing could also reduce revenues available to pay existing
obligations. Single-family mortgage revenue bonds are subject to extraordinary
mandatory redemption at par in whole or in part from the proceeds derived from
prepayments of underlying mortgage loans and also from the unused proceeds of
the issue within a stated period which may be within a year from the date of
issue.
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Municipal leases are obligations issued by state and local governments
or authorities to finance the acquisition of equipment and facilities and may be
considered to be illiquid. They may take the form of a lease, an installment
purchase contract, a conditional sales contract, or a participation interest in
any of the above. Each Fund will limit its investment in municipal leases to no
more than 5% of its total assets. The Board of Trustees is responsible for
determining the credit quality of unrated municipal leases, on an ongoing basis,
including an assessment of the likelihood that the lease will not be cancelled.
The exclusion from gross income for Federal income tax purposes for
certain housing authority bonds depends on qualification under relevant
provisions of the Code and on other provisions of Federal law. These provisions
of Federal law contain certain ongoing requirements relating to the cost and
location of the residences financed with the proceeds of the single-family
mortgage bonds and the income levels of tenants of the rental projects financed
with the proceeds of the multi-family housing bonds. While the issuers of the
bonds, and other parties, including the originators and servicers of the
single-family mortgages and the owners of the rental projects financed with the
multi-family housing bonds, covenant to meet these ongoing requirements and
generally agree to institute procedures designed to insure that these
requirements will be consistently met, there is no assurance that the
requirements will be consistently met. The failure to meet these requirements
could cause the interest on the bonds to become taxable, possibly retroactively
from the date of issuance, thereby reducing the value of the bonds and
subjecting Shareholders to unanticipated tax liabilities and possibly requiring
a Fund to sell the bonds at the reduced value. Furthermore, any failure to meet
these ongoing requirements might constitute an event of default under the
applicable mortgage or permit the holder to accelerate payment of the bond or
require the issuer to redeem the bond. In any event, where the mortgage is
insured by the Federal Housing Administration ("FHA"), the consent of the FHA
may be required before insurance proceeds would become payable to redeem the
mortgage subsidy bonds.
Information about the financial condition of issuers of Municipal
Securities may be less available than about corporations having a class of
securities registered under the Securities Exchange Act of 1934.
An issuer's obligations under its Municipal Securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the federal bankruptcy code, and laws, if
any, which may be enacted by Congress or state legislatures extending the time
for payment of principal or interest, or both, or imposing other constraints
upon the enforcement of such obligations. The power or ability of an issuer to
meet its obligations for the payment of interest on and principal of its
Municipal Securities may be materially adversely affected by litigation or other
conditions.
Such litigation or conditions may from time to time have the effect of
introducing uncertainties in the market for tax-exempt obligations or certain
segments thereof, or may materially affect the credit risk with respect to
particular bonds or notes. Adverse economic, business, legal or political
developments might affect all or a substantial portion of a Fund's Municipal
Securities in the same manner.
From time to time, proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax exemption for
interest on tax exempt bonds, and similar proposals may be introduced in the
future. A recent decision of the United States Supreme Court has held that
Congress has the constitutional authority to enact such legislation. It is not
possible to determine what effect the adoption of such proposals could have on
(i) the availability of Municipal Securities for investment by the Funds, and
(ii) the value of the investment portfolios of the Funds.
The Internal Revenue Code of 1986, as amended (the "Code") imposes
certain continuing requirements on issuers of tax-exempt bonds regarding the
use, expenditure and investment of bond proceeds and the payment of rebates to
the United States of America. Failure by the issuer to comply subsequent to the
issuance of tax-exempt bonds with certain of these requirements could cause
interest on the bonds to become includable in gross income retroactive to the
date of issuance.
The Funds may invest in Municipal Securities either by purchasing them
directly or by purchasing certificates of accrual or similar instruments
evidencing direct ownership of interest payments or principal payments, or both,
on Municipal Securities, provided that, in the opinion of counsel to the initial
seller of each such certificate or instrument, any discount accruing on such
certificate or instrument that is purchased at a yield not greater than the
coupon rate of interest on the related Municipal Securities will to the same
extent as interest on such Municipal Securities be exempt from federal income
tax and state income tax (where applicable) and not treated as a preference item
for individuals for purposes of the federal alternative minimum tax. The Funds
may also invest in Municipal Securities by purchasing from banks participation
interests in all or part of specific holdings of Municipal Securities. Such
participation may be backed in whole or in part by an irrevocable letter of
credit or guarantee of the selling bank. The selling bank may receive a fee from
a Fund in connection with the arrangement. A Fund will not purchase
participation interests unless it receives an opinion of counsel or a ruling of
the Internal Revenue Service that interest earned by it on Municipal Securities
in which it holds such participation interest is exempt from federal income tax
and state income tax (where applicable) and not treated as a preference item for
individuals for purposes of the federal alternative minimum tax.
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DEMAND FEATURES
The Funds (except the Funds of Funds and the Treasury & Agency Fund)
may acquire securities that are subject to puts and standby commitments ("demand
features") to purchase the securities at their principal amount (usually with
accrued interest) within a fixed period (usually seven days) following a demand
by the Fund. The demand feature may be issued by the issuer of the underlying
securities, a dealer in the securities or by another third party, and may not be
transferred separately from the underlying security. The underlying securities
subject to a put may be sold at any time at market rates. The Funds expect that
they will acquire puts only where the puts are available without the payment of
any direct or indirect consideration. However, if advisable or necessary, a
premium may be paid for put features. A premium paid will have the effect of
reducing the yield otherwise payable on the underlying security.
Under a "stand-by commitment," a dealer would agree to purchase, at a
Fund's option, specified municipal securities at a specified price. A Fund will
acquire these commitments solely to facilitate portfolio liquidity and does not
intend to exercise its rights thereunder for trading purposes. Stand-by
commitments may also be referred to as put options. A Fund will generally limit
its investments in stand-by commitments to 25% of its total assets.
The purpose of engaging in transactions involving puts is to maintain
flexibility and liquidity to permit the Fund to meet redemption requests and
remain as fully invested as possible.
SWAPS, CAPS AND FLOORS
Certain of the Funds may enter into swaps, caps, and floors on various
securities (such as U.S. government securities), securities indexes, interest
rates, prepayment rates, foreign currencies or other financial instruments or
indexes, in order to protect the value of the Fund from interest rate
fluctuations and to hedge against fluctuations in the floating rate market in
which the Fund's investments are traded, for both hedging and non-hedging
purposes. While swaps, caps, and floors (sometimes hereinafter collectively
referred to as "swap contracts") are different from futures contracts (and
options on futures contracts) in that swap contracts are individually negotiated
with specific counterparties, the Funds will use swap contracts for purposes
similar to the purposes for which they use options, futures, and options on
futures. Those uses of swap contracts (i.e., risk management and hedging)
present the Funds with risks and opportunities similar to those associated with
options contracts, futures contracts, and options on futures. See "Futures
Contracts" and "Risk Factors in Futures Contracts."
The Funds may enter into these transactions to manage their exposure to
changing interest rates and other market factors. Some transactions may reduce
each Fund's exposure to market fluctuations while others may tend to increase
market exposure.
Swap contracts typically involve an exchange of obligations by two
sophisticated parties. For example, in an interest rate swap, the Fund may
exchange with another party their respective rights to receive interest, such as
an exchange of fixed rate payments for floating rate payments. Currency swaps
involve the exchange of respective rights to make or receive payments in
specified currencies. Mortgage swaps are similar to interest rate swaps in that
they represent commitments to pay and receive interest. The notional principal
amount, however, is tied to a reference pool or pools of mortgages.
Caps and floors are variations on swaps. The purchase of a cap entitles
the purchaser to receive a principal amount from the party selling the cap to
the extent that a specified index exceeds a predetermined interest rate or
amount. The purchase of an interest rate floor entitles the purchaser to receive
payments on a notional principal amount from the party selling the floor to the
extent that a specified index falls below a predetermined interest rate or
amount. Caps and floors are similar in many respects to over-the-counter options
transactions, and may involve investment risks that are similar to those
associated with options transactions and options on futures contracts.
Because swap contracts are individually negotiated, they remain the
obligation of the respective counterparties, and there is a risk that a
counterparty will be unable to meet its 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. In addition, the Fund may incur a market
value adjustment on securities held upon the early termination of the swap. To
protect against losses related to counterparty default, the Funds may enter into
swaps that require transfers of collateral for changes in market value. In
contrast, currency swaps and other types of swaps may involve the delivery of
the entire principal value of one designated currency or financial instrument in
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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 Banc One Advisors has determined that
it would be prudent to close out or offset the first swap contract.
The Funds will not enter into any mortgage swap, interest rate swap,
cap or floor transaction unless the unsecured commercial paper, senior debt, or
the claims paying ability of the other party thereto is rated in one of the top
two rating categories by at least one NRSRO, or if unrated, determined by Banc
One Advisors to be of comparable quality.
The use of swaps involves investment techniques and risks different
from and potentially greater than those associated with ordinary Fund securities
transactions. If Banc One Advisors is incorrect in its expectations of market
values, interest rates, or currency exchange rates, the investment performance
of the Funds would be less favorable than it would have been if this investment
technique were not used. In addition, in certain circumstances entry into a swap
contract that substantially eliminates risk of loss and the opportunity for gain
in an "appreciated financial position" will accelerate gain to the Funds.
The Staff of the Securities and Exchange Commission is presently
considering its position with respect to swaps, caps and floors as senior
securities. Pending a determination by the Staff, the Funds will either treat
swaps, caps and floors as being subject to their senior securities restrictions
or will refrain from engaging in swaps, caps and floors. Once the Staff has
expressed a position with respect to swaps, caps and floors, the Funds intend to
engage in swaps, caps and floors, if at all, in a manner consistent with such
position. To the extent the net amount of an interest rate or mortgage swap is
held in a segregated account, consisting of cash or liquid, high grade debt
securities, the Funds and Banc One Advisors believe that swaps do not constitute
senior securities under the Investment Company Act of 1940 and, accordingly,
will not treat them as being subject to each Fund's borrowing restrictions. The
net amount of the excess, if any, of each Fund's obligations over its
entitlements with respect to each interest rate swap will be accrued on a daily
basis and an amount of cash or liquid securities having an aggregate net asset
value at least equal to the accrued excess will be maintained in a segregated
account by the Funds' Custodian. Each of the Bond Funds generally will limit
their investments in swaps, caps and floors to 25% of its total assets.
STRUCTURED INSTRUMENTS
Structured instruments are debt securities issued by agencies of the
U.S. government (such as Ginnie Mae, Fannie Mae, and Freddie Mac), banks,
corporations, and other business entities whose interest and/or principal
payments are indexed to certain specific foreign currency exchange rates,
interest rates, or one or more other reference indices. Structured instruments
frequently are assembled in the form of medium-term notes, but a variety of
forms are available and may be used in particular circumstances. Structured
instruments are commonly considered to be derivatives.
The terms of such structured instruments provide that their principal
and/or interest payments are adjusted upwards or downwards to reflect changes in
the reference index while the structured instruments are outstanding. In
addition, the reference index may be used in determining when the principal is
redeemed. As a result, the interest and/or principal payments that may be made
on a structured product may vary widely, depending on a variety of factors,
including the volatility of the reference index and the effect of changes in the
reference index on principal and/or interest payment.
While structured instruments may offer the potential for a favorable
rate of return from time to time, they also entail certain risks. Structured
instruments may be less liquid than other debt securities, and the price of
structured instruments may be more volatile. If the value of the reference index
changes in a manner other than that expected by Banc One Advisors, principal
and/or interest payments on the structured instrument may be substantially less
than expected. The Funds will invest only in structured securities that are
consistent with each Fund's investment objective, policies and restrictions and
Banc One Advisors' 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
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in the form of a corporate debt obligation, they may not have some of the
protection against counterparty default that may be available with respect to
publicly traded debt securities (i.e., the existence of a trust indenture). In
that respect, the risks of default associated with structured instruments may be
similar to those associated with swap contracts. See "Swaps, Caps and Floors."
NEW FINANCIAL PRODUCTS
New options and futures contracts and other financial products, and
various combinations thereof, continue to be developed and certain of the Funds
may invest in any such options, contracts and products as may be developed to
the extent consistent with each Fund's investment objective, policies and
restrictions and the regulatory requirements applicable to investment companies.
These various products may be used to adjust the risk and return
characteristics of each Fund's investments. These various products may increase
or decrease exposure to security prices, interest rates, commodity prices, or
other factors that affect security values, regardless of the issuer's credit
risk. If market conditions do not perform consistent with expectations, the
performance of each Fund would be less favorable than it would have been if
these products were not used. In addition, losses may occur if counterparties
involved in transactions do not perform as promised. These products may expose
the Fund to potentially greater return as well as potentially greater risk of
loss than more traditional fixed income investments.
RESTRICTED SECURITIES
Some of the Funds may invest in commercial paper issued in reliance on
the exemption from registration afforded by Section 4(2) of the Securities Act
of 1933 and other restricted securities. Section 4(2) commercial paper is
restricted as to disposition under federal securities law and is generally sold
to institutional investors, such as the Funds, who agree that they are
purchasing the paper for investment purposes and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) commercial paper is normally resold to other institutional
investors like the Funds through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) commercial paper, thus
providing liquidity. The Funds believe that Section 4(2) commercial paper and
possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees are quite liquid. The Funds intend,
therefore, to treat restricted securities that meet the liquidity criteria
established by the Board of Trustees, including Section 4(2) commercial paper
and Rule 144A Securities, as determined by Banc One Advisors, as liquid and not
subject to the investment limitation applicable to illiquid securities.
The ability of the Trustees to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange Commission
("SEC") Staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a nonexclusive safe-harbor for
certain secondary market transactions involving securities subject to
restrictions on resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further enhance the
liquidity of the secondary market for securities eligible for resale under Rule
144A. The Funds believe that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities to the Trustees. The
Trustees have directed Banc One Advisors to consider the following criteria in
determining the liquidity of certain restricted securities:
- the frequency of trades and quotes for the security;
- the number of dealers willing to purchase or sell the security
and the number of other potential buyers;
- dealer undertakings to make a market in the security; and
- the nature of the security and the nature of the marketplace
trades.
Certain Section 4(2) commercial paper programs cannot rely on Rule 144a
because, among other things, they were established before the adoption of the
rule. However, the Trustees may determine for purposes of the Trust's liquidity
requirements that an issue of 4(2) commercial paper is liquid if the following
conditions, which are set forth in a 1994 SEC no-action letter, are met:
- The 4(2) paper must not be traded flat or in default as to
principal or interest;
- The 4(2) paper must be rated in one of the two highest rating
categories by a least two nationally recognized statistical
rating organizations ("NRSROs"), or if only one NRSRO rates
the security, by that NRSRO, or if unrated, is determined by
Banc One Advisors to be of equivalent quality; and
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- Banc One Advisors must consider the trading market for the
specific security, taking into account all relevant factors,
including but not limited, to whether the paper is the subject
of a commercial paper program that is administered by an
issuing and paying agent bank and for which there exists a
dealer willing to make a market in that paper, or is
administered by a direct issuer pursuant to a direct placement
program; and
- Banc One Advisors shall monitor the liquidity of the 4(2)
commercial paper purchased and shall report to the Board of
Trustees promptly if any such securities are no longer
determined to be liquid if such determination causes a fund to
hold more than 15% (10% for Money Market Funds) of its net
assets in illiquid securities in order for the Board of
Trustees to consider what action, if any, should be taken on
behalf of The One Group, unless Banc One Advisors is able to
dispose of illiquid assets in an orderly manner in an amount
that reduces the Fund's holdings of illiquid assets to less
than 15% (10% for Money Market Funds) of its net assets; and
- Banc One Advisors shall report to the Board of Trustees on the
appropriateness of the purchase and retention of liquid
restricted securities under these Guidelines no less
frequently that quarterly.
HIGH YIELD SECURITIES
The Income Fund and the Income Bond Fund may invest in high yield
securities. High yield bonds are securities that are rated below investment
grade by the primary rating agencies (BB or lower by S&P and BA or lower by
Moody's). Other terms used to describe such securities include "lower rated
bonds", "non-investment grade bonds" and "junk bonds". Generally, lower rated
debt securities provide a higher yield than higher rated debt securities of
similar maturity, but are subject to a greater degree of risk with respect to
the ability of the issuer to meet its principal and interest obligations.
Issuers of high yield securities may not be as strong financially as those
issuing higher rated securities. These securities are regarded as predominately
speculative. The market value of high yield securities may fluctuate more than
the market value of higher rated securities, since high yield securities tend to
reflect short-term corporate and market developments to a greater extent than
higher rated securities, which fluctuate primarily in response to the general
level of interest rates, assuming that there has been no change in the
fundamental quality of such securities. The market prices of fixed income
securities generally fall when interest rates rise. Conversely, the market
prices of fixed-income securities generally rise when interest rates fall.
Additional risks of high yield securities include limited liquidity and
secondary market support. As a result, the prices of high yield securities may
decline rapidly in the event that a significant number of holders decide to
sell. Changes in expectations regarding an individual issuer, an industry or
high yield securities generally could reduce market liquidity for such
securities and make their sale by the Funds more difficult, at least in the
absence of price concessions. Reduced liquidity also could adversely affect the
Funds' ability to accurately value high yield securities. Issuers of high yield
securities also are more vulnerable to real or perceived economic changes (for
instance, an economic downturn or prolonged period of rising interest rates),
political changes or adverse developments specific to the issuer. Adverse
economic, political or other developments may impair the issuer's ability to
service principal and interest obligations, to meet projected business goals and
to obtain additional financing, particularly if the issuer is highly leveraged.
In the event of a default, the Funds would experience a reduction of their
income and could expect a decline in the market value of the defaulted
securities.
Further, proposed or yet to be proposed new laws may have a possible
negative impact on the market for high yield bonds. As an example, legislation
required federally-insured savings and loan associations to divest their
investments in high yield bonds. New legislation, if enacted, could have a
material negative effect on a Fund's net asset value and investment practices.
Finally, the market prices of high-yield securities structured as zero
coupon or pay-in-kind securities are generally affected to a greater extent by
interest rate changes and tend to be more volatile than securities which pay
interest periodically. In addition, zero coupon, pay-in-kind and delayed
interest bonds often do not pay interest until maturity. Accordingly, such bonds
may involve greater credit risks than bonds paying interest currently. However,
a Fund must recognize a computed amount of interest income and pay dividends to
shareholders even though it has received no cash. In some instances, the Funds
may have to sell securities to have sufficient cash to pay the dividends.
The high yield securities in which the Funds may invest include the
following:
-- Straight fixed-income debt securities. These include bonds and other
debt obligations which bear a fixed or variable rate of interest
payable at regular intervals and have a fixed or resettable maturity
date. The particular terms of such securities vary and may include
features such as call provisions and sinking funds.
-- Zero-coupon debt securities. These bear no interest obligation but
are issued at a discount from their value at maturity. When held to
maturity, their entire return equals the difference between their issue
price and their maturity value.
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-- Zero-fixed-coupon debt securities. These are zero-coupon debt
securities which convert on a specified date to interest-bearing debt
securities.
-- Pay-in-kind bonds. These are bonds which allow the issuer, at its
option, to make current interest payments on the bonds either in cash
or in additional bonds.
U.S. TREASURY OBLIGATIONS
The Funds may invest in bills, notes and bonds issued by the U.S.
Treasury and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known as
Separately Traded Registered Interest and Principal Securities ("STRIPS") and
Coupon Under Book Entry Safekeeping ("CUBES").
TREASURY RECEIPTS
Certain of the Funds may purchase interests in separately traded
interest and principal component parts of U.S. Treasury obligations that are
issued by banks or brokerage firms and are created by depositing U.S. Treasury
notes and U.S. Treasury bonds into a special account at a custodian bank.
Receipts include Treasury Receipts ("TRS"), Treasury Investment Growth Receipts
("TIGRS"), and Certificates of Accrual on Treasury Securities ("CATS").
COMMON STOCK
Common stock represents a share of ownership in a company and usually
carries voting rights and earns dividends. Unlike preferred stock, dividends on
common stock are not fixed but are declared at the discretion of the issuer's
board of directors.
PREFERRED STOCK
Preferred stock is a class of stock that generally pays dividends at a
specified rate and has preference over common stock in the payment of dividends
and liquidation. Preferred stock generally does not carry voting rights. As with
all equity securities, the price of preferred stock fluctuates based on changes
in a company's financial condition and on overall market and economic
conditions.
INVESTMENT COMPANY SECURITIES
Some of the Funds may invest up to 5% of their total assets in the
securities of any one investment company, but may not own more than 3% of the
securities of any one investment company or invest more than 10% of their total
assets in the securities of other investment companies. These limits do not
apply to the Fund of Funds. Other investment company securities may include
securities of a money market fund of the Trust, and securities of other
investment companies for which Banc One Advisors serves as investment advisor or
administrator. Because other investment companies employ an investment advisor,
such investments by the Funds may cause Shareholders to bear duplicative fees.
Banc One Advisors will waive its fee attributable to the assets of the investing
fund invested in a money market fund of the Trust and in other funds advised by
Banc One Advisors; and, to the extent required by the laws of any state in which
shares of the Trust are sold, Banc One Advisors will waive its fees attributable
to the assets of any Fund invested in any investment company.
CONVERTIBLE SECURITIES
Convertible securities have characteristics similar to both fixed
income and equity securities. Convertible securities may be issued as bonds or
preferred stock. Because of the conversion feature, the market value of
convertible securities tends to move together with the market value of the
underlying stock. As a result, the Funds' selection of convertible securities is
based, to a great extent, on the potential for capital appreciation that may
exist in the underlying stock. The value of convertible securities is also
affected by prevailing interest rates, the credit quality of the issuer, and any
call provisions.
WARRANTS
Warrants are securities, typically issued with preferred stock or
bonds, that give the holder the right to buy a proportionate amount of common
stock at a specified price, usually at a price that is higher than the market
price at the time of issuance of the warrant. The right may last for a period of
years or indefinitely.
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ASSET-BACKED SECURITIES
Asset-backed securities consist of securities secured by company
receivables, home equity loans, truck and auto loans, leases, credit card
receivables and other securities backed by other types of receivables or other
assets. These securities are generally pass-through securities, which means that
principal and interest payments on the underlying securities (less servicing
fees) are passed through to shareholders on a pro rata basis. These securities
involve prepayment risk, which is the risk that the underlying debt may be
refinanced or paid off prior to their maturities during periods of declining
interest rates. In that case, a portfolio manager may have to reinvest the
proceeds from the securities at a lower rate. Potential market gains on a
security subject to prepayment risk may be more limited than potential market
gains on a comparable security that is not subject to prepayment risk. Under
certain prepayment rate scenarios, the Fund may fail to recoup any premium paid
on asset-backed securities.
SHORT-TERM FUNDING AGREEMENT
Some Funds may, in order to enhance yield, make limited investments in
short-term funding agreements issued by banks and highly rated U.S. insurance
companies. Short-term funding agreements issued by insurance companies are
sometimes referred to as Guaranteed Investment Contracts ("GICs"), while those
issued by banks are referred to as Bank Investment Contracts ("BICs"). Pursuant
to such agreements, the Funds make cash contributions to a deposit account at a
bank or insurance company. The bank or insurance company then credits to the
Funds on a monthly basis guaranteed interest at either a fixed, variable or
floating rate. These contracts are general obligations of the issuing bank or
insurance company (although they may be the obligations of an insurance company
separate account) and are paid from the general assets of the issuing entity.
The funds will purchase short-term funding agreements only from banks and
insurance companies which, at the time of purchase, are rated in one of the
three highest rating categories and have assets of $1 billion or more.
Generally, there is no active secondary market in short-term funding agreements.
Therefore, short-term funding agreements may be considered by the Funds to be
illiquid investments. To the extent that a short-term funding agreement is
determined to be illiquid, such agreements will be acquired by the Funds only
if, at the time of purchase, no more than 15% of the Fund's net assets will be
invested in short-term funding agreements and other illiquid securities.
OHIO MUNICIPAL SECURITIES
As used in the Prospectuses and this Statement of Additional
Information, the term "Ohio Municipal Securities" refers to debt securities
which are issued by or on behalf of Ohio or its respective authorities,
agencies, instrumentalities and political subdivisions which produce interest
which, in the opinion of counsel for the issuer are exempt from both federal
income tax, and Ohio personal income tax.
Risk Factors Regarding Investments in Ohio Municipal Securities
The economy of Ohio, while becoming increasingly diversified and
increasingly reliant on the service sector, continues to rely in significant
part on durable goods manufacturing, which is largely concentrated in motor
vehicles and equipment, steel, rubber products and household appliances. As a
result, general economic activity in Ohio, as in many other industrial states,
tends to be more cyclical than in some other states and in the nation as a
whole. Agriculture also is an important segment of the Ohio economy, and the
state has instituted several programs to provide financial assistance to
farmers. Although revenue obligations of the state or its political subdivisions
may be payable from a specific source or project, and general obligation debt
may be payable from a specific tax, there can be no assurance that future
economic difficulties and the resulting impact on state and local government
finances will not adversely affect the market value of the Ohio Municipal
Securities in the Funds of the Trust or the ability of the respective obligators
to make timely payment of interest and principal on such obligations.
Since the Ohio Municipal Bond Fund and Ohio Municipal Money Market Fund
invest primarily in Ohio Municipal Securities, the value of each Fund's Shares
may be especially affected by factors pertaining to the economy of Ohio and
other factors specifically affecting the ability of issuers of Ohio Municipal
Securities to meet their obligations. As a result, the value of the Shares of
the Ohio Municipal Bond Fund and the Ohio Municipal Money Market Fund may
fluctuate more widely than the value of Shares of a portfolio investing in
securities relating to a number of different states. The ability of Ohio state,
county, or local governments to meet their obligations will depend primarily on
the availability of tax and other revenues to those governments and on their
fiscal conditions generally. The amounts of tax and other revenues available to
issuers of Ohio Municipal Securities may be affected from time to time by
economic, political and demographic conditions within the state. In addition,
constitutional or statutory restrictions may limit a government's power to raise
revenues or increase taxes. The availability of federal, state, and local aid to
issuers of Ohio Municipal Securities may also affect their ability to meet their
obligations. Payments of principal and interest on limited obligation securities
will depend on the economic condition of the facility or specific revenue source
from which revenues the payments will be made, which in turn could be affected
by economic, political, and demographic conditions in the state. Any reduction
in the actual or perceived ability to meet obligations on the part of either an
issuer of an Ohio Municipal Security or a provider of credit enhancement for
such Ohio
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Municipal Security (including a reduction in the rating of its outstanding
securities) would likely affect adversely the market value and marketability of
that Ohio Municipal Security and could adversely affect the values of other Ohio
Municipal Securities as well.
WEST VIRGINIA MUNICIPAL SECURITIES
As used in the Prospectus and this Statement of Additional Information,
the term "West Virginia Municipal Securities" refers to debt securities which
are issued by or on behalf of West Virginia or its respective authorities,
agencies, instrumentalities and political subdivisions and which produce
interest which, in the opinion of counsel for the issuer, is exempt from both
federal income tax and is generally exempt from West Virginia personal income
tax.
Risk Factors Regarding Investments in West Virginia Municipal
Securities. Because of concentration of the West Virginia Fund's investments in
West Virginia municipal securities, the Fund is more subject to the risks of
West Virginia's economy than if the Fund was invested in municipal securities of
various states.
Coal mining and related industries remain an important part of the West
Virginia economy, but increasing governmental regulation affecting production
and usage of coal and reduction in demand for certain types of coal have had an
adverse impact on the industry, state and local governments have made and
continue to make concentrated efforts to encourage diversification of the
state's economy with some success, such as the growth in tourism and the
location of a new Toyota plant in the state.
While there has been progress in creating new jobs, West Virginia's
unemployment continues to exceed the national average. For May, 1997, West
Virginia's seasonally adjusted unemployment rate was 6.0% as compared to the
national average of 4.8%.
Because of increased taxes since 1989, the State's current financial
position is relatively stable, and in recent years, there have been budget
surpluses at the end of the State's fiscal year. In addition, the completion of
the statewide reappraisal of property subject to ad valorem taxation in 1994 has
increased funding available to local governments and school boards. However,
with little or no population growth, unemployment remaining above the national
average in most of the state, the continuing decline in school enrollment and an
aging population, among other factors, the State, local governments and school
boards continue to struggle to produce sufficient revenues to fund operations
and support public education.
KENTUCKY MUNICIPAL SECURITIES
As used in the Prospectus and this Statement of Additional Information,
the term "Kentucky Municipal Securities" refers to debt securities which are
issued by or on behalf of Kentucky or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from both federal income tax
and Kentucky personal income tax.
Risk Factors Regarding Investments in Kentucky Municipal Securities. As
of May 31, 1997, Kentucky had an unemployment rate of 5.9%, which equaled the
national average. For calendar year 1996, Kentucky's per capita income ranked
42nd in the nation and was 81% of the national average. The most current audited
financial statements for Kentucky indicate a surplus of funds in the General
Fund of $503,200,000 as of June 30, 1996, which was $482,500,000 above the
budgeted balance.
Unlike the municipal securities of most states, nearly all Kentucky
Municipal Securities are not general obligations of the issuer; rather, payment
depends on revenues generated by the property financed by the securities.
TEXAS MUNICIPAL SECURITIES
As used in the Prospectus and this Statement of Additional Information,
the term "Texas Municipal Securities" refers to debt securities which are issued
by or on behalf of Texas or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from federal income tax.
Risk Factors Regarding Investments in Texas Municipal Securities.
Because the Fund invests primarily in obligations issued by Texas entities, the
Fund's performance is partially dependent upon economic conditions within the
State of Texas generally and upon the economic condition of issuing governments
and their instrumentalities in particular. In the late 1980's, weakness in the
oil and gas related and agricultural sectors of the Texas economy adversely
affected consumer spending, financial institutions, utility demand, and real
estate values within the state. Consequently, the state and many of its local
governments had to increase sales, utilities, and ad valorem tax rates in order
to maintain revenue yields. In the past two
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years, however, in contrast to the national economy, business activity in Texas
has strengthened, with employment growth occurring in most sectors. In addition,
Texas' major financial institutions have been recapitalized and bank failures
have generally ceased.
ARIZONA MUNICIPAL SECURITIES
As used in the Prospectus and this Statement of Additional Information,
the term "Arizona Municipal Securities" refers to debt securities which are
issued by or on behalf of Arizona or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from both federal income tax
and Arizona personal income tax .
Risk Factors Regarding Investments in Arizona Municipal Securities.
Arizona's outlook remains uncertain as long as the state does not adopt a plan
regarding long term matching of revenues and expenditures, especially for
education, health care and corrections. Arizona's growth continues to out pace
national averages, for example: (i) the state's 35% population growth during the
1980's was the third fastest rate in the nation, next to Alaska and Nevada; (ii)
Arizona's current population growth is over 2% per year, about twice the
national average; and (iii) the state's unemployment rate for the month of June,
1997 was 4.3%.
Nonetheless, growth has been expensive for Arizona. During the
high-growth 1980's, combined per capita state and local expenditures climbed to
about 105% of the U.S. average from about 95%, according to data from the
Advisory Commission on Intergovernmental Relations. Between fiscal 1985 and
1990, the state managed five successive years of shortfalls with internal
borrowing, tax accelerations, one-time adjustments, and budget cuts. Since 1991,
the state's budget has been balanced. Although the Arizona State debt limit is
$350,000, and, by its Constitution, Arizona is a "pay as you go" State, the
State finances many capital improvements through revenue bonds, special tax
bonds or lease purchase arrangements, which are not treated as "debts", but
which greatly reduce the pressure on the State's annual budget. For example, the
Arizona Department of Transportation issues bonds supported by excise taxes on
fuel for propulsion of motor vehicles, the State's universities and community
colleges are funded in part through revenue bonds payable solely from tuitions
and student fees, and the State itself, from time to time, finances facilities
through annually renewable lease-purchase agreements. The various political
subdivisions of the state have differing debt limits, and their debts are not
aggregated into the State's debt limit.
In addition, local conditions may materially effect any given issue or
issuer. Such conditions include, without limitation, (1) acts of God (such as
flooding or droughts), (2) mismanagement or bankruptcy of large tax payers or
users of an issuer's services or conduit borrowers who may be the true obligors
of a tax exempt issue, or who may bear a disproportionate share of the taxes,
special assessments or revenues supporting securities issued by an issuer, (3)
environmental enforcement actions instituted by the State or federal government,
(4) mismanagement of the issuer's affairs, (5) damage claims which exceed
insurance coverage or self-insurance reserves (neither the State of Arizona nor
its political subdivisions enjoy sovereign immunity from damage claims), or (6)
issuer bankruptcy.
In addition, Arizona's continued population growth depends to some
extent on its ability to manage its water resources, as the State is
predominantly arid. Specifically, the great bulk of Arizona's population, and
the area wherein most future growth is expected to occur, is located in three
central Arizona counties, i.e. Maricopa (including the greater Phoenix
metropolitan area), Pima (including the Tucson metropolitan area), and Pinal
Counties.
To a great extent continued growth in these counties will depend on
continued importation of water from the Colorado River. This is accomplished
through the Central Arizona Project, a federal water reclamation project, a
major portion (2 to 2.5 billion dollars) of which must be repaid through water
sales to, and taxes levied on, the water users in such counties. The actual
amount to be repaid is now the subject of litigation, which can be expected to
continue for several years. Construction of the Central Arizona Project was
declared to be substantially complete in October of 1993.
Arizona's share of Colorado River water, although adjudicated by the
U.S. Supreme Court, is, to some extent, sought by the States of California and
Nevada who have expressed interest in gaining access to that portion of
Arizona's share not being put to beneficial use within the State. Arizona demand
for Central Arizona Project water is currently in the range of 35 to 40% of
Project capacity. The long range success of either California or Nevada's
position cannot be determined at this time.
There is litigation pending in Arizona which could have material
effects on the value of Arizona school district bonds. Plaintiffs allege a
failure on behalf of the State to ensure that school facilities in districts
with lower assessed valuations are properly capitalized, in line with uniformly
applied objective standards. The Arizona Supreme Court ruled that Arizona's
statutory financing scheme for public education is not in compliance with the
Arizona Constitution.
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In 1996, the Arizona Legislature adopted legislation appropriating
additional state funding for school districts. It is unclear whether, when or in
what form the Arizona Legislature may further respond to the Court's direction
in Roosevelt to enact appropriate school budget and finance laws, nor can any
assurance be given that the Supreme Court will approve any such legislative
response or that the Supreme Court will not take further action in this matter,
either before or after any legislative response. The effect of any such
legislative or judicial action cannot be determined at this time, but such
action may have future material effects on the financial operations of Arizona
School Districts.
In the Creighton Elementary School District case, taxpayers within
Creighton Elementary School District No. 14 of Maricopa County, Arizona (the
"Creighton District"), brought suit in the Superior Court of Maricopa County
against the Creighton District on the basis that the outstanding principal
amount of bonds previously issued by the Creighton District, together with
premium received in connection with the issuance of such bonds, should be
treated as debt for constitutional and statutory debt limit purposes. The
plaintiffs sought to enjoin the issuance of additional bonds, arguing that
accumulated initial issue premium should be treated as debt for constitutional
debt limit purposes. This premium, associated with the issuance of prior
Creighton District Bonds, if counted as debt, would, plaintiffs contended, cause
the bonds sought to be issued to exceed the Creighton District's debt limit. On
April 18, 1996, the Court entered a judgment in favor of the taxpayers,
enjoining the issuance of additional Creighton District Bonds. In a subsequent
minute entry, the court stated that the premium to be treated as debt is
determined on the amount the underwriter paid to the Creighton District for the
bonds in question and not on the price for which the underwriter resold such
bonds. In addition, the court has also subsequently stated that the premium
treated as debt attributable to each maturity is retired upon the payment of the
principal amount of the applicable maturity. It is not clear if, pursuant to the
judgment against the Creighton District, all or part of any premium received by
the Creighton District is subject to constitutional and statutory requirements
other than debt limits, such as the requirement for voter authorization. The
judgment was not appealed by the Creighton District. Many school districts in
Arizona have outstanding obligations (i.e. obligations, wherein large initial
issue premiums were received) similar to that of the Creighton District.
Notwithstanding such litigation, issuer's counsel, representing school
districts has or will issue an unqualified opinion with respect to the validity,
enforceability and tax-exempt status of School District Bonds before such Bonds
are acquired by the fund. The standard of certainty applicable to such opinion
is that it would be unreasonable for a court to hold to the contrary with
respect to matters addressed therein.
The Arizona Legislature has passed legislation with respect to the
treatment of premium and debt. Under this legislation, the outstanding
indebtedness of a jurisdiction is equal to the total principal amount of all
bonds outstanding at the time of calculation. Additionally, premium is not
counted as debt, but the amount of premium permitted for bonds issued after the
passage of the legislation is limited to the greater of 2% of the par value of
the bond issue or $100,000. This legislation further validated all then
outstanding general obligation and general obligation refunding Bonds which
might have been subject to challenge after the Creighton ruling.
It is not known whether the Act will be challenged in court or whether,
if challenged, all or any portion of the act would be upheld.
LOUISIANA MUNICIPAL SECURITIES
As used in the Prospectus and this Statement of Additional Information,
the term "Louisiana Municipal Securities" refers to debt securities which are
issued by or on behalf of Louisiana or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from both federal income tax
and Louisiana personal income tax.
Risk Factors Regarding Investments in Louisiana Municipal Securities.
Louisiana's general obligation bonds are currently rated A3 by Moody's and A
minus by S&P. Louisiana's ratings reflect an ongoing recovery process from the
severe financial problems which developed after oil prices declined in the
mid-to-late 1980's. 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 is still somewhat weak in terms of its credit fundamentals. While
ratings of individual cities, parishes, agencies and special districts vary,
most Louisiana issuers have been affected to some degree by Louisiana's economy.
Through the oil boom of the late 1970s and early 1980s, Louisiana's
labor force and employment grew steadily, as did its financial position.
However, when the oil industry weakened, economic growth slowed and operating
deficits occurred, Louisiana's undesignated General Fund deficit reached $512
million in fiscal 1988 (ended June 30) and the fund balance was a negative $377
million.
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Louisiana implemented a plan to eliminate its deficits and $979 million
of revenue bonds were sold in 1988, secured by (i) the revenues from a 1%
statewide sales and use tax, and (ii) all funds, accounting and investment
earnings with respect to said revenue bonds. All of the bonds issued have now
been retired.
During the period from fiscal year 1991-92 through fiscal year 1995-96,
the state experienced operating budget surpluses in four of the five fiscal
years. The table below sets forth in summary fashion the condition of the
State's General Fund from fiscal years 1991-92 through 1994-95.
<TABLE>
<CAPTION>
1995-96 1994-95(2) 1993-94(1) 1992-93 1991-92(2)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total Revenue $ 11,186,213 $ 10,515,148 $ 10,674,052 $ 10,655,246 $ 8,743,623
Total Expenditures 11,058,840 10,721,280 10,570,658 10,344,339 9,249,014
Net Other Financing Sources 34,173 24,607 25,698 8,501 18,960
Excess (Deficiency) of Revenues and
Other Sources Over Expenditures
and Other Uses 161,546 (181,525) 129,102 319,408 (485,431)
Beginning Fund Balance 430,316 594,920 457,909 50,013 535,906
Fund Balance Adjustments (996) 13,764 7,909 88,488 538
Ending Fund Balance 587,709 430,316 594,920 457,909 50,013
Undesignated Fund Balance 318,039 145,689 212,941 101,138 (83,342)
</TABLE>
Note: For purposes of this comparison, transfers have been reclassified as
revenue/expenditure
(1) Approximately $106 million in beginning undesignated fund balance was
utilized to defease future debt service attributable to fiscal year
1995-96 as described below.
(2) The $146 million in ending underestimated fund balance was utilized to
defease future debt service attributable to fiscal year 1996-97.
Upon the actual completion of the fiscal year 1991-1992, it was learned
that the State's General Fund actually ended fiscal year 1991-92 with an
undesignated fund balance deficit of $83 million. This shortfall was eliminated
within the 1992-93 budgetary fiscal cycle by utilizing a set aside against the
total balance available for appropriations, resulting from the official
projections of the Revenue Estimating Conference, prior to any budget adjustment
approval submitted to the Joint Legislative Committee on the Budget.
The State ended the fiscal year 1992-93 with a positive undesignated
fund balance in its General Fund of $101 million. During 1994, $30.6 million of
the surplus funds were utilized to cover known shortfalls in current year
program operations. As noted in the table above, the State ended the fiscal year
1993-94 with an operating surplus of $129 million dollars. This amount together
with the prior year fund balance of $101 million and reserve changes left an all
unreserved-undesignated balance in the General Fund of $212.9 million.
The State began fiscal year 1994-95 with a General Fund balance of $594
million. At the time the projections of the Revenue Estimating Conference for
fiscal year 1993-94 were published, the undesignated fund balance was reflected
at $212 million. Subsequent to publication, it was determinate that $106 million
of the $212 million was, in fact, designated for other mandated purposes and was
not available for general operating purposes. The remaining $106 million was
subsequently utilized prior to June 30, 1995, to structure a current portfolio
that was utilized to defease a portion of the State's fiscal year 1994-95
general obligation debt service requirement, which freed an equivalent amount of
projected general fund revenues for fiscal year 1994-95 to be utilized to cover
normal operating costs.
The State's General Fund had an operating loss (on a generally accepted
accounting principles basis) of $181 million in fiscal year 1994-95 (on a
budgetary basis, this balance would be reduced by those fund balances utilized
to structure the aforementioned portfolio). As a result of operations and
inventory valuation changes, the State General Fund balance, as of June 30,
1996, declined to $427 million, of which $145 million was undesignated or
reserved for a future purpose.
The current general fund expenditure authorization necessary to
continue all existing programs through fiscal year 1996-97 is approximately
$5,271.9 million, inclusive of currently known supplemental appropriation needs.
The revised estimate of revenues for fiscal year 1996-97 is $5,487.5 million. In
addition, general fund revenues of $12.6 million were carried forward from
fiscal year 1995-96, making a total of $5,500.1 million available for general
fund expenditures in fiscal year 1996-97. The $228.2 million balance between
available revenues and projected expenditures is available for any lawful
purpose. The State's cash flow position for fiscal year 1996-97 has improved in
comparison to the State's cash flow position
35
<PAGE> 281
for fiscal year 1995-96. Month end balances for fiscal year 1996-97 show less
pronounced fluctuations than in the previous year.
The State's budget projections may also be impacted by certain matters
relating to the Medicaid program. On April 26, 1996, Congress adopted a budget
bill which included a two year funding base specifically for the State Medicaid
program, covering October 1, 1995 though June 30, 1997. That budget bill capped
federal Medicaid funds allocated to the State at a certain amount until the
State could increase its matching contribution to federally required levels.
The State implemented a series of Medicaid program reductions in Fiscal
Year 1996-97 to ensure the Medicaid program would not exceed the total of the
State-required match and federal share. Proposed changes in the design of the
Medicaid program at the federal level may further cause the State to alter its
Medicaid program in order to continue to provide necessary medical services to
the indigent population of the State in future years.
Total Medicaid spending has been reduced by 30% from its Fiscal Year
1993-94 level of $4.6 billion. The appropriation for the Medicaid program
(including administration) at the beginning of Fiscal Year 1996-97 was $3.23
billion. This appropriation was increased to $3.31 billion in order to provide
for a State-funded medically needy program and for certain non-recurring costs.
Although the Congressional Fiscal Year 1995-96 budget bill indicated an
intent to allow the State a third year (Fiscal Year 1997-98) to reach the
federally required matching levels, the chances of that reauthorization are
uncertain, and therefore, the State's Fiscal year 1997-98 budget does not
reflect continuation of that funding. The Medicaid funding picture for Fiscal
Year 1997-98 was clarified with the Administration's recent proposal that the
Medicaid program be supported at $3.19 billion in total funding with $966
million in State matching funds. This level of State match is nearly $200
million higher than that called for under the special financing arrangement
passed by Congress in 1996 because Congressional reauthorization of this
arrangement for Fiscal Year 1997-98 is given little chance of passage. The total
Medicaid funding level of $3.19 billion is approximately $100 million lower than
the Fiscal Year 1996-97 budget. DHH will propose a plan to the Legislature to
align program spending with available revenues.
In 1996, the Legislature passed a "local option" bill which permitted
voters in all parishes to decide during the 1996 November general election
whether to allow specified forms of gaming to continue. Thirty-three parishes
voted against continuation of video draw poke device operations and 31 parishes
voted to allow video draw poker device operations to continue. In parishes where
video draw poker was voted out, no new video draw poker licenses may be issued,
and those already operating may renew their one-year video draw poker licenses
for only two more times. Initial estimates for the loss of revenues associated
with almost half the State's parishes voting against continuation of the video
draw poker devices is estimated at $70 million for fiscal year 1997-2000.
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 6.9% as of December 31,
1995. The comparable national unemployment rate was 5.6%. 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 1995,
Louisiana's per capital personal income was $18,981 as compared with the
national average of $23,208. According to Moody's, Louisiana's State-level tax
supported debt is the sixth highest as a percentage of personal income and
eighth highest on a per-capita basis.
Municipal obligations are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors, such
as the Federal Bankruptcy Code, and laws, if any, which may be enacted by
Congress or State legislatures extending the time for payment of principal or
interest, or both, or imposing other constraints upon enforcement of such
obligations or upon municipalities to levy taxes. There is also the possibility
that as a result of litigation or other conditions the power or ability of any
one or more issuers to pay when due principal or interest on its or their
municipal obligations may be materially affected.
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<PAGE> 282
INVESTMENT RESTRICTIONS
The following investment restrictions are FUNDAMENTAL and may be
changed with respect to a particular Fund only by a vote of a majority of the
outstanding Shares of that Fund. See "ADDITIONAL INFORMATION-- Miscellaneous" in
this Statement of Additional Information.
Each of the Equity Funds may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with a Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of a Fund would be invested in the securities of such issuer or a Fund
would own more than 10% of the outstanding voting securities of such issuer.
This restriction applies to 75% of a Fund's assets. With respect to The One
Group Equity Index Fund, no more than 10% of the Funds assets may be invested in
securities issued or guaranteed by the United States, its agencies or
instrumentalities. For purposes of these limitations, a security is considered
to be issued by the government entity whose assets and revenues guarantee or
back the security. With respect to private activity bonds or industrial
development bonds backed only by the assets and revenues of a non-governmental
user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to investments in the obligations issued or
guaranteed by the U.S. government or its agencies and instrumentalities and
repurchase agreements involving such securities. For purposes of this limitation
(i) utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents.
3. Make loans, except that 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 as described
in the Prospectus and in this Statement of Additional Information.
Each of the Bond Funds may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with a Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of a Fund would be invested in the securities of such issuer or a Fund
would own more than 10% of the outstanding voting securities of such issuer.
This restriction applies to 75% of a Fund's assets. For purposes of these
limitations, a security is considered to be issued by the government entity
whose assets and revenues guarantee or back the security. With respect to
private activity bonds or industrial development bonds backed only by the assets
and revenues of a non-governmental user, such user would be considered the
issuer.
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to investments in the obligations issued or
guaranteed by the U.S. government or its agencies and instrumentalities and
repurchase agreements involving such securities. For purposes of this limitation
(i) utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents.
3. Make loans, except that 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 as described
in the Prospectus and in this Statement of Additional Information.
Each of the Fund of Funds may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, securities
of regulated investment companies, and, if consistent with a Fund's investment
objective and policies, repurchase agreements involving such securities) if as a
result more than 5% of the total assets of a Fund would be invested in the
securities of such issuer or a Fund would own more than 10% of the outstanding
voting securities of such issuer. This restriction applies to 75% of a Fund's
assets. For purposes of these limitations, a security is considered to be issued
by the government entity whose assets and revenues guarantee or back the
security. With respect to private activity bonds or industrial development bonds
backed only by the assets and revenues of a non-governmental user, such user
would be considered the issuer.
37
<PAGE> 283
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, except for
investments in funds of the One Group, provided that this limitation does not
apply to investments in obligations issued or guaranteed by the U.S. government
or its agencies and instrumentalities and repurchase agreements involving such
services. For purposes of this limitation (i) utilities will be divided
according to their services (for example, gas, gas transmission, electric and
telephone will each be considered a separate industry); and (ii) wholly-owned
finance companies will be considered to be in the industries of their parents if
their activities are primarily related to financing the activities of their
parents.
3. Make loans, except that 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 as described
in the Prospectus and in this Statement of Additional Information.
Each of the Money Market Funds may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with the Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of a Fund would be invested in the securities of such issuer or a Fund
would own more than 10% of the outstanding voting securities of such issuer,
provided, however, that a Fund may invest up to 25% of its total assets without
regard to this restriction as permitted by applicable law and also provided that
with respect to the Ohio Municipal Money Market Fund, as to 50% of such Fund's
assets, the Fund may invest up to 25% of its assets in the securities of a
single issuer. With respect to remaining 50% of its total assets, the Ohio
Municipal Money Market Fund may not purchase the securities of any issuer if as
a result more than 5% of the total assets of the Fund would be invested in the
securities of such issuer. For purposes of these limitations, a security is
considered to be issued by the government entity whose assets and revenues
guarantee or back the security. With respect to private activity bonds or
industrial development bonds backed only by the assets and revenues of a
nongovernmental user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry. With
respect to the Prime Money Market Fund, (i) that this limitation does not apply
to investments in the obligations issued or guaranteed by the U.S. government or
its agencies and instrumentalities, domestic bank certificates of deposit or
bankers' acceptance and repurchase agreements involving such securities; (ii)
wholly-owned finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of their parents; and (iii) utilities will be divided according to
their services (for example, gas, gas transmission, electric and telephone will
each be considered a separate industry.) With respect to the Prime Money Market
Fund, the Ohio Municipal Money Market Fund and the Municipal Money Market Fund,
this limitation shall not apply to Municipal Securities or governmental
guarantees of Municipal Securities; and further provided, that for the purposes
of this limitation only, private activity bonds that are backed only by the
assets and revenues of a non-governmental user shall not be deemed to be Ohio
Municipal Securities for purposes of the Ohio Municipal Money Market Fund nor
Municipal Securities for purposes of the Prime Money Market Fund and the
Municipal Money Market Fund.
3. 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 as described
in the Prospectus and in this Statement of Additional Information.
With respect to the Institutional Money Market Funds:
The Treasury Only Money Market Fund may not:
1. Purchase securities other than U.S. Treasury bills, notes and other
U.S. obligations issued or guaranteed by the U.S. Treasury.
2. Invest in any securities subject to repurchase agreements.
The Government Money Market Fund may not:
1. Purchase securities other than those issued or guaranteed by the
U.S. government or its agencies or instrumentalities, some of which may be
subject to repurchase agreements.
Each of the Institutional Money Market Funds may not:
1. Borrow money or issue senior securities, except that each Fund may
borrow from banks for temporary purposes in amounts up to 10% of the value of
the Fund's total assets at the time of such borrowing; or mortgage, pledge or
38
<PAGE> 284
hypothecate any assets, except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the
value of the respective Fund's total assets at the time of its borrowing.
2. Purchase securities while borrowings (including reverse repurchase
agreements) exceed 5% of the respective Fund's net assets.
3. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities and, if
consistent with such Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of the Fund would be invested in the securities of such issuer or the
Fund would own more than 10% of the outstanding voting securities of such
issuer; provided, however, that a Fund may invest up to 25% of its total assets
without regard to this restriction as permitted by applicable law. For purposes
of these limitations, a security is considered to be issued by the government
entity whose assets and revenues guarantee or back the security. With respect to
private activity bonds or industrial development bonds backed only by the assets
and revenues of a non-governmental user, such user would be considered the
issuer.
With respect to the Municipal Bond Funds.
The Intermediate Tax Free-Bond Fund and the Municipal Income Fund may
not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with a Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of a Fund would be invested in the securities of such issuer or a Fund
would own more than 10% of the outstanding voting securities of such issuer.
This restriction applies to 75% of a Fund's assets. For purposes of these
limitations, a security is considered to be issued by the government entity
whose assets and revenues guarantee or back the security. With respect to
private activity bonds or industrial development bonds backed only by the assets
and revenues of a non-governmental user, such user would be considered the
issuer.
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to Municipal Securities or governmental
guarantees of Municipal Securities, and with respect to the Municipal Income
Fund, housing authority obligations. For purposes of this limitation (i)
utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents.
The Arizona Municipal Bond Fund, the West Virginia Municipal Bond, the
Louisiana Municipal Bond Fund, The Ohio Municipal Bond Fund and the Kentucky
Bond Fund may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with a Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 25% of the total
assets of a Fund would be invested in the securities of such issuer. This
restriction applies to 50% of a Fund's assets. With respect to the remaining 50%
of its total assets, a Fund may not purchase the securities of any issuer if as
a result more than 5% of the total assets of the Fund would be invested in the
securities of such Issuer. For purposes of these limitations, a security is
considered to be issued by the government entity whose assets and revenues
guarantee or back the security. With respect to private activity bonds or
industrial development bonds backed only by the assets and revenues of a
non-governmental user, such user would be considered the issuer.
2. Purchase any securities (i) that would cause more than 25% of the
total assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to investments in obligations issued or
guaranteed by the U.S. government or its agencies and instrumentalities and
repurchase agreements involving such securities; and (ii) this limitation does
not apply to Municipal Securities or Ohio Municipal Securities, Kentucky
Municipal Securities, Arizona Municipal Securities, West Virginia Municipal
Securities and Louisiana Municipal Securities. For purposes of this limitation
(i) utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents. In addition, with respect to the
Arizona Municipal Bond Fund and the West Virginia Municipal Bond Fund, for
purposes of this limitation only, private activity bonds that are backed only by
the assets and revenues of a non-governmental issued shall not be deemed to be
Municipal Securities or Arizona Municipal Securities (for the Arizona Municipal
Bond Fund) or West Virginia Securities (for the West Virginia Municipal Bond
Fund).
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<PAGE> 285
None of the Municipal Bond Funds may:
1. 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 as described
in this Prospectus and in the Statement of Additional Information.
None of the Funds may:
1. Purchase securities on margin, sell securities short, or participate
in a joint or joint and several basis in any securities trading account, except,
in the case of the Municipal Bond Funds, for use of short-term credit necessary
for clearance of purchases of portfolio securities.
2. Underwrite the securities of other issuers except to the extent that
a Fund may be deemed to be an underwriter under certain securities laws in the
disposition of "restricted securities."
3. Purchase or sell commodities or commodity contracts (including
futures contracts), except that for bona fide hedging and other permissible
purposes: (i) the Equity, Bond and International Equity Index Funds may purchase
or sell financial futures contracts and (except for the Treasury & Agency Fund)
may purchase call or put options on financial futures contracts, and (ii) the
International Equity Index Fund may purchase or sell foreign currency futures
contracts and foreign currency forward contacts, and may purchase put or call
options on foreign currency futures contracts and on foreign currencies on
appropriate U.S. exchanges, and may purchase or sell foreign currency on a spot
basis.
4. Except for the Treasury & Agency Fund, purchase participation or
other direct interests in oil, gas or mineral exploration or development
programs (although investments by all Funds other than the U.S. Treasury
Securities Money Market, Treasury Money Market, Treasury Only Money Market and
Government Money Market Fund in marketable securities of companies engaged in
such activities are not hereby precluded).
5. Invest in any issuer for purposes of exercising control or
management.
6. Purchase securities of other investment companies except as
permitted by the 1940 Act and rules, regulations and applicable exemptive relief
thereunder.
7. Purchase or sell real estate (however, each Fund except the Money
Market Funds may, to the extent appropriate to its investment objective,
purchase securities secured by real estate or interests therein or securities
issued by companies investing in real estate or interests therein).
8. Borrow money or issue senior securities, except that each Fund may
borrow from banks or enter into reverse repurchase agreements for temporary
purposes in amounts up to 10% of the value of its total assets at the time of
such borrowing; or mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of the Fund's total assets at
the time of its borrowing. A Fund will not purchase securities while its
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding.
In addition, the U.S. Treasury Securities Money Market, the Prime Money
Market and the Institutional Money Market Funds may not:
1. Buy common stocks or voting securities.
In addition, the U.S. Treasury Securities Money Market Fund, the Prime
Money Market Fund and the Government Money Market Fund may not
1. Buy state, municipal, or private activity bonds.
The following investment restrictions are NON-FUNDAMENTAL except as
noted otherwise and therefore can be changed by the Board of Trustees without
prior shareholder approval.
No Fund may:
1. Invest in illiquid securities in an amount exceeding, in the
aggregate 15% of the Fund's net assets (10% of net assets for a Fund that is a
Money Market Fund). An illiquid security is a security which cannot be disposed
of promptly (within seven days) and in the usual course of business without a
loss, and includes repurchase agreements maturing in excess
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<PAGE> 286
of seven days, time deposits with a withdrawal penalty, non-negotiable
instruments and instruments for which no market exists. (This restriction is
fundamental with respect to the Ohio Municipal Money Market Fund.)
2. Acquire the securities of registered open-end investment companies
or registered unit investment trusts in reliance on Section 12(d)(1)(F) or
12(d)(1)(G) of the 1940 Act, other than the Investor Growth Fund, the Investor
Growth & Income Fund, the Investor Conservative Growth Fund, the Investor
Balanced Fund, the Investor Aggressive Growth Fund, and the Investor Fixed
Income Fund.
The foregoing percentages apply at the time of purchase of a security.
Additionally, although not a matter controlled by their fundamental
investment restrictions, so long as their shares are registered under the
securities laws of the State of Texas, the Prime Money Market Fund and the Ohio
Municipal Money Market Fund will: (i) limit their investments in other
investment companies to no more than 10% of each Funds total asset; (ii) invest
only in other investment companies with substantially similar investment
objectives; and (iii) invest only in other investment companies with charges and
fees substantially similar to those set forth in paragraph (3) and (4) of
Section 123.3 of the Texas State Statute, not to exceed .25% in 12b-1 and no
other commission or other remuneration is paid or given directly or indirectly
for soliciting any security holder in Texas.
In addition, the Intermediate Tax-Free Bond Fund will not invest more
than 25% of its assets in municipal securities that are related in such a way
that a political, economic or business development affecting one security will
also affect other municipal securities.
PORTFOLIO TURNOVER
The portfolio turnover rate for each Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the year by the monthly
average value of the portfolio securities. The calculation excludes all
securities whose maturities at the time of acquisition were one year or less.
Thus, for regulatory purposes, the portfolio turnovers with respect to the Money
Market Funds were zero for the period from the commencement of their respective
operations to June 30, 1997 and are expected to remain zero, and the portfolio
turnover rate with respect to the Institutional Money Market Funds is expected
to be zero.
The portfolio turnover rates of the Funds for the fiscal years ended
June 30, 1997 and 1996 were as follows:
THE ONE GROUP PORTFOLIO TURNOVER
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
FUND 1997 1996
- ---- ---- ----
<S> <C> <C>
U.S. Treasury Securities Money Market 0%** 0%**
Prime Money Market 0%** 0%**
Municipal Money Market 0%** 0%**
Ohio Municipal Money Market 0%** 0%**
Income Equity 28.18% 14.92%
Disciplined Value 92.66% 90.55%
Growth Opportunities 301.35% 435.30%
Equity Index 5.81% 9.08%
Large Company Value 77.05% 186.84%
Asset Allocation 80.96% 73.38%
International Equity Index 9.61% 6.28%
Large Company Growth 57.17% 35.51%
Income Bond 55.18% 95.52%
Limited Volatility Bond 66.61% 75.20%
Intermediate Tax-Free Bond 86.89% 111.58%
Municipal Income 62.83% 83.17%
Ohio Municipal Bond 7.45% 24.61%
Government Bond 60.53% 62.70%
Ultra Short-Term Income 70.36% 67.65%
Intermediate Bond 55.91% 101.06%
Treasury Only Money Market 0%** 0%**
Government Money Market 0%** 0%**
Kentucky Municipal Bond 13.30% 16.78%
Institutional Prime Money Market NA+ NA*
Treasury Money Market NA+ NA*
Tax-Exempt Money Market NA+ NA*
Arizona Municipal Bond 5.66%*** NA*
Texas Tax-Free Bond NA+ NA*
W. Virginia Municipal Bond 6.21%*** NA*
Louisiana Municipal Bond 17.39% 16.72%++
Value Growth 113.17% 65.21%++
Small Capitalization 92.01% 59.57%++
Investor Growth 18.49%+++ NA*
Investor Growth & Income 18.07+++ NA*
Investor Aggressive Growth NA+ NA*
Investor Conservative Growth 28.46%+++ NA*
</TABLE>
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<PAGE> 287
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
FUND 1997 1996
- ---- ---- ----
<S> <C> <C>
Investor Balanced 12.20%+++ NA*
Investor Fixed Income NA+ NA*
Income NA+ NA*
Treasury & Agency 54.44%*** NA*
</TABLE>
* As of June 30, 1996, the Fund had not commenced operations.
** Turnover rate is not applicable to money market funds.
*** Portfolio turnover rate for the period January 20, 1997 through June
30, 1997.
+ As of June 30, 1997, the Fund had not commenced operations.
++ Portfolio turnover rate for the period December 1, 1995 to June 30,
1996.
+++ Portfolio turnover rate for the period December 10, 1996 through June
30, 1997.
The high portfolio turnover rates for the fiscal year ended June 30,
1997 for the Growth Opportunities Fund and the Value Growth Fund resulted from
various factors, including some or all of the following: investment strategies,
unusually high market volatility and significant growth of the Funds. Portfolio
turnover may vary greatly from year to year as well as within a particular year,
and may also be affected by cash requirements for redemptions of Shares and by
requirements which enable the Trust to receive certain favorable tax treatments.
Portfolio turnover will not be a limiting factor in making portfolio decisions.
ADDITIONAL TAX INFORMATION CONCERNING ALL FUNDS
Each Fund is treated as a separate entity for federal income tax
purposes and is not combined with The One Group's other funds. It is the policy
of each Fund of the Trust to meet the requirements necessary to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). By following such policy, each Fund expects to
eliminate or reduce to a nominal amount the federal income taxes to which it may
be subject.
In order to qualify as a regulated investment company, each Fund of the
Trust must, among other things, (1) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock or securities, foreign currencies or
other income (including gains from options, futures or forward contracts)
derived with respect to its business of investing in stock, securities or
currencies, (2) derive less than 30% of its gross income from the sale or other
disposition of stock, securities, options, futures, forward contracts, and
certain foreign currencies (or certain options, futures, or forward contracts on
foreign currencies) held for less than three months, and (3) diversify its
holdings so that at the end of each quarter of its taxable year (i) at least 50%
of the market value of the Fund's assets is represented by cash or cash items,
United States government securities, securities of other regulated investment
companies, and other securities limited, in respect of any one issuer, to an
amount not greater than 5% of the value of the Fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
United States government securities or the securities of other regulated
investment companies) or of two or more issuers that the Fund controls and that
are engaged in the same, similar, or related trades or businesses. These
requirements may restrict the degree to which the Fund may engage in short-term
trading and limit the range of the Fund's investments. If a Fund of the Trust
qualifies as a regulated investment company, it will not be subject to federal
income tax on the part of its income distributed to Shareholders, provided the
Fund distributes during its taxable year at least (a) 90% of its taxable net
investment income (very generally, dividends, interest, certain other income,
and the excess, if any, of net short-term capital gain over net long-term loss),
and (b) 90% of the excess of (i) its tax-exempt interest income (if any) less
(ii) certain deductions attributable to that income. Each Fund of the Trust
intends to make sufficient distributions to Shareholders to qualify for this
special tax treatment.
If a Fund failed to qualify as a regulated investment company receiving
special tax treatment in any taxable year, the Fund would be subject to tax on
its taxable income at corporate rates, and all distributions from earnings and
profits, including any distributions of net tax-exempt income and net long-term
capital gains, would be taxable to Shareholders as ordinary income. In addition,
the Fund could be required to recognize unrealized gains, pay substantial taxes
and interest and make substantial distributions before requalifying as a
regulated investment company and being accorded special tax treatment.
Regulated investment companies that do not distribute in each calendar
year (regardless of whether they otherwise have a non-calendar taxable year) an
amount equal to 98% of their "ordinary income" (as defined) for the calendar
year, plus 98% of their capital gain net income (as defined) for the one-year
period ending on October 31 of such calendar year, plus any undistributed
amounts from the previous year are subject to a non-deductible excise tax equal
to 4% of the undistributed amounts. For purposes of the excise tax, a Fund is
treated as having distributed any amount on which it is subject to income tax
for any taxable year ending in such calendar year. Each Fund of the Trust
intends to make sufficient distributions to avoid liability for the excise tax.
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Shareholders of the Funds will generally be subject to federal income
tax on distributions received from the Funds. Dividends that are attributable to
a Fund's net investment income will be taxed to shareholders as ordinary income.
Distributions of net capital gain that are designated by a Fund as capital gain
dividends will generally be taxable to a Shareholder receiving such
distributions as long-term capital gain regardless of how long the Shareholder
has held its shares. Distributions in excess of a Fund's current and accumulated
"earnings and profits" will be treated by a Shareholder receiving such
distributions as a return of capital to the extent of such Shareholder's basis
in its Shares in the Fund, and thereafter as capital gain. A return of capital
is not taxable, but reduces a Shareholder's basis in its shares. Shareholders
not subject to tax on their income generally will not be required to pay tax on
amounts distributed to them. The sale, exchange or redemption of Fund shares by
a Shareholder may give rise to a taxable gain or loss to that Shareholder. In
general, any gain or loss realized upon a taxable disposition of shares will be
treated as long-term capital gain or loss if the Shareholder has held the shares
for more than 12 months, and otherwise as short-term capital gain or loss.
However, if a Shareholder sells shares at a loss within six months of purchase,
any loss will be disallowed for Federal income tax purposes to the extent of any
exempt-interest dividends received on such shares. A Fund may designate a
portion of its distributions of net capital gain as deriving from capital assets
held for more than one year but not more than 18 months ("mid-term gain"). The
balance of such distributions, deriving from capital assets held for more than
18 months, may be included in a Shareholder's computation of its adjusted net
capital gain. In addition, a Shareholder's gain upon a taxable disposition of
shares held for more than one year but not more than 18 months will qualify as
mid-term gain, and gain upon a taxable disposition of shares held for more than
18 months may be included in the Shareholders' computation of its adjusted net
capital gain. It is expected that pursuant to forthcoming regulations, the Fund
will provide shareholders with information allowing them to calculate their
mid-term gains and adjusted net capital gains.
In addition, any loss (not already disallowed as provided in the
preceding sentence) realized upon a taxable disposition of shares held for six
months or less will be treated as long-term to the extent of any long-term
capital gain distributions received by the Shareholder with respect to the
shares. All or a portion of any loss realized upon a taxable disposition of Fund
shares will be disallowed if other Fund shares are purchased within 30 days
before or after the disposition. In such a case, the basis of the newly
purchased shares will be adjusted to reflect the disallowed loss.
Certain investment and hedging activities of the Funds, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, swaps, short sales, foreign currencies, and foreign
securities will be subject to special tax rules. In a given case, these rules
may accelerate income to the Fund, defer losses to the Fund, cause adjustments
in the holding periods of the Fund's securities, convert short-term capital
losses into long-term capital losses, or otherwise affect the character of the
Fund's income. These rules could therefore affect the amount, timing and
character of distributions to Shareholders and cause differences between a
Fund's book income and taxable income. Income earned as a result of these
transactions would, in general, not be eligible for the dividends-received
deduction or for treatment as exempt-interest dividends when distributed to
Shareholders. The Fund will endeavor to make any available elections pertaining
to such transactions in a manner believed to be in the best interest of the
Fund.
Certain securities purchased by the Funds (such as STRIPS, CUBES, TRS,
TIGRS, and CATS), as defined in "Details About the Funds' Investment Practices
and Policies" in the Funds' Prospectuses, are sold at original issue discount
and thus do not make periodic cash interest payments. Similarly, zero-coupon
bonds do not make periodic interest payments. A Fund will be required to include
as part of its current income for tax purposes the imputed interest on such
obligations even though the Fund has not received any interest payments on such
obligations during that period. Because each Fund distributes substantially all
of its net investment income to its Shareholders (including such imputed
interest), the Fund may have to sell portfolio securities in order to generate
the cash necessary for the required distributions. Such sales may occur at a
time when Banc One Advisors would not otherwise have chosen to sell such
securities and may result in a taxable gain or loss.
A Fund will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends or of gross proceeds from
redemptions paid to any individual Shareholder who has provided to the Fund
either an incorrect tax identification number or no number at all, or who is
subject to withholding by the Internal Revenue Service for failure properly to
report payments of interest or dividends. This withholding, known as backup
withholding, is not an additional tax, and any amounts withheld may be credited
against the Shareholder's ultimate U.S. tax liability.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting purchasers of Shares of a Fund of the Trust.
Further tax information regarding the Tax-Advantaged Funds and the International
Equity Index Fund is included in following sections of this Statement of
Additional Information. No attempt is made to present herein a complete
explanation of the federal income tax treatment of each Fund or its
Shareholders, and this discussion is not intended as a substitute for careful
tax planning. Accordingly, prospective purchasers of Shares of a Fund are urged
to consult their tax advisors with specific reference to their own tax
situation, including the potential application of state, local and (if
applicable) foreign taxes.
The foregoing discussion and the discussion below regarding the
Tax-Advantaged Funds and the International Equity Index Fund are based on tax
laws and regulations which are in effect on the date of this Statement of
Additional Information;
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such laws and regulations may be changed by legislative, judicial or
administrative action, and such changes may be retroactive.
ADDITIONAL TAX INFORMATION CONCERNING THE TAX-ADVANTAGED FUNDS
The Code permits a regulated investment company which has invested, at
the close of each quarter of its taxable year, at least 50% of its total assets
in tax-free Municipal Securities and other securities the interest on which is
exempt from the regular federal income tax to pay exempt-interest dividends to
its Shareholders.
The policy of each Tax-Advantaged Fund is to distribute each year as
exempt-interest dividends substantially all the Fund's net exempt interest
income. An exempt-interest dividend is any dividend or part thereof (other than
a capital gain dividend) paid by a Tax-Advantaged Fund and designated as an
exempt-interest dividend in a written notice mailed to Shareholders after the
close of the Fund's taxable year, which does not exceed, in the aggregate, the
net interest income from Municipal Securities and other securities the interest
on which is exempt from the regular federal income tax received by the Fund
during the taxable year. The percentage of the total dividends paid for any
taxable year which qualifies as federal exempt-interest dividends will be the
same for all Shareholders receiving dividends from a Tax-Advantaged Fund during
such year, regardless of the period for which the Shares were held.
Exempt-interest dividends may generally be treated by a Tax-Advantaged
Fund's Shareholders as items of interest excludable from their gross income
under Section 103(a) of the Code. However, each Shareholder of a Tax-Free Fund
is advised to consult his or her tax advisor with respect to whether such
Shareholder may be treated as a "substantial user" or a "related person" to such
user under Section 147(a) with respect to facilities financed through any of the
tax-exempt obligations held by the Fund. "Substantial user" is defined under
U.S. Treasury Regulations to include a non-exempt person who regularly uses a
part of such facilities in his trade or business and (a)(i) whose gross revenues
derived with respect to the facilities financed by the issuance of bonds are
more than 5% of the total revenues derived by all users of such facilities or
(ii) who occupies more than 5% of the usable area of the facility or (b) for
whom such facilities or a part thereof were specifically constructed,
reconstructed or acquired.
"Related persons" includes certain related natural persons, affiliated
corporations, partners and partnerships.
Dividends attributable to interest on certain private activity bonds
issued after August 7, 1986 must be taken into account in determining
alternative minimum taxable income for purposes of determining liability (if
any) for the alternative minimum tax applicable to individuals and the
alternative minimum tax applicable to corporations. In the case of corporations,
all tax-exempt interest dividends will be taken into account in determining
adjusted current earnings for the purpose of computing the alternative minimum
tax imposed on corporations (as defined for federal income tax purposes).
Current Federal law limits the types and volume of bonds qualifying for
Federal income tax exemption of interest, which may have an effect on the
ability of the Funds to purchase sufficient amounts of tax exempt securities to
satisfy the Code's requirements for the payment of "exempt-interest" dividends.
Each Tax-Advantaged Fund may at times purchase Municipal Securities (or
other securities the interest on which is exempt from the regular federal income
tax) at a discount from the price at which they were originally issued. For
federal income tax purposes, some or all of the market discount will be included
in the Fund's ordinary income and will be taxable to shareholders as such when
it is distributed to them.
Each Tax-Advantaged Fund may acquire rights regarding specified
portfolio securities under puts. See "Puts." The policy of each Tax-Free Fund is
to limit its acquisition of puts to those under which the Fund will be treated
for federal income tax purposes as the owner of the Municipal Securities
acquired subject to the put and the interest on the Municipal Securities will be
tax-exempt to the Fund. Although the Internal Revenue Service has issued a
published ruling that provides some guidance regarding the tax consequences of
the purchase of puts, there is currently no guidance available from the Internal
Revenue Service that definitively establishes the tax consequences of many of
the types of puts that the Funds could acquire under the 1940 Act. Therefore,
although a Tax-Advantaged Fund will only acquire a put after concluding that it
will have the tax consequences described above, the Internal Revenue Service
could reach a different conclusion from that of the Fund.
Following is a brief discussion of treatment of exempt-interest
dividends by certain states.
ARIZONA TAXES. Shareholders of the Arizona Municipal Bond Fund will not
be subject to Arizona income tax on exempt-interest dividends received from the
Fund to the extent that such dividends are attributable to interest on
tax-exempt obligations of the state of Arizona and its political subdivisions
("Local Obligations"). Interest from Local Obligations however, may be
includable in Federal gross income.
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KENTUCKY TAXES. Fund shares are currently exempt from the Kentucky tax
on intangible property. The Kentucky Supreme Court recently held that corporate
shares are not subject to the Kentucky intangible property tax because of an
exemption for shares of certain corporations with in-state activities which the
Court held to violate the Commerce Clause of the U.S. Constitution. The Kentucky
Revenue Cabinet has announced that, in light of the ruling, it will not, as a
matter of policy, require that the Kentucky intangible property tax be paid on
any portion of the value of shares of any mutual fund. Previously the Cabinet
had required owners of shares of mutual funds to pay tax on the portion of their
share value representing underlying fund assets not exempt from the tax.
The Cabinet could change this policy in the future. The Kentucky
General Assembly could re-enact the intangible tax on corporate shares and other
similar securities without the exemption found objectionable by the Court. There
is no assurance that the Fund shares will remain free from the Kentucky
intangible property tax.
WEST VIRGINIA TAXES. Shareholders may reduce their West Virginia
adjusted gross income ("AGI") for that portion of the interest or dividends they
receive which represents interest or dividends of the Fund on obligations or
securities of any authority, commission or instrumentality of West Virginia that
is exempt from the West Virginia personal income tax by Federal or West Virginia
law. Shareholders may also reduce their West Virginia AGI for that portion of
interest or dividends received from the Fund derived from obligations of the
United States and from obligations or securities of some authorities,
commissions or instrumentalities of the United States.
However, shareholders cannot reduce their West Virginia AGI for any
portion of interest or dividends received from the Fund derived from income on
obligations of any state, or political subdivision thereof, other than West
Virginia, regardless of any Federal law exemption, such as that accorded
"exempt-interest dividends;" and they must increase their West Virginia AGI by
the amount of such interest or dividend income. Also, a shareholder must
increase his West Virginia AGI by interest on indebtedness incurred (directly or
indirectly) to purchase or hold shares of the Fund to the extent such interest
was deductible in determining Federal AGI. The sale, exchange, or redemption of
Fund shares is subject to the West Virginia income tax to the extent the gain or
loss therefrom affects the determination of the shareholder's Federal AGI.
The foregoing is only a summary of some of the important tax
considerations generally affecting purchasers of Shares of a Tax-Advantaged
Fund. Additional tax information concerning all Funds of the Trust is contained
in the immediately preceding section of this Statement of Additional
Information. No attempt is made to present a complete explanation of the federal
income tax treatment of each Tax-Advantaged Fund or its Shareholders, and this
discussion is not intended as a substitute for careful tax planning.
Accordingly, prospective purchasers of Shares of a Tax-Advantaged Fund are urged
to consult their tax advisors with specific reference to their own tax
situation, including the potential application of state, local and foreign
taxes.
ADDITIONAL TAX INFORMATION CONCERNING THE INTERNATIONAL EQUITY INDEX FUND
Transactions of the International Equity Index Fund in foreign
currencies, foreign currency denominated debt securities and certain foreign
currency options, future contracts and forward contracts (and similar
instruments) may result in ordinary income or loss to the Fund for federal
income tax purposes which will be taxable to the Shareholders as such when it is
distributed to them.
Gains from foreign currencies (including foreign currency options,
foreign currency futures and foreign currency forward contracts) will constitute
qualifying income for purposes of the 90% test only to the extent that they are
directly related to the trust's business of investing in stock or securities.
Investment by the International Equity Index Fund in certain "passive
foreign investment companies" could subject the Fund to a U.S. federal income
tax or other charge on proceeds from the sale of its investment in such a
company or other distributions from such a company, which tax cannot be
eliminated by making distributions to International Equity Index Fund
Shareholders. If the International Equity Index Fund elects to treat a passive
foreign investment company as a "qualified electing fund," different rules would
apply, although the International Equity Index Fund does not expect to make such
an election. Rather, the Fund intends to avoid such tax or other charge by
making an election to mark gains (and to a limited extent, losses) from such
investments to market annually.
FOREIGN TAX CREDIT
If more than 50% of the International Equity Index Fund's total assets
at year end consist of the debt and equity securities of foreign corporations,
the Fund may elect to permit its Shareholders who are U.S. citizens to claim a
foreign tax credit or deduction on their U.S. income tax returns for their pro
rata share of foreign taxes paid by the Fund. In that case, Shareholders will be
required to include in gross income their pro rata share of foreign taxes paid
by the Fund. Each Shareholder may then claim a foreign tax credit or a tax
deduction that would offset some or all of the increased tax liability.
Generally, a credit for foreign taxes is subject to the limitation that it may
not exceed the Shareholder's U.S. tax attributable
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to his or her total foreign source taxable income. For this purpose, the source
of the income to the International Equity Index Fund flows through to the Fund's
Shareholders. In addition, no credit will be allowed for foreign taxes paid in
respect of any dividend on stock paid or accrued after September 4, 1997 unless
the stock was held (without protection from risk of loss) for at least 16 days
during the 30-day period beginning 15 days before the ex-dividend date. For
certain preferred stock the holding period is 46 days during a similar 90-day
period. This means that (i) Shareholders not satisfying this holding period
requirement may not claim foreign tax credits in respect of their shares, and
(ii) the Fund may not "flow through" tax credits to Shareholders in respect of
dividends on stock that the Fund has not held for the requisite period. If the
Fund makes this election with respect to foreign tax credits it will notify
Shareholders of their proportionate share of foreign taxes paid, the portion of
the distribution that represents foreign source income, and any amount of such
foreign taxes paid which are not creditable because the Fund did not meet the
holding period requirement. Gains to the International Equity Index Fund from
the sale of securities generally will be treated as derived from U.S. sources
and certain currency fluctuation gains, including fluctuation gains from foreign
currency denominated debt securities, receivables and payables, will be treated
as ordinary income derived from U.S. sources. With limited exceptions, the
foreign tax credit is allowed to offset only 90% of the alternative minimum tax
imposed on corporations and individuals. Because of these limitations,
Shareholders may be unable to claim a credit for the full amount of their
proportionate share of the foreign taxes paid by the International Equity Index
Fund.
The foregoing is only a general description of the treatment of foreign
source income or foreign taxes under the United States federal income tax laws.
Because the availability of a credit or deduction depends on the particular
circumstances of each Shareholder, Shareholders are advised to consult their own
tax advisors.
VALUATION
VALUATION OF THE MONEY MARKET AND INSTITUTIONAL MONEY MARKET FUNDS
The Money Market and Institutional Money Market Funds have elected to
use the amortized cost method of valuation pursuant to Rule 2a-7 under the 1940
Act. This involves valuing an instrument at its cost initially and thereafter
assuming a constant amortization to maturity of any discounts or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. This method may result in periods during which value, as
determined by amortized cost, is higher or lower than the price each Fund would
receive if it sold the instrument. The value of securities in the Funds can be
expected to vary inversely with changes in prevailing interest rates.
Pursuant to Rule 2a-7, the Money Market and Institutional Money Market
Funds will maintain a dollar-weighted average portfolio maturity appropriate to
their objective of maintaining a stable net asset value per Share, provided that
no Fund will purchase any security with a remaining maturity of more than 397
days (securities subject to repurchase agreements and certain variable or
floating rate instruments may bear longer maturities) nor maintain a
dollar-weighted, average portfolio maturity which exceeds 90 days. The Trust's
Board of Trustees has also undertaken to establish procedures reasonably
designed, taking into account current market conditions and a Fund's investment
objective, to stabilize the net asset value per Share of the Money Market Funds
for purposes of sales and redemptions at $1.00. These procedures include review
by the Trustees, at such intervals as they deem appropriate, to determine the
extent, if any, to which the net asset value per Share of each Fund calculated
by using available market quotations deviates from $1.00 per Share. In the event
such deviation exceeds one half of one percent, the Rule requires that the Board
promptly consider what action, if any, should be initiated. If the Trustees
believe that the extent of any deviation from a Fund's $1.00 amortized cost
price per Share may result in material dilution or other unfair results to new
or existing investors, they will take such steps as they consider appropriate to
eliminate or reduce to the extent reasonably practicable any such dilution or
unfair results. These steps may include selling portfolio instruments prior to
maturity, shortening the average portfolio maturity, withholding or reducing
dividends, reducing the number of a Fund's outstanding Shares without monetary
consideration, or utilizing a net asset value per Share determined by using
available market quotations.
VALUATION OF THE EQUITY FUNDS, THE BOND FUNDS AND THE MUNICIPAL BOND FUNDS
Except as noted below, investments of the Asset Allocation Fund, Equity
Funds, Bond Funds, and Municipal Bond Funds of the Trust in securities the
principal market for which is a securities exchange are valued at their market
values based upon the latest available sales price or, absent such a price, by
reference to the latest available bid and asked prices in the principal market
in which such securities are normally traded. Except as noted below, investments
of the International Equity Index Fund in securities the principal market for
which is a securities exchange are valued at the closing mid-market price on
that exchange on the day of computation.
With regard to each of the above-mentioned Funds, securities the
principal market for which is not a securities exchange are valued at the mean
of their latest bid and ask quotations in such principal market. Securities and
other assets for which quotations either (1) are not readily available or (2) in
the case of the International Equity Index Fund are determined by that Fund's
Advisor or Sub-Advisor to not accurately reflect their value are valued at their
fair value as determined in good faith under consistently applied procedures
established by and under the general supervision of the Trustees of the Trust.
Short-term securities are valued at either amortized cost or original cost plus
accrued interest, which approximates current value. Mutual fund investments of
the Funds of Funds will be valued at the most recently calculated net asset
value.
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The value of a foreign security is determined in its national currency
as of the close of trading on the foreign exchange or other principal market on
which it is traded, which value is then converted into its U.S. dollar
equivalent at the foreign exchange closing mid-market rate reported in the
FINANCIAL TIMES as the closing rate for that date. When an occurrence subsequent
to the time a value of a foreign security was so established is likely to have
changed the value, then the fair value of those securities will be determined by
consideration of other factors by or under the direction of the Trustees of the
Trust or their delegates.
Securities for which market quotations are readily available will be
valued on the basis of quotations provided by dealers in such securities or
furnished by a pricing service. Securities for which market quotations are not
readily available and other assets will be valued at fair value using methods
determined in good faith by the Investment Advisor under the supervision of the
Trustees and may include yield equivalents or a pricing matrix.
ADDITIONAL INFORMATION REGARDING THE
CALCULATION OF PER SHARE NET ASSET VALUE
The net asset value of each Fund is determined and its Fiduciary Class,
Class A, Class B, Class C and Service Class Shares are priced as of the times
specified in each Fund's Prospectus. The net asset value per Share of each
Fund's Fiduciary Class, Class A, Class B, Class C and Service Class Shares is
calculated by determining the value of the respective Class's proportional
interest in the securities and other assets of the Fund, less (i) such Class's
proportional share of general liabilities and (ii) the liabilities allocable
only to such Class, and dividing such amount by the number of Shares of the
Class outstanding. The net asset value of a Fund's Fiduciary Class, Class A,
Class B, Class C and Service Class Shares may differ from each other due to the
expense of the Distribution and Shareholders Services Plan fee applicable to a
Fund's Class A, Class B, Class C and Service Class Shares.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
All of the classes of Shares in each Fund (other than Class A shares of
the Income Fund and Service Class shares in the U.S. Treasury Securities Money
Market Fund and the Prime Money Market Fund) are sold on a continuous basis by
The One Group Services Company (the "Distributor"), and the Distributor has
agreed to use appropriate efforts to solicit all purchase orders.
Fiduciary Class Shares in a Fund may be purchased, through procedures
established by the Distributor, by institutional investors, including affiliates
of BANC ONE CORPORATION and any bank, depository institution, insurance company,
pension plan or other organization authorized to act in fiduciary, advisory,
agency, custodial or similar capacities. Fiduciary Shares are not available to
Individual Retirement Accounts.
Class A, Class B and Class C Shares (except Class A shares of the
Income Fund) may be purchased by any investor that does not meet the purchase
eligibility criteria, described above, with respect to Fiduciary Shares. Class A
shares of the Income Fund may only be purchased in connection with investment
company consolidations and reorganizations. Class C Shares are available only to
investors in the Funds of Funds. In addition to purchasing Class A, Class B and
Class C Shares directly from the Distributor, an investor may purchase Class A,
Class B and Class C Shares through a financial institution, such as a bank,
savings and loan association, insurance company (each a "Shareholder Servicing
Agent") that has established a Shareholder servicing agreement with the
Distributor, or through a broker-dealer that has established a dealer agreement
with the Distributor. Questions concerning the eligibility requirements for each
class of the Trust's Shares may be directed to the Distributor at
1-800-480-4111.
Service Class Shares are available only in the Prime Money Market and
U.S. Treasury Securities Money Market Funds. This class of shares is available
to broker-dealers, other financial intermediaries, banks and other depository
institutions requiring special administrative and accounting services (E.G.,
sweep processing).
As described in each Prospectus for each of the Equity and Bond Funds
and the Funds of Funds, and in the Multiple Class Plan, under certain
circumstances, Class A Shares of a Fund may be purchased free of the sales
charge applicable to such Class A Shares. No sales charge is imposed on Class A
Shares of the Funds: (i) issued through reinvestment of dividends and capital
gains distributions; (ii) acquired through the exercise of exchange privileges
where a comparable sales charge has been paid for exchanged Shares; (iii)
purchased by officers, directors or trustees, retirees and employees (and their
spouses and immediate family members) of the Trust, of BANC ONE CORPORATION and
its subsidiaries and affiliates, of the Distributor and its subsidiaries and
affiliates, of broker-dealers who have entered into a dealer agreement with the
Trust and their subsidiaries and affiliates, or of an investment sub-Advisor of
a Fund of the Trust and such sub-Advisor's subsidiaries and affiliates; (iv)
sold to affiliates of BANC ONE CORPORATION and certain accounts (other than
Individual Retirement Accounts) for which financial organizations, including any
bank, depository institution, insurance company,
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pension plan or other organization are authorized to act in fiduciary, advisory,
agency, custodial or similar capacities, or purchased by investment Advisors,
financial planners or other intermediaries who have a dealer arrangement with
the Distributor, who place trades for their own accounts or for the accounts of
their clients and who charge a management, consulting or other fee for their
services, as well as clients of such investment Advisors, financial planners or
other intermediaries who place trades for their own accounts if the accounts are
linked to the master account of such investment Advisor, financial planner or
other intermediary; (v) purchased with proceeds from the recent redemption of
Fiduciary Class Shares of a Fund of the Trust or acquired in an exchange of
Fiduciary Class Shares of a Fund for Class A Shares of the same Fund; (vi)
purchased with proceeds from the recent redemption of Shares of a mutual fund
(other than a Fund of the Trust) for which a sales charge was paid; (vii)
purchased in an Individual Retirement Account with the proceeds of a
distribution from an employee benefit plan, provided that, at the time of
distribution, the employee benefit plan had plan assets invested in a Fund of
the Trust; (viii) purchased with Trust assets; (ix) purchased in accounts as to
which a bank or broker-dealer charges an asset allocation fee, provided the bank
or broker-dealer has an agreement with the Distributor; (x) purchased in
connection with plans of reorganization of a Fund, such as mergers, asset
acquisitions and exchange offers to which a Fund is a party.
An investor relying upon any of the categories of waivers of the sales
charge must qualify for such waiver in advance of the purchase with the
Distributor or the financial institution or intermediary through which Shares
are purchased by the investor.
The waiver of the sales charge under circumstances (v), (vi), and (vii)
above applies only if the purchase is made within 60 days of the redemption and
if conditions imposed by the Distributor are met. The waiver policy with respect
to the purchase of Shares through the use of proceeds from a recent redemption
or distribution as described in clauses (v), (vi), and (vii) above will not be
continued indefinitely and may be discontinued at any time without notice.
Investors should call the Distributor at 1-800-480-4111 to determine whether
they are eligible to purchase Shares without paying a sales charge through the
use of proceeds from a recent redemption or distribution as described above, and
to confirm continued availability of these waiver policies prior to initiating
the procedures described in clauses (v), (vi), and (vii).
Fiduciary Class Shareholders of a Fund may exchange their Shares for
Class A Shares of the same Fund or for Class A Shares or Fiduciary Class Shares
of another Fund of the Trust. Class A Shareholders may exchange their Shares for
Fiduciary Class Shares of a Fund or for Fiduciary Class or Class A Shares of
another Fund or the Trust, if the Shareholder is eligible to purchase such
Shares. If a Class A Shareholder of the Income Fund exchanges his or her Shares
within one year of receipt of the Shares, the Shareholder will be assessed a 2%
redemption fee. The exchange privilege may be exercised only in those states
where the Shares of the Fund or such other Fund may be legally sold. All
exchanges discussed herein are made at the net asset value of the exchanged
Shares, except as provided below. The Trust does not impose a charge for
processing exchanges of Shares. If a Shareholder seeks to exchange Class A
Shares of a Fund that does not impose a sales charge for Class A Shares of a
Fund that does, or the Fund being exchanged into has a higher sales charge, the
Shareholder will be required to pay a sales charge in the amount equal to the
difference between the sales charge applicable to the Fund into which the Shares
are being exchanged and any sales charge previously paid for the exchanged
Shares, including any sales charges incurred on any earlier exchanges of the
Shares (unless such sales charge is otherwise waived as provided above). The
exchange of Fiduciary Class Shares for Class A Shares also will require payment
of the sales charge unless the sales charge is waived, as provided above. If a
Shareholder (no longer eligible to purchase Fiduciary Shares) purchases Class A
Shares of a Fund, the Shareholder will be subject to Distribution and
Shareholder Services Plan Fees.
Class B Shareholders of a Fund may exchange their Shares for Class B
Shares of any other Fund of the Trust on the basis of the net asset value of the
exchanged Class B Shares, without the payment of any Contingent Deferred Sales
Charge that might otherwise be due upon redemption of the outstanding Class B
Shares. The newly acquired Class B Shares will be subject to the higher
Contingent Deferred Sales Charge of either the Fund from which the Shares were
exchanged or the Fund into which the Shares were exchanged. With respect to
outstanding Class B Shares as to which previous exchanges have taken place,
"higher Contingent Deferred Sales Charge" shall mean the higher of the
Contingent Deferred Sales Charge applicable to either the Fund the Shares are
exchanging into or any other Fund from which the Shares previously have been
exchanged. For purposes of computing the Contingent Deferred Sales Charge that
may be payable upon a disposition of the newly acquired Class B Shares, the
holding period for outstanding Class B Shares of the Fund from which the
exchange was made is "tacked" to the holding period of the newly acquired Class
B Shares. For purposes of calculating the holding period applicable to the newly
acquired Class B Shares, the newly acquired Class B Shares shall be deemed to
have been issued on the date of receipt of the Shareholder's order to purchase
the outstanding Class B Shares of the Fund from which the initial exchange was
made.
Class C Shareholders may not exchange their Class C Shares for shares
of any other class nor may shares of any other class be exchanged for Class C
Shares.
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.
48
<PAGE> 294
Shares of the Institutional Money Market Funds may be purchased by
commercial and retail institutional investors, including affiliates of BANC ONE
CORPORATION, that have opened an account with the Transfer Agent either directly
or through a Shareholder Servicing Agent, by persons whose individual net worth,
or joint net worth with that person's spouse, at the time of his or her purchase
exceeds $1,000,000, or by persons whose individual annual income, or joint
annual income with that person's spouse, at the time of his or her purchase
exceeds $200,000.
The Trust may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Securities and Exchange Commission, (b) the Exchange is closed for other
than customary weekend and holiday closings, (c) the Securities and Exchange
Commission has by order permitted such suspension, or (d) an emergency exists as
determined by the Securities and Exchange Commission.
The Trust may redeem Shares involuntarily if redemption appears
appropriate in light of the Trust's responsibilities under the 1940 Act. (See
"Valuation of the Money Market and Institutional Money Market Funds and the
Municipal Money Market Fund" above.)
49
<PAGE> 295
MANAGEMENT OF THE TRUST
TRUSTEES & OFFICERS
Overall responsibility for management of the Trust rests with the Board
of Trustees of the Trust, who are elected by the Shareholders of the Trust.
There are currently four Trustees, all of whom are not "interested persons" of
the Trust within the meaning of that term under the 1940 Act. The Trustees, in
turn, elect the officers of the Trust to supervise actively its day-to-day
operations.
The Trustees of the Trust, their addresses, and principal occupations
during the past five years are set forth below.
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST DURING PAST 5 YEARS
- ---------------- -------------- -------------------
<S> <C> <C>
Peter C. Marshall Trustee From November, 1993 to present,
DCI Marketing, Inc. President, DCI Marketing, Inc.;
2727 W. Good Hope Road from 1992 to November, 1993, Vice
Milwaukee, WI 53209 President-Finance and Treasurer,
DCI Marketing, Inc.; from 1987
to August, 1992, has served as
an officer in the corporate finance
group of Blunt, Ellis & Loewi and
its successor corporation, Kemper
Securities, Inc.
Charles I. Post Trustee From July, 1986 to present, has
7615 4th Avenue West been self-employed as a consultant.
Bradenton, FL 34209
John S. Randall Trustee Since 1972, has been self-employed
1840 North Prospect Ave. as a management consultant.
Apt. 419
Milwaukee, WI 53202
Frederick W. Ruebeck Trustee From June, 1988 to present, has
Eli Lilly & Company been Director of Investments, Eli
Lilly Corporate Center Lilly and Company.
307 East McCarty
Indianapolis, IN 46285
Robert A. Oden, Jr. Trustee From 1995 to present, President
Office of the President Kenyon College; from 1989 to
Ransom Hall 1995, Headmaster, The Hotchkiss
Kenyon College School.
Gambier, OH 43022
</TABLE>
The Trustees of the Trust receive fees and expenses for each meeting of
the Board of Trustees attended. No officer or employee of the Distributor
currently acts as a Trustee of the Trust.
The Compensation Table below sets forth the estimated total
compensation to the Trustees from the Trust and the operational funds of The One
Group for the Trust's fiscal year ended June 30, 1997.
50
<PAGE> 296
COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
BENEFITS ESTIMATED TOTAL
AGGREGATE ACCRUED ANNUAL COMPENSATION
COMPENSATION AS PART BENEFITS FROM
NAME OF FROM THE OF FUND UPON THE FUND
PERSON, POSITION TRUST EXPENSES RETIREMENT COMPLEX(2)
---------------- ----- -------- ---------- ----------
<S> <C> <C> <C> <C>
Peter C. Marshall, $36,000 N/A N/A $39,000
Chairman
Charles I. Post, $33,500 N/A N/A $36,500
Trustee
John S. Randall, $33,500 N/A N/A $36,500
Trustee
Frederick W. Ruebeck, $33,500 N/A N/A $36,500
Trustee
</TABLE>
1 Figures are for the Trust's fiscal year ended June 30, 1997.
2 "Fund Complex" comprises the 33 operational funds of The One Group as
well as the 4 funds of The One Group(R) Investment Trust at June 30,
1997.
51
<PAGE> 297
The officers of the Trust receive no compensation directly from the
Trust for performing the duties of their offices. The officers of the Trust,
their addresses, and principal occupations during the past five years are shown
below.
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST DURING PAST 5 YEARS
- ---------------- -------------- -------------------
<S> <C> <C>
Mark Dillon President From 1993 to present, Vice-
The One Group Services President of BISYS Fund
Company Services, Inc. and President of
3435 Stelzer Road The One Group Services
Columbus, Ohio 43219 Company; from 1986 to 1993,
Vice-President of the Winsbury
Company
Mark Redman Vice President, From June, 1995 to present,
The One Group Services Co. Assistant Secretary Vice President, The One Group
3435 Stelzer Road & Treasurer Services Company; from
Columbus, Ohio 43219 February 1989 to present,
employee of the Winsbury
Company
George O. Martinez Secretary From March 1995 to present,
BISYS Fund Services, Inc. Senior Vice President and
3435 Stelzer Road Director of Legal and
Columbus, OH 43219 Compliance Services, BISYS
Fund Services, Inc.; from June
1989 - March 1995, Vice
President and Associate
General Counsel, Alliance
Capital Management
Alaina J. Metz Assistant Secretary From June 1995 to present,
BISYS Fund Services, Inc. Chief Administrator,
3435 Stelzer Road Administration and Regulatory
Columbus, Ohio 43219 Services, BISYS Fund Services,
Inc.; from May 1989 - June 1995,
Supervisor, Mutual Fund Legal
Department, Alliance Capital
Management.
</TABLE>
52
<PAGE> 298
INVESTMENT ADVISOR
Banc One Investment Advisors Corporation
Investment advisory services to each of the Trust's Funds are provided
by Banc One Advisors. Banc One Advisors makes the investment decisions for the
assets of the Fund and continuously reviews, supervises and administers the
Fund's investment program, subject to the supervision of, and policies
established by, the Trustees of the Trust. The Trust's Shares are not sponsored,
endorsed or guaranteed by, and do not constitute obligations or deposits of any
bank affiliate of Banc One Advisors and are not insured by the FDIC or issued or
guaranteed by the U.S. government or any of its agencies.
Banc One Advisors is an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, a bank holding company incorporated in the state of Ohio. BANC ONE
CORPORATION has affiliate banking organizations in Arizona, Colorado, Illinois,
Indiana, Kentucky, Louisiana, Ohio, Oklahoma, Texas, Utah, West Virginia and
Wisconsin. In addition, BANC ONE CORPORATION has several affiliates that engage
in data processing, venture capital, investment and merchant banking, and other
diversified services including trust management, investment management,
brokerage, equipment leasing, mortgage banking, consumer finance, and insurance.
On a consolidated basis, BANC ONE CORPORATION had assets of over $101 billion as
of June 30, 1997.
Banc One Advisors represents a consolidation of the investment advisory
staffs of a number of bank affiliates of BANC ONE CORPORATION, which have
considerable experience in the management of open-end management investment
company portfolios, including The One Group (formerly, the Helmsman Fund) since
1985.
Prior to January 11, 1993, investment advisory services were provided
to the Income Equity, Disciplined Value, Growth Opportunities, and Large Company
Value Funds by Bank One, Milwaukee, NA ("Bank One, Milwaukee"). Prior to January
11, 1993, investment advisory services were provided to the Money Market Funds,
the Institutional Money Market Funds, the Bond Funds, and the Intermediate
Tax-Free Bond Fund by Bank One, Indianapolis, NA ("Bank One, Indianapolis").
Prior to January 11, 1993, investment advisory services were provided to the
International Equity Index, Equity Index, and the Ohio Municipal Bond Funds by
Bank One, Columbus, NA ("Bank One, Columbus"). Prior to January 11, 1993,
investment sub-advisory services were also provided to the Large Company Value
Fund by Bank One, Columbus. Prior to January, 1994, investment advisory services
were provided to the predecessor funds of Intermediate Bond Fund and Large
Company Growth Fund, Sun Eagle Intermediate Fixed Income Fund and Sun Eagle
Equity Growth Fund, respectively, by Bank One, Arizona, NA. Prior to January 20,
1995, investment advisory services were provided to the predecessor Fund of the
Kentucky Municipal Bond Fund, the Trademark Kentucky Municipal Bond Fund, by
Liberty National Bank and Trust Company of Kentucky. Prior to January 2, 1996,
investment advisory services were provided to the predecessor Funds of the
Louisiana Municipal Bond Fund, the Value Growth Fund, and the Small
Capitalization Fund (formerly the Gulf South Growth Fund), formerly Paragon
Louisiana Tax-Free Fund, Paragon Value Growth Fund and Paragon Gulf South Growth
Fund, respectively, by Premier Investment Advisors, LLP.
During the fiscal years ended June 30, 1997, 1996, and 1995, the Funds
of the Trust paid the following investment advisory fees to Banc One Advisors
(except as noted above) and Banc One Advisors voluntarily waived investment
advisory fees as follows:
53
<PAGE> 299
THE ONE GROUP ADVISORY--NET
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1997 1996 1995
---- ---- ----
FUND NET WAIVED NET WAIVED NET WAIVED
- ---- --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities
Money Market $5,992,323 $2,742,727 $3,335,123 $2,120,534 $2,258,214 $1,956,704
Prime Money Market $7,824,731 $1,899,772 $5,939,373 $2,662,726 $3,991,856 $2,887,240
Municipal Money Market $1,241,937 $ 593,593 $1,111,463 $ 930,328 $ 964,943 $ 834,690
Ohio Municipal Money Market $ 231,786 $ 36,034 $ 171,609 $ 114,565 $ 163,752 $ 112,517
Income Equity $4,104,562 $ 0 $1,809,128 $ 70,594 $1,466,342 $ 7,338
Disciplined Value $4,129,523 $ 0 $3,934,183 $ 61,237 $3,306,317 $ 0
Growth Opportunities $4,511,169 $ 0 $3,688,445 $ 54,262 $3,024,214 $ 6,973
Equity Index $ 547,238 $1,094,476 $ 238,008 $ 638,315 $ 167,195 $ 396,281
Large Company Value $4,726,413 $ 0 $3,763,553 $ 0 $1,730,555 $ 0
Asset Allocation $ 684,481 $ 142,861 $ 306,083 $ 92,023 $ 214,418 $ 68,226
International Equity Index $2,201,616 $ 837 $1,279,277 $ 91,958 $1,036,935 $ 0
Large Company Growth $7,948,260 $ 0 $5,235,736 $ 245,284 2,515,585 $ 0
Income Bond $2,581,863 $1,290,933 $1,918,010 $1,135,461 $1,662,030 $1,317,284
Limited Volatility Bond $1,830,204 $1,830.204 $1,330,873 $1,450,516 $1,155,274 $1,393,194
Intermediate Tax-Free Bond $1,235,203 $ 776,825 $ 629,789 $ 769,809 $ 499,312 $ 699,036
Municipal Income $1,314,694 $ 387,974 $ 714,573 $ 387,167 $ 572,498 $ 246,244
Ohio Municipal Bond $ 389,001 $ 391,781 $ 257,158 $ 328,794 $ 299,400 $ 302,235
Government Bond $3,098,420 $ 194,800 $2,182,543 $ 70,159 $1,251,932 $ 38,861
Ultra Short-Term Income $ 117,314 $ 342,966 $ 29,293 $ 227,497 $ 277,435 $ 208,134
Intermediate Bond $1,273,126 $1,092,194 $ 612,348 $ 747,012 $ 239,603 $ 597,220
Treasury Only Money Market $ 385,087 $ 0 $ 287,729 $ 0 $ 181,522 $ 16,794
Government Money Market $ 848,690 $ 0 $ 612,362 $ 5,166 $ 478,342 $ 101,302
Kentucky Municipal Bond
(Trademark Kentucky
Municipal Bond)** $ 270,459 $ 78,137 $ 108,684 $ 132,964 $ 53,481 $ 59,433
Institutional Prime
Money Market NA # NA # NA* NA* NA* NA*
Treasury Money Market NA # NA # NA* NA* NA* NA*
Tax-Exempt Money Market NA # NA # NA* NA* NA* NA*
Arizona Municipal Bond+++ $ 390,737 $ 126,415 NA* NA* NA* NA*
Texas Tax-Free Bond NA # NA # NA* NA* NA* NA*
W. Virginia Municipal Bond+++ $ 121,278 $ 66,525 NA* NA* NA* NA*
Louisiana Municipal Bond $ 683,535 $ 394,121 $ 207,766++ $ 103,883++ $ 992,485+ $ 198,495+
Value Growth $2,309,475 $ 69,333 $ 400,112++ $ 51,948++ $1,281,345+ NA+
Small Capitalization $ 699,896 $ 30,410 $ 184,391++ $ 25,531++ $ 582,482+ NA+
Income Fund NA # NA # NA* NA* NA* NA*
Investor Growth++++ $ 1,552 $ 6,244 NA* NA* NA* NA*
Investor Growth & Income++++ $ 2,046 $ 8,237 NA* NA* NA* NA*
Investor Aggressive Growth NA # NA # NA* NA* NA* NA*
Investor Conservative Growth++++ $ 683 $ 2,750 NA* NA* NA* NA*
Investor Balanced++++ $ 3,107 $ 12,503 NA* NA* NA* NA*
Investor Fixed Income NA # NA # NA* NA* NA* NA*
Treasury & Agency Fund+++ $ 99,224 $ 99,225 NA* NA* NA* NA*
</TABLE>
# As of June 30, 1997, the Fund had not commenced operations.
* As of June 30, 1996, the Fund had not commenced operations.
** In the fiscal year ended June 30, 1994, and from July 1, 1994 through
January 19, 1995, the Advisor was Liberty National Bank and Trust
Company of Kentucky.
+ For fiscal years ended November 30, 1994 and 1995, the Advisor was
Premier Investment Advisors, LLC.
++ Fees for the period from December 31, 1995 to June 30, 1996.
+++ Fees for the period from January 20, 1997 to June 30, 1997.
++++ Fees for the period from December 10, 1996 to June 30, 1997.
54
<PAGE> 300
All investment advisory services are provided to the Funds by Banc One
Advisors pursuant to an investment advisory agreement dated January 11, 1993
(the "Investment Advisory Agreement"). The Investment Advisory Agreement (and
the Sub-Investment Advisory Agreement described immediately following,
collectively, the "Advisory and Sub-Advisory Agreements") will continue in
effect as to a particular Fund from year to year, if such continuance is
approved at least annually by the Trust's Board of Trustees or by vote of a
majority of the outstanding Shares of such Fund (as defined under "ADDITIONAL
INFORMATION--Miscellaneous" in this Statement of Additional Information), and a
majority of the Trustees who are not parties to the respective investment
advisory agreements or interested persons (as defined in the Investment Company
Act of 1940) of any party to the respective investment advisory agreements by
votes cast in person at a meeting called for such purpose. The Advisory and
Sub-Advisory Agreements were renewed by the Trust's Board of Trustees at their
quarterly meeting on August 17, 1995. The Advisory and Sub-Advisory Agreements
are terminable as to a particular Fund at any time on 60 days' written notice
without penalty by the Trustees, by vote of a majority of the outstanding Shares
of that Fund, or by the Fund's Advisor or Sub-Advisor as the case may be. The
Advisory and Sub-Advisory Agreements also terminate automatically in the event
of any assignment, as defined in the 1940 Act.
The Advisory and Sub-Advisory Agreements each provide that the
respective Advisor or Sub-Advisor shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Trust in connection with the
performance of the respective investment advisory agreements, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of Banc One Advisors or Sub-Advisor in
the performance of its duties, or from reckless disregard by it of its duties
and obligations thereunder.
Goldman Sachs Asset Management, formerly the investment Sub-Advisor to
the Ultra Short-Term Income Fund, $176,570 in sub-advisory fees from Banc One
Advisors for the fiscal year ended June 30, 1995 and $26,251 in sub-advisory
fees from Banc One Advisors for the fiscal year ended June 30, 1996.
Independence International Associates, Inc.
Independence International Associates, Inc. ("Independence
International") serves as investment Sub-Advisor to the International Equity
Index Fund pursuant to an agreement with Banc One Advisors dated January 11,
1993. Independence International is a wholly-owned subsidiary of John Hancock
Asset Management, Inc. and an indirect, wholly-owned subsidiary of John Hancock
Mutual Life Insurance Company. Boston International Advisors, Inc., the
predecessor of Independence International, received $161,906 in sub-advisory
fees from Banc One Advisors for the fiscal year ended June 30, 1995, $212,352 in
sub-advisory fees from Banc One Advisors for the fiscal year ended June 30,
1996; and $315,098 in sub-advisory fees from Banc One Advisors for the fiscal
year ended June 30, 1997.
GLASS-STEAGALL ACT
In 1971 the United States Supreme Court held in INVESTMENT COMPANY
INSTITUTE V. CAMP that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a Fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its Shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment Advisor, transfer
agent, and custodian to such an investment company. In 1981, the United States
Supreme Court held in BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM V.
INVESTMENT COMPANY INSTITUTE that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment Advisors to registered closed-end investment companies. In the BOARD
OF GOVERNORS case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment Advisors to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act. In addition, state securities laws on this issue
may differ from the interpretations of federal law expressed herein and banks
and financial institutions may be required to register as dealers pursuant to
state law.
In the Investment Advisory Agreement with the Trust, Banc One Advisors
has represented to the Trust that it possesses the legal authority to perform
the investment advisory services contemplated by the agreement and described in
the Prospectuses and this Statement of Additional Information without violation
of applicable statutes and regulations. Future changes in either federal or
state statutes and regulations relating to the permissible activities of banks
or bank holding companies and the subsidiaries or affiliates of those entities,
as well as further judicial or administrative decisions or interpretations of
present and future statutes and regulations, could prevent or restrict Banc One
Advisors from continuing to perform such services for the Trust. Depending upon
the nature of any changes in the services which could be provided
55
<PAGE> 301
by Banc One Advisors, the Board of Trustees of the Trust would review the
Trust's relationship with Banc One Advisors and consider taking all action
necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of BANC ONE CORPORATION subsidiary banks or
their correspondent banks in connection with customer purchases of Shares of the
Trust, these banks might be required to alter materially or discontinue the
services offered by them to customers. It is not anticipated, however, that any
change in the Trust's method of operations would affect its net asset value per
Share or result in financial losses to any customer.
PORTFOLIO TRANSACTIONS
Pursuant to the Advisory and Sub-Advisory Agreements, Banc One Advisors
and the Sub-Advisor determine, subject to the general supervision of the Board
of Trustees of the Trust and in accordance with each Fund's investment objective
and restrictions, which securities are to be purchased and sold by each such
Fund and which brokers are to be eligible to execute its portfolio transactions.
Purchases and sales of portfolio securities with respect to the Money Market
Funds, the Bond Funds, the Funds of Funds and (to a varying degree) the Asset
Allocation Fund usually are principal transactions in which portfolio securities
are purchased directly from the issuer or from an underwriter or market maker
for the securities. Purchases from underwriters of portfolio securities
generally include (but not in the case of mutual fund shares purchased by the
Funds of Funds) a commission or concession paid by the issuer to the underwriter
and purchases from dealers serving as market makers may include the spread
between the bid and asked price. Transactions on stock exchanges (other than
certain foreign stock exchanges) involve the payment of negotiated brokerage
commissions. Transactions in the over-the-counter market are generally principal
transactions with dealers. With respect to the over-the-counter market, the
Trust, where possible, will deal directly with the dealers who make a market in
the securities involved except in those circumstances where better price and
execution are available elsewhere. While the Banc One Advisors generally seeks
competitive spreads or commissions, the Trust may not necessarily pay the lowest
spread or commission available on each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various
dealers is determined by Banc One Advisors and the Sub-Advisor with respect to
the Funds each serves based on their best judgment and in a manner deemed fair
and reasonable to Shareholders. The primary consideration is prompt execution of
orders in an effective manner at the most favorable price. Subject to this
consideration, dealers who provide supplemental investment research to Banc One
Advisors or the Sub-Advisor may receive orders for transactions by the Trust,
even if such dealers charge commissions in excess of the lowest rates available,
provided such commissions are reasonable in light of the value of brokerage and
research services received. Such research services may include, but are not be
limited to, analysis and reports concerning economic factors and trends,
industries, specific securities, and portfolio strategies. Information so
received is in addition to and not in lieu of services required to be performed
by Banc One Advisors or the Sub-Advisor and does not reduce the advisory fees
payable to Banc One Advisors or the Sub-Advisor. Such information may be useful
to Banc One Advisors or the Sub-Advisor in serving both the Trust and other
clients and, conversely, supplemental information obtained by the placement of
business of other clients may be useful to Banc One Advisors or the Sub-Advisor
in carrying out their obligations to the Trust. In the last fiscal year, Banc
One Advisors directed brokerage commissions to brokers who provided research
services to Banc One Advisors. Total compensation paid to such brokers amounted
to $15,142,680.
The Trust will not execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with its Advisors or their
affiliates except as may be permitted under the 1940 Act, and will not give
preference to correspondents of BANC ONE CORPORATION subsidiary banks with
respect to such transactions, securities, savings deposits, repurchase
agreements, and reverse repurchase agreements.
During the Trust's fiscal year ended June 30, 1995, the Trust paid
brokerage commissions to Goldman for brokerage services provided as follows:
<TABLE>
<CAPTION>
FUND COMMISSIONS PAID
---- ----------------
<S> <C>
Income Equity $ 700
Disciplined Value $81,124
Small Company Growth $47,160
Large Company Value $47,640
Equity Index $ 6,741
Asset Allocation $ 6,677
Government ARM $ 531
Large Company Growth $ 3,381
</TABLE>
During the Trust's fiscal year ended June 30, 1996, the Trust paid
brokerage commissions to Goldman for brokerage services provided as follows:
<TABLE>
<CAPTION>
FUND COMMISSIONS PAID
---- ----------------
<S> <C>
Income Equity $ 5,750
Disciplined Value $ 1,810
Growth Opportunities $11,714
Equity Index $42,243
Large Company Value $10,650
Asset Allocation $ 9,602
Small Capitalization $ 2,265
Value Growth $ 1,647
</TABLE>
56
<PAGE> 302
During the Trust's fiscal year ended June 30, 1996, the percentage of
the Trust's aggregate brokerage commissions paid to Goldman was 1.26% and the
percentage of the Trust's aggregate dollar amount of transactions involving the
payment of commissions effected through Goldman was 1.47%.
In the fiscal years ended June 30, 1997, 1996, and 1995, each of the
Funds of the Trust that paid brokerage commissions and the amounts paid for each
year were as follows:
THE ONE GROUP BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
FUND 1997 1996 1995
- ---- ---- ---- ----
<S> <C> <C> <C>
Income Equity $ 395,450 $ 96,204 $ 102,275
Disciplined Value $1,570,859 $ 613,774 $2,572,895
Growth Opportunities $3,199,337 $2,798,442 $1,242,481
Equity Index $ 162,178 $ 56,155 $ 21,858
Large Company Value $1,378,450 $2,126,632 $1,783,768
Asset Allocation $ 194,187 $ 61,678 $ 42,796
International Equity Index $ 349,010 $ 176,140 $ 223,386
Large Company Growth $1,285,883 $ 596,397 $ 442,672
Ultra Short-Term Income $ 0 $ 0 $ 531
Small Capitalization $ 194,127 $ 43,039
Value Growth $1,005,409 $ 224,373
</TABLE>
Investment decisions for each Fund of the Trust are made independently
from those for the other Funds or any other investment company or account
managed by Banc One Advisors or the Sub-Advisor. Any such other investment
company or account may also invest in the same securities as the Trust. When a
purchase or sale of the same security is made at substantially the same time on
behalf of a given Fund and another Fund, investment company or account (or, in
the case of the International Equity Index Fund, another account), the
transaction will be averaged as to price, and available investments allocated as
to amount, in a manner which Banc One Advisors or the Sub-Advisor of the given
Fund believes to be equitable to the Fund(s) and such other investment company
or account. In some instances, this investment procedure may adversely affect
the price paid or received by a Fund or the size of the position obtained by a
Fund. To the extent permitted by law, Banc One Advisors and the Sub-Advisor may
aggregate the securities to be sold or purchased by it for a Fund with those to
be sold or purchased by it for other Funds or for other investment companies or
accounts in order to obtain best execution. As provided by the Investment
Advisory and Sub-Advisory Agreements, in making investment recommendations for
the Trust, Banc One Advisors and the Sub-Advisor will not inquire or take into
consideration whether an issuer of securities proposed for purchase or sale by
the Trust is a customer of Banc One Advisors or the Sub-Advisor or their parents
or subsidiaries or affiliates and, in dealing with its commercial customers,
Banc One Advisors and the Sub-Advisor and their respective parent, subsidiaries,
and affiliates will not inquire or take into consideration whether securities of
such customers are held by the Trust.
ADMINISTRATOR
The One Group Services Company serves as Administrator (the
"Administrator") to each Fund of the Trust pursuant to a Management and
Administration Agreement with the Trust (the "Administration Agreement"). The
Board of Trustees of the Trust approved The One Group Services Company as the
sole Administrator for each Fund beginning December 1, 1995. The Administrator
assists in supervising all operations of each Fund to which it serves as
Administrator (other than those performed under the respective investment
advisory agreements and Custodian and Transfer Agency Agreements for that Fund).
Under the Administration Agreement, the Administrator has agreed to
price the portfolio securities of each Fund it serves and to compute the net
asset value and net income of such Funds on a daily basis, to maintain office
facilities for the Trust, to maintain each such Fund's financial accounts and
records, and to furnish the Trust statistical and research data, data
processing, clerical, accounting, and bookkeeping services, and certain other
services required by the Trust with respect to each such Fund. The Administrator
prepares annual and semi-annual reports to the Securities and Exchange
Commission, prepares federal and State tax returns, prepares filings with State
securities commissions, and generally assists in all aspects of the Trust's
operations other than those performed under the investment advisory agreements,
and Custodian and Transfer Agency Agreements. Under the Administration
Agreement, the Administrator may delegate all or any part of its
responsibilities thereunder.
Banc One Advisors also serves as Sub-Administrator to each Fund of the
Trust, pursuant to an agreement between the Administrator and Banc One Advisors.
Pursuant to this agreement, Banc One Advisors performs many of the
Administrator's duties, for which Banc One Advisors receives a fee paid by the
Administrator.
57
<PAGE> 303
The Trust paid fees for administrative services to 440 Financial and to
SEI Financial Management, previous Administrators of the Trust, to The Winsbury
Company, the prior Administrator to the predecessor funds of the Large Company
Growth and Intermediate Bond Funds, and to Federated Administrative Services,
the prior Administrator to the predecessor Fund of the Kentucky Municipal Bond
Fund, for the fiscal years ended June 30, 1997, 1996, and 1995 as follows:
58
<PAGE> 304
THE ONE GROUP ADMINISTRATOR--NET
<TABLE>
<CAPTION>
THE ONE GROUP FISCAL YEAR ENDED JUNE 30, 1997
SERVICES BANC ONE ADVISORS**
FUND COMPANY NET WAIVED NET WAIVED
<S> <C> <C> <C> <C>
U.S. Treasury Securities $4,041,160 $ 52,457 $ $ 0
Money Market
Prime Money Market $4,325,620 $ 268,513 $1,666,976 $ 0
Municipal Money Market $ 821,921 $ 45,236 $ 314,733 $ 0
Ohio Municipal Money Market $ 168,236 $ 79,377 $ 107,188 $ 0
Income Equity $ 916,621 $ 0 $ 332,802 $ 0
Disciplined Value $ 922,753 $ 0 $ 334,826 $ 0
Growth Opportunities $1,007,999 $ 0 $ 365,770 $ 0
Equity Index $ 329,854 $ 574,004 $ 328,342 $ 0
Large Company Value $1,056,104 $ 0 $ 383,222 $ 0
Asset Allocation $ 94,269 $ 116,194 $ 76,370 $ 0
International Equity Index $ 662,008 $ 0 $ 240,084 $ 0
Large Company Growth $1,775,503 $ 0 $ 644,453 $ 0
(Sun Eagle: Equity Growth)
Income Bond $1,067,153 $ 0 $ 387,285 $ 0
Limited Volatility Bond $1,008,923 $ 0 $ 366,010 $ 0
Intermediate Tax-Free Bond $ 554,163 $ 0 $ 201,205 $ 0
Municipal Income $ 609,095 $ 16,541 $ 227,031 $ 0
Ohio Municipal Bond $ 213,314 $ 1,857 $ 78,076 $ 0
Government Bond $ 990,039 $ 220,036 $ 439,098 $ 0
Ultra Short-Term Income $ 60,695 $ 95,720 $ 50,007 $ 0
Intermediate Bond (Sun Eagle) $ 651,480 $ 0 $ 236,534 $ 0
Intermediate Fixed Income)
Treasury Only Money Market $ 240,680 $ 0 $ 240,061 $ 0
Government Money Market $ 530,431 $ 0 $ 530,415 $ 0
Institutional Prime NA* NA* NA* $ 0
Money Market
Treasury Money Market NA* NA* NA* $ 0
Tax-Exempt Money Market NA* NA* NA* $ 0
Arizona Municipal Bond $ 140,206 $ 49,819 $ 69,221 $ 0
Kentucky Municipal Bond $ 127,957 $ 0 $ 46,478 $ 0
Texas Tax-Free Bond NA* NA* NA* NA*
W. Virginia Municipal Bond $ 58,427 $ 10,580 $ 25,040 $ 0
Louisiana Municipal Bond $ 297,050 $ 0 $ 107,762 $ 0
Value Growth $ 531,250 $ 0 $ 192,876 $ 0
Small Capitalization (Gulf South Growth) $ 92,752 $ 70,432 $ 59,214 $ 0
Income NA* NA* NA* NA*
Investor Growth $ 15,583 $ 0 $ 0 $ 0
Investor Growth & Income $ 0 $ 20,566 $ 0 $ 0
Investor Aggressive Growth NA* NA* NA* NA*
Investor Conservative Growth $ 0 $ 6,866 $ 0 $ 0
Investor Balanced $ 0 $ 31,220 $ 0 $ 0
Investor Fixed Income NA* NA* NA* NA*
Treasury & Agency $ 13,891 $ 68,143 $ 29,765 $ 0
</TABLE>
* As of June 30, 1997, the Fund had not commenced operations.
** These fees were paid by The One Group Services Company to Banc One
Advisors pursuant to the Sub-Administration Agreement.
59
<PAGE> 305
THE ONE GROUP ADMINISTRATOR--NET
<TABLE>
<CAPTION>
THE ONE GROUP FISCAL YEAR ENDED JUNE 30, 1996
SERVICES BANC ONE ADVISORS** 440***
FUND COMPANY NET WAIVED NET WAIVED NET WAIVED
- ---- ----------- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities
Money Market $1,675,933 $ 23,824 $ 928,127 0 $ 881,386 $ 19,060
Prime Money Market $2,490,499 $ 0 $1,463,271 0 $1,611,838 $ 0
Municipal Money Market $ 504,611 $ 58,625 $ 340,160 0 $ 328,817 $ 82,052
Ohio Municipal Money Market $ 9,933 $ 87,195 $ 53,819 0 $ 22,276 $ 39,800
Income Equity $ 286,663 $ 0 $ 151,456 0 $ 136,804 $ 0
Disciplined Value $ 543,544 $ 0 $ 321,420 0 $ 357,658 $ 0
Growth Opportunities $ 511,634 $ 0 $ 301,050 0 $ 332,353 $ 0
Equity Index $ 219,301 $ 96,276 $ 165,797 0 $ 52,623 $ 119,116
Large Company Value $ 532,314 $ 0 $ 300,440 0 $ 283,851 $ 32,509
Asset Allocation $ 19,184 $ 48,482 $ 33,779 0 $ 22,718 $ 11,794
International Equity Index $ 307,633 $ 0 $ 171,529 0 $ 172,763 $ 0
Large Company Growth $ 778,543 $ 0 $ 441,303 0 $ 457,430 $ 0
(Sun Eagle: Equity Growth)
Income Bond $ 505,703 $ 0 $ 302,920 0 $ 343,646 $ 186
Limited Volatility Bond $ 471,594 $ 0 $ 275,961 0 $ 301,887 $ 0
Intermediate Tax-Free Bond $ 222,203 $ 0 $ 138,734 0 $ 167,244 $ 0
Municipal Income $ 210,905 $ 43,781 $ 142,512 0 $ 110,442 $ 43,233
Ohio Municipal Bond $ 81,876 $ 15,630 $ 57,825 0 $ 55,179 $ 11,740
Government Bond $ 544,937 $ 6,947 $ 297,480 0 $ 270,620 $ 12,171
Ultra Short-Term Income $ 0 $ 50,706 $ 28,274 $ 0 $ 35,162
Intermediate Bond (Sun
Eagle:
Intermediate Fixed Income) $ 229,988 $ 0 $ 134,912 0 $ 148,161 $ 0
Treasury Only Money Market $ 113,945 $ 0 $ 179,830 0 $ 65,888 $ 0
Government Money Market $ 232,688 $ 0 $ 385,955 0 $ 153,141 $ 131
Institutional Prime
Money Market NA* NA* NA NA* NA*
Treasury Money Market NA* NA* NA NA* NA*
Tax-Exempt Money Market NA* NA* NA NA* NA*
Arizona Municipal Bond NA* NA* NA NA* NA*
Kentucky Municipal Bond 38,104 $ 1,196 23,883 0 $ 26,310 $ 2,256
Texas Tax-Free Bond NA* NA* NA NA* NA*
W. Virginia Municipal Bond NA* NA* NA NA* NA*
Louisiana Municipal Bond $ 86,078+ $ 0 $ 31,165+ 0 $ 0 $ 0
Value Growth $ 101,245+ $ 0 $ 36,656+ 0 $ 0 $ 0
Gulf South Growth $ 47,011+ $ 0 $ 17,021+ 0 $ 0 $ 0
Income NA* NA* NA* NA* NA* NA*
Investor Growth NA* NA* NA* NA* NA* NA*
Investor Growth & Income NA* NA* NA* NA* NA* NA*
Investor Aggressive Growth NA* NA* NA* NA* NA* NA*
Investor Conservative Growth NA* NA* NA* NA* NA* NA*
Investor Balanced NA* NA* NA* NA* NA* NA*
Investor Fixed Income NA* NA*
</TABLE>
* As of June 30, 1996, the Fund had not commenced operations.
** These were fees paid by The One Group Services Company to Banc One
Advisors pursuant to the Sub-Administration Agreement for the period
from December 1, 1995 through June 30, 1996, and by 440 for the period
June 30, 1995 to December 1, 1995.
*** These were fees paid from July 1, 1995 through early November 30, 1995.
+ These fees were paid from March 26, 1996 through June 30, 1996.
60
<PAGE> 306
THE ONE GROUP ADMINISTRATOR--NET
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30, 1995
440 ADVISOR** FEDERATED
FUND NET WAIVED NET WAIVED NET WAIVED
- ---- --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities
Money Market $1,731,370 $ 122,233 $ 176,604 $ 0 NA NA
Prime Money Market $2,897,503 $ 111,313 $ 304,170 $ 0 NA NA
Municipal Money Market $ 699,142 $ 92,641 $ 75,012 $ 0 NA NA
Ohio Municipal Money Market $ 82,050 $ 61,415 $ 11,806 $ 0 NA NA
Income Equity $ 308,619 $ 0 $ 27,163 $ 0 NA NA
Disciplined Value $ 687,537 $ 0 $ 65,713 $ 0 NA NA
Growth Opportunities $ 631,524 $ 0 $ 59,053 $ 0 NA NA
Equity Index $ 90,704 $ 195,567 $ 30,329 $ 0 NA NA
Large Company Value $ 317,839 $ 27,527 $ 48,604 $ 0 NA NA
Asset Allocation $ 62,570 $ 4,439 $ 6,304 $ 0 NA NA
International Equity Index $ 285,929 $ 0 $ 31,831 $ 0 NA NA
Large Company Growth $ 495,980 $ 0 $ 76,459 $ 0 NA NA
Income Bond $ 763,202 $ 6,504 $ 67,577 $ 0 NA NA
Limited Volatility Bond $ 653,915 $ 2,136 $ 60,084 $ 0 NA NA
Intermediate Tax-Free Bond $ 305,651 $ 0 $ 31,017 $ 0 NA NA
Municipal Income $ 198,808 $ 79,249 $ 28,635 $ 0 NA NA
Ohio Municipal Bond $ 124,734 $ 32,085 $ 13,946 $ 0 NA NA
Government Bond $ 414,276 $ 14,952 $ 53,984 $ 0 NA NA
Ultra Short-Term Income $ 68,313 $ 72,059 $ 8,546 $ 0 NA NA
Intermediate Bond $ 208,925 $ 0 $ 26,063 $ 0 NA NA
Treasury Only Money Market $ 86,438 $ 0 $ 33,470 $ 0 NA NA
Government Money Market $ 273,911 $ 23,414 $ 88,367 $ 0 NA NA
Kentucky Municipal Bond $ 24,352*** $ 1,554*** $ 6,155*** $ 0*** $ 77,852**** $ 0****
Institutional Prime
Money Market NA* NA* NA* NA* NA NA
Treasury Money Market NA* NA* NA* NA* NA NA
Tax-Exempt Money Market NA* NA* NA* NA* NA NA
Arizona Municipal Bond NA* NA* NA* NA* NA NA
Texas Tax-Free Bond NA* NA* NA* NA* NA NA
W. Virginia Municipal Bond NA* NA* NA* NA* NA NA
Louisiana Municipal Bond $ 297,746+ $ 99,248+ NA NA NA NA
Value Growth $ 295,695+ NA+ NA NA NA NA
Gulf South Growth $ 134,419+ NA+ NA NA NA NA
Income NA* NA* NA* NA* NA NA
Investor Growth NA* NA* NA* NA* NA NA
Investor Growth & Income NA* NA* NA* NA* NA NA
Investor Aggressive Growth NA* NA* NA* NA* NA NA
Investor Conservative
Growth NA* NA* NA* NA* NA NA
Investor Balanced NA* NA* NA* NA* NA NA
Investor Fixed Income NA* NA* NA* NA* NA NA
</TABLE>
* As of June 30, 1995, the Fund had not commenced operations.
** These were fees paid by 440 to Banc One Advisors pursuant to the
Sub-Administration Agreement for the period from April 1, 1995 through
June 30, 1995.
*** These fees were paid from January 20, 1995 through June 30, 1995.
**** These fees were paid from February 1, 1994 through January 19, 1995.
+ These fees were paid for fiscal year ended November 30, 1995 to Goldman
Sachs Asset Management, the Funds' prior administrator.
61
<PAGE> 307
Unless sooner terminated, the Administration Agreement between the
Trust and The One Group Services Company will continue in effect through
November 30, 1997. The Administration Agreement thereafter shall be renewed
automatically for successive one year terms, unless written notice not to renew
is given by the non-renewing party to the other party at least sixty days prior
to the expiration of the then-current term. The Administration Agreement will be
reviewed and ratified at least annually by the Trust's Board of Trustees,
provided that the Administration Agreement is also reviewed and ratified by the
majority of the Trust's Trustees who are not parties to the Administration
Agreement or interested persons (as defined in the 1940 Act) of any party to the
Administration Agreement, by vote cast in person at a meeting called for the
purpose of reviewing and ratifying the Administration Agreement. The
Administration Agreement is terminable with respect to a particular Trust only
upon mutual agreement of the parties to the Administration Agreement and for
cause (as defined in the Administration Agreement) by the party alleging cause,
on not less than sixty days' notice by the Trust's Board of Trustees or by The
One Group Services Company.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered by
the Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or
negligence in the performance of its duties, or from the reckless disregard by
it of its obligations and duties thereunder.
DISTRIBUTOR
The One Group Services Company serves as Distributor to each Fund of
the Trust pursuant to its Distribution Agreement with the Trust (the
"Distribution Agreement"). The Board of Trustees of the Trust approved The One
Group Services Company as the sole Distributor beginning November 1, 1995.
Unless otherwise terminated, the Distribution Agreement will continue in effect
until November 30, 1997 and will continue from year to year if approved at least
annually (i) by the Trust's Board of Trustees or by the vote of a majority of
the outstanding Shares of the Funds (see "ADDITIONAL INFORMATION--
Miscellaneous," in this Statement of Additional Information) that are parties to
the Distribution Agreement, and (ii) by the vote of a majority of the Trustees
of the Trust who are not parties to the Distribution Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. The agreement may be terminated in the event of its
assignment, as defined in the 1940 Act. The One Group Services Company is a
broker-dealer registered with the Securities and Exchange Commission, and is a
member of the National Association of Securities Dealers, Inc.
DISTRIBUTION PLAN
The operation and fees with respect to Class A Shares, Class B Shares,
Class C Shares, and Service Class Shares of the Trust payable under the Trust's
Distribution and Shareholder Services Plans, to which Class A Shares, Class B
Shares, Class C Shares, and Service Class Shares of each Fund of the Trust are
subject, are described in each such Fund's Prospectuses and in the Multiple
Class Plan.
The Distribution and Shareholder Services Plan with respect to Class A
Shares (the "Distribution Plan") was initially approved on July 28, 1989 by the
Trust's Board of Trustees, including a majority of the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the Distribution Plan (the "Independent
Trustees"). The Distribution Plan originally applied to the single class of
Shares of each Fund of the Trust that existed prior to the offering of the
Funds' Shares as five separate classes. An amendment to the Distribution Plan
was approved by the Independent Trustees on October 21, 1991, and became
effective on February 7, 1992. Such amendment limited fees under the
Distribution Plan only to the Class A Shares of each Fund. The Distribution Plan
was amended again on February 11, 1993 in order to make Retirement Class Shares
(now the Service Class Shares) subject to distribution fees. The Distribution
Plan was further amended on February 29, 1996, to eliminate certain "defensive"
provisions of the Distribution Plan. A Distribution and Shareholder Services
Plan (the "CDSC Plan") for Class B and Class C Shares was initially approved on
August 12, 1993 by the Independent Trustees. The CDSC Distribution Plan was
re-executed on December 13, 1995 and amended on February 20, 1997. Prior to
February 7, 1992, distribution fees were waived with respect to every Fund of
the Trust except the U.S. Treasury Securities Money Market Fund and the Prime
Money Market Fund.
During the fiscal year ending June 30, 1997, the distribution fees paid
by the Class A, Class B and Service Class Shares (formerly Retirement Class
Shares) of the Trust to The One Group Services Company were as follows:
62
<PAGE> 308
THE ONE GROUP DISTRIBUTION FEES PAID FOR THE FISCAL YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
SERVICE
FUND DISTRIBUTOR CLASS A CLASS B CLASS
<S> <C> <C> <C> <C>
U.S. Treasury Securities Money Market One Group Ser. $ 850,746 $ 375 $ 0
Prime Money Market One Group Ser. $ 840,900 $ 2,280 $ 0
Municipal Money Market One Group Ser. $ 105,745 NA $ 0
Ohio Municipal Money Market One Group Ser. $ 92,006 NA $ 0
Income Equity One Group Ser. $ 104,017 $ 483,517 NA
Disciplined Value One Group Ser. $ 54,778 $ 179,949 NA
Growth Opportunities One Group Ser. $ 80,764 $ 226,269 NA
Equity Index One Group Ser. $ 145,478 $ 901,878 NA
Large Company Value One Group Ser. $ 30,071 $ 60,403 NA
Asset Allocation One Group Ser. $ 57,839 $ 283,235 NA
International Equity Index One Group Ser. $ 27,165 $ 73,443 NA
Large Company Growth One Group Ser. $ 237,595 $ 865,711 NA
Income Bond One Group Ser. $ 31,402 $ 79,320 NA
Limited Volatility Bond One Group Ser. $ 43,944 $ 42,962 NA
Intermediate Tax-Free Bond One Group Ser. $ 16,954 $ 23,312 NA
Municipal Income One Group Ser. $ 78,506 $ 264,557 NA
Ohio Municipal Bond One Group Ser. $ 40,806 $ 107,071 NA
Government Bond One Group Ser. $ 92,225 $ 101,562 NA
Ultra Short-Term Income One Group Ser. $ 31,166 $ 14,247 NA
</TABLE>
63
<PAGE> 309
<TABLE>
<CAPTION>
SERVICE
FUND DISTRIBUTOR CLASS A CLASS B CLASS
<S> <C> <C> <C> <C>
Intermediate Bond One Group Ser. $ 37,030 $ 71,731 NA
Treasury Only Money Market One Group Ser. NA NA NA
Government Money Market One Group Ser. NA NA NA
Kentucky Municipal Bond One Group Ser. $ 18,364 $ 17,792 NA
Treasury Money Market One Group Ser. NA* NA* NA*
Tax-Exempt Money Market One Group Ser. NA* NA* NA*
Arizona Municipal Bond One Group Ser. $ 556+ 0 NA
Texas Tax-Free Bond One Group Ser. $ 0* $ 0* NA*
W. Virginia Municipal Bond One Group Ser. $ 553+ $ 1,097+ NA
Louisiana Municipal Bond One Group Ser. $125,917 $ 32,207 NA
Value Growth One Group Ser. $ 98,729 $ 69,685 NA
Small Capitalization One Group Ser. $ 43,358 $ 32,113 NA
Income One Group Ser. NA* NA* NA*
Investor Growth ** One Group Ser. $ 1,739 $ 13,821 NA
Investor Growth & Income ** One Group Ser. $ 2,040 $ 17,155 NA
Investor Aggressive Growth One Group Ser. NA* NA* NA*
Investor Conservative Growth ** One Group Ser. $ 653 $ 4,800 NA
Investor Balanced ** One Group Ser. $ 846 $ 11,720 NA
Investor Fixed Income One Group Ser. NA* NA* NA*
Treasury & Agency One Group Ser. $ 13+ $ 17+ NA
</TABLE>
* These funds had not commenced operations as of June 30, 1997.
** These fees were paid from December 10, 1996 to June 30, 1997.
+ The fees were paid from January 20, 1997 to June 30, 1997.
In accordance with Rule 12b-1 under the 1940 Act, the Distribution Plan
and CDSC Plan may be terminated with respect to the Class A Shares, Class B
Shares, Class C Shares or Service Class Shares of any Fund by a vote of a
majority of the Independent Trustees, or by a vote of a majority of the
outstanding Class A Shares, Class B Shares, Class C Shares or Service Class
Shares, respectively, of that Fund. The Distribution Plan and CDSC Plan may be
amended by vote of the Trust's Board of Trustees, including a majority of the
Independent Trustees, cast in person at a meeting called for such purpose,
except that any change in the Distribution Plan or Class B Distribution Plan
that would materially increase the distribution fee with respect to the Class A
Shares, Class B Shares, Class C Shares or Service Class Shares of a Fund
requires the approval of that Fund's Class A, Class B, Class C or Service Class
Shareholders, respectively. The Trust's Board of Trustees will review on a
quarterly and annual basis written reports of the amounts received and expended
under the Distribution Plan (including amounts expended by the Distributor to
Participating Organizations pursuant to the Servicing Agreements entered into
under the Distribution Plan) indicating the purposes for which such expenditures
were made.
64
<PAGE> 310
CUSTODIAN AND TRANSFER AGENT
Cash and securities owned by the Funds of the Trust are held by State
Street Bank and Trust Company ("State Street") as Custodian. State Street serves
the respective Funds as Custodian pursuant to a Custodian Agreement with the
Trust (the "Custodian Agreement"). Under the Custodian Agreement, State Street
(i) maintains a separate account or accounts in the name of each Fund; (ii)
makes receipts and disbursements of money on behalf of each Fund; (iii) collects
and receives all income and other payments and distributions on account of the
Funds' portfolio securities; (iv) responds to correspondence from security
brokers and others relating to its duties; and (v) makes periodic reports to the
Trust's Board of Trustees concerning the Trust's operations. State Street may,
at its own expense, open and maintain a sub-custody account or accounts on
behalf of the Trust, provided that State Street shall remain liable for the
performance of all of its duties under the Custodian Agreement.
Bank One Trust Company, N.A. serves as Sub-Custodian in connection with
the Trust's securities lending activities, pursuant to an agreement between
State Street and Bank One Trust Company. Bank One Trust Company receives a fee
paid by the Trust.
Rules adopted under the 1940 Act permit the Trust to maintain its
securities and cash in the custody of certain eligible banks and securities
depositories. The Trust intends to select foreign custodians or sub-custodians
to maintain foreign securities of the International Equity Index Fund pursuant
to such rules, following a consideration of a number of factors, including, but
not limited to, the reliability and financial stability of the institution; the
ability of the institution to perform custodial services for the Trust; the
reputation of the institution in its national market; the political and economic
stability of the country in which the institution is located; and the risks of
potential nationalization or expropriation of Trust assets. In addition, the
1940 Act requires that foreign bank sub-custodians, among other things have
Shareholder equity in excess of $200 million, have no lien on the Trust's assets
and maintain adequate and accessible records.
State Street Bank & Trust ("State Street") serves as Transfer Agent and
Dividend Disbursing Agent for each Fund pursuant to Transfer Agency Agreements
with the Trust (the "Transfer Agency Agreement"). Under the Transfer Agency
Agreements, State Street has agreed (i) to issue and redeem Shares of the Trust;
(ii) to address and mail all communications by the Trust to its Shareholders,
including reports to Shareholders, dividend and distribution notices, and proxy
material for its meetings of Shareholders; (iii) to respond to correspondence or
inquiries by Shareholders and others relating to its duties; (iv) to maintain
Shareholder accounts and certain sub-accounts; and (v) to make periodic reports
to the Trust's Board of Trustees concerning the Trust's operations.
EXPERTS
The financial statements of the Trust for the fiscal year ended June
30, 1997 are incorporated by reference in this Statement of Additional
Information, have been audited by Coopers & Lybrand L.L.P., independent
accountants, as set forth in their reports appearing elsewhere herein, and are
included in reliance upon such reports and on the authority of such firm as
experts in auditing and accounting.
The financial statements for the predecessor funds of the Intermediate
Bond Fund and Large Company Growth Fund, Sun Eagle Intermediate Fixed Income
Fund and Sun Eagle Equity Growth Fund, respectively, for the fiscal year ended
June 30, 1993 and for the period from February 28, 1992 (commencement of
operations of each Fund) to June 30, 1992 are incorporated by reference in this
Statement of Additional Information, have been audited by KPMG Peat Marwick LLP,
independent accountants, and are included in reliance upon the authority of such
firm as experts in auditing and accounting.
The financial statements for the predecessor Fund of the Kentucky
Municipal Bond Fund, the Trademark Kentucky Municipal Bond Fund, for the period
from February 1, 1994 to January 19, 1995, and for the period from March 12,
1993 (commencement of operations) to January 31, 1994 are incorporated by
reference in this Statement of Additional Information, have been audited by KPMG
Peat Marwick LLP, independent accountants, and are included in reliance upon the
authority of such firm as experts in auditing and accounting.
The financial statements for the predecessor funds of the Louisiana
Municipal Bond Fund, the Value Growth Fund, and the Gulf South Growth Fund, the
Paragon Louisiana Tax-Free Fund, the Paragon Value Growth Fund and the Paragon
Gulf South Growth Fund, for the fiscal year ended November 30, 1995 are
incorporated by reference in this Statement of Additional Information, have been
audited by Price Waterhouse LLP, independent accountants, and are included in
reliance upon such reports and on the authority of such firm as experts in
auditing and accounting.
The law firm of Ropes & Gray, One Franklin Square, 1301 K Street, N.W.,
Suite 800 East, Washington, D.C. 20005 is counsel to the Trust. From time to
time, Ropes & Gray have rendered legal services to Bank One, Milwaukee and Bank
One, Wisconsin Trust Company, NA.
65
<PAGE> 311
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES
The Trust is a Massachusetts Business Trust. The Trust's Declaration of
Trust was filed with the Secretary of State of the Commonwealth of Massachusetts
on May 23, 1985 and authorizes the Board of Trustees to issue an unlimited
number of Shares, which are units of beneficial interest, without par value. The
Trust's Declaration of Trust authorizes the Board of Trustees to establish one
or more series of Shares of the Trust, and to classify or reclassify any series
into one or more classes by setting or changing in any one or more respects the
preferences, designations, conversion, or other rights, restrictions, or
limitations as to dividends, conditions of redemption, qualifications, or other
terms applicable to the Shares of such class, subject to those matters expressly
provided for in the Declaration of Trust, as amended, with respect to the Shares
of each series of the Trust. The Trust presently includes 40 series of Shares,
which represent interests in the Prime Money Market Fund, the U.S. Treasury
Securities Money Market Fund, the Municipal Money Market Fund, the Ohio
Municipal Money Market Fund, the Income Equity Fund, the Disciplined Value Fund,
the Growth Opportunities Fund, the Value Growth Fund, the Small Capitalization
Fund, the Large Company Value Fund, the Large Company Growth Fund, the
International Equity Index Fund, the Equity Index Fund, the Asset Allocation
Fund, the Income Bond Fund, the Limited Volatility Bond Fund, the Intermediate
Bond Fund, the Government Bond Fund, the Ultra Short-Term Income Fund, the
Income Fund, the Investor Growth Fund, the Investor Growth & Income Fund, the
Investor Aggressive Growth Fund, the Investor Fixed Income Fund, the Investor
Conservative Growth Fund, the Investor Balanced Fund, the Municipal Income Fund,
the Intermediate Tax-Free Bond Fund, the Ohio Municipal Bond Fund, the Texas
Tax-Free Bond Fund, the West Virginia Municipal Bond Fund, the Kentucky
Municipal Bond Fund, the Louisiana Municipal Bond Fund, the Arizona Municipal
Bond Fund, the Treasury Money Market Fund, the Treasury Only Money Market Fund,
the Government Money Market Fund, the Tax Exempt Money Market Fund, the
Institutional Prime Money Market Fund and the Treasury and Agency Fund. The
Funds of the Trust (other than the Institutional Money Market Funds, the U.S.
Treasury Securities Money Market Fund, the Prime Money Market Fund, the
Municipal Money Market Fund and the Ohio Municipal Money Market Fund) offer
Shares in four separate classes: Fiduciary Shares, Class A Shares, Class B and
Class C Shares. The U.S. Treasury Securities Money Market Fund and the Prime
Money Market Fund offer Fiduciary Class Shares, Class A Shares, Class B Shares,
Class C Shares, Fiduciary Class Shares and Service Class Shares. The
Institutional Money Market Funds offer only Fiduciary Class Shares. The
Municipal Money Market Fund and the Ohio Municipal Money Market Funds offer
Fiduciary Class, Class A and Class C Shares. See the relevant Prospectus for
those Funds for more details.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Trust's Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Trust,
Shares of a Fund are entitled to receive the assets available for distribution
belonging to the Fund, and a proportionate distribution, based upon the relative
asset values of the respective Funds, of any general assets not belonging to any
particular Fund which are available for distribution.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding Shares of
each Fund affected by the matter. For purposes of determining whether the
approval of a majority of the outstanding Shares of a Fund will be required in
connection with a matter, a Fund will be deemed to be affected by a matter
unless it is clear that the interests of each Fund in the matter are identical,
or that the matter does not affect any interest of the Fund. Under Rule 18f-2,
the approval of an investment advisory agreement or any change in investment
policy would be effectively acted upon with respect to a Fund only if approved
by a majority of the outstanding Shares of such Fund. However, Rule 18f-2 also
provides that the ratification of independent public accountants, the approval
of principal underwriting contracts, and the election of Trustees may be
effectively acted upon by Shareholders of the Trust voting without regard to
series.
Class A Shares, Class B Shares, Class C Shares and Service Class Shares
of a Fund have exclusive voting rights with respect to matters pertaining to the
Fund's Distribution Plan.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, holders of units of beneficial interest in a
business trust may, under certain circumstances, be held personally liable as
partners for the obligations of the trust. However, the Trust's Declaration of
Trust provides that Shareholders shall not be subject to any personal liability
for the obligations of the Trust, and that every written agreement, obligation,
instrument, or undertaking made by the Trust shall contain a provision to the
effect that the Shareholders are not personally liable thereunder. The
Declaration of Trust provides for indemnification out of the trust property of
any Shareholder held personally liable solely by reason of his being or having
been a Shareholder. The Declaration of Trust also provides that the Trust shall,
upon request, assume the defense of any claim made against any Shareholder for
any act or obligation of the Trust, and shall satisfy any judgment thereon.
Thus, the risk of a Shareholder incurring financial loss on account of
Shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations.
66
<PAGE> 312
The Declaration of Trust states further that no Trustee, officer, or
agent of the Trust shall be personally liable in connection with the
administration or preservation of the assets of the trust or the conduct of the
Trust's business; nor shall any Trustee, officer, or agent be personally liable
to any person for any action or failure to act except for his own bad faith,
willful misfeasance, gross negligence, or reckless disregard of his duties. The
Declaration of Trust also provides that all persons having any claim against the
Trustees or the Trust shall look solely to the assets of the trust for payment.
PERFORMANCE
From time to time, the Funds may advertise yield, total return and/or
distribution rate. These figures will be based on historical earnings and are
not intended to indicate future performance. The yield of a Fund refers to the
annualized income generated by an investment in the Fund over a specified 30-day
period. The yield is calculated by assuming that the income generated by the
investment during that period is generated over a one-year period and is shown
as a percentage of the investment.
Total return is the change in value of an investment in a Fund over a
given period, assuming reinvestment of any dividends and capital gains. A
cumulative total return reflects an actual rate of return over a stated period
of time. An average annual total return is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period. Average annual total
returns smooth out variations in performance; they are not the same as actual
year-by-year results.
The distribution rate is computed by dividing the total amount of the
dividends per share paid out during the past period by the maximum offering
price or month-end net asset value depending on the class of a Fund. This figure
is then "annualized" (multiplied by 365 days and divided by the applicable
number of days in the period). Funds with a front-end sales charge would
incorporate the offering price into the distribution yield in place of month-end
net asset value.
Distribution rate is a measure of the level of income paid out in cash
to Shareholders over a specified period. It differs from yield and total return
and is not intended to be a complete measure of performance. Furthermore, the
distribution rate may include return of principal and/or capital gains. Total
return is the change in value of a hypothetical investment over a given period
assuming reinvestment of dividends and capital gain distributions. The yield
refers to the cumulative 30-day rolling net investment income, divided by
maximum offering price and multiplied by average shares outstanding during this
period.
Further information about the performance of each class of the Funds is
contained in the Trust's Annual Report to Shareholders for The One Group, which
may be obtained without charge by calling 1-800-480-4111.
CALCULATION OF PERFORMANCE DATA
The yield for each Money Market Funds, and the Institutional Money
Market Funds was computed with respect to each class of Shares by determining
the percentage net change, excluding capital changes, in the value of an
investment in one Share of the particular class of the Fund over the base
period, and multiplying the net change by 365/7 (or approximately 52 weeks). The
effective yield of each class of each Fund represents a compounding of the yield
by adding 1 to the number representing the percentage change in value of the
investment during the base period, raising that sum to a power equal to 365/7,
and subtracting 1 from the result. No performance data is available with respect
to the Tax Exempt Money Market, Treasury Money Market and Institutional Prime
Money Market Fund because those Funds had not commenced operations as of June
30, 1997.
MONEY MARKET FUNDS
Fiduciary Shares
<TABLE>
<CAPTION>
INCEPTION 7-DAY YIELD
DATE 6/30/97
<S> <C> <C>
U.S. Treasury Securities 09/09/85(2) 5.03%
Prime 08/01/85(2) 5.25%
Municipal 06/04/87 3.63%
Ohio Municipal(1) 06/09/93 3.73%
</TABLE>
Class A Shares
<TABLE>
<CAPTION>
INCEPTION 7-DAY YIELD
DATE 6/30/97
<S> <C> <C>
U.S. Treasury Securities 02/18/92 4.78%
Prime 02/18/92 5.00%
Municipal 02/18/92 3.38%
Ohio Municipal(1) 01/26/93 3.48%
</TABLE>
67
<PAGE> 313
Institutional Shares
<TABLE>
<CAPTION>
INCEPTION 7-DAY YIELD
DATE 6/30/97
<S> <C> <C>
Treasury Only Money 04/16/93 5.12%
Market
Government Money Market 06/14/93 5.30%
</TABLE>
Class B Shares
<TABLE>
<CAPTION>
INCEPTION 7-DAY YIELD
DATE 6/30/97
<S> <C> <C>
U.S. Treasury Securities 11/01/96 4.03%
Prime 11/01/96 4.25%
</TABLE>
(1) A portion of the income may be subject to alternative minimum tax.
(2) Data for performance purposes begins 1/1/87 (Fiduciary Class).
The tax equivalent yields for the classes of the Municipal Money
Market, Ohio Municipal Money Market, and Tax Exempt Money Market Funds are
computed by dividing that portion of the Fund's yield (with respect to a
particular class) which is tax-exempt by 1 minus a stated income tax rate and
adding the product to that portion, if any, of the yield of the Fund (with
respect to a particular class) that is not tax-exempt. The tax equivalent yields
for the classes of the Municipal Money Market Fund contained in the following
paragraph were computed based on an assumed effective federal income tax rate of
39.6%. No such data was provided for the Tax Exempt Money Market Fund because it
had not commenced operations as of June 30, 1997. The tax equivalent effective
yield for the classes of the Municipal Money Market Fund, Ohio Municipal Money
Market Fund, and Tax Exempt Money Market Funds are computed by dividing that
portion of the effective yield of the Fund (with respect to a particular class)
which is tax-exempt by 1 minus a stated income tax rate and adding the product
to that portion, if any, of the effective yield of the Fund (with respect to a
particular class) that is not tax-exempt.
TAX-EQUIVALENT YIELD
<TABLE>
<CAPTION>
FIDUCIARY CLASS A
7 DAY 7 DAY
YIELD 28% TAX 39.6% TAX YIELD 28% TAX 39.6% TAX
----- ------- --------- ----- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Municipal Money Market 3.63% 5.04% 6.01% 3.38% 4.69% 5.60%
Ohio Municipal 3.73% 5.18% 6.18% 3.48% 4.83% 5.76%
Money Market
</TABLE>
The performance of the funds may be compared in publications to the
performance of various indices and investments (such as other mutual funds) for
which reliable performance data is available, as well as averages, performance
rankings or other information prepared by recognized mutual fund statistical
services, as set forth below.
Performance information showing a Fund's total return and/or 30-day
yield with respect to a particular class may be presented from time to time in
advertising and sales literature regarding the Equity Funds, the Bond Funds, the
Funds of Funds, and the Municipal Bond Funds. A 30-day yield is calculated by
dividing the net investment income per-share earned during the 30-day base
period by the maximum offering price per share on the last day of the period,
according to the following formula:
a-b
------
30-Day Yield = 2[(cd +1)6-1]
In the above formula, "a" represents dividends and interest earned by a
particular class during the 30-day base period; "b" represents expenses accrued
to a particular class for the 30-day base period (net of reimbursements); "c"
represents the average daily number of Shares of a particular class outstanding
during the 30-day base period that were entitled to receive dividends; and "d"
represents the maximum offering price per share of a particular class on the
last day of the 30-day base period.
From time to time the tax equivalent 30-day yield of a particular class
of a Municipal Bond Fund may be presented in advertising and sales literature.
The tax equivalent 30-day yield will be computed by dividing that portion of a
Fund's yield (respecting a particular class) which is tax-exempt by 1 minus a
stated income tax rate and adding the product to that portion, if any, of the
yield of the Fund (respecting a particular class) that is not tax-exempt. The
tax equivalent 30-day yields for a Municipal Bond Fund (respecting a particular
class) will, unless otherwise noted, be computed based on an assumed effective
federal income tax rate of 31%. No tax equivalent 30-day yield information is
available for the Texas Tax-Free Bond Fund.
68
<PAGE> 314
A Fund's respective cumulative total return and average annual total
return was determined by calculating the change in the value of a hypothetical
$1,000 investment in a particular class of the Fund for each of the periods
shown. Cumulative total return for a particular class of a Fund is computed by
determining the rate of return over the applicable period that would equate the
initial amount invested to the ending redeemable value of the investment. The
cumulative return is calculated as the total dollar increase or decrease in the
value of an account assuming reinvestment of all distributions divided by the
original initial investment. The average annual return for a particular class of
a Fund is computed by determining the average annual compounded rate of return
over the applicable period that would equate the initial amount invested to the
ending redeemable value of the investment. The ending redeemable value includes
dividends and capital gain distributions reinvested at net asset value. The
resulting percentages indicated the positive or negative investment results that
an investor would have experienced from changes in share price and reinvestment
of dividends and capital gains distributions.
69
<PAGE> 315
FIDUCIARY SHARES
FIXED INCOME FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
30-DAY
INCEPTION LIFE OF SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Income Bond(2) 07/02/87 8.10% 7.97% 6.37% 7.24% 7.23% 6.70%
Limited Volatility Bond 09/04/90 6.75% 6.61% 5.75% NA 7.09% 6.18%
Intermediate Tax-Free(2) 09/04/90 7.76% 6.63% 5.86% NA 6.83% 4.57%
Ohio Municipal Bond(2) 07/02/91 7.22% 6.32% 6.03% NA 6.78% 4.31%
Municipal Income(2) 02/09/93 7.49% 6.49% NA NA 5.43% 5.20%
Government Bond 02/08/93 8.10% 7.93% NA NA 5.52% 6.24%
Ultra Short-Term Income 02/02/93 7.14% 5.96% NA NA 5.00% 6.08%
Intermediate Bond 02/28/92 7.68% 7.57% 6.46% NA 6.63% 6.35%
Kentucky Municipal Bond(2) 03/12/93 6.74% 6.59% NA NA 5.15% 4.34%
Louisiana Municipal Bond(2) 12/29/89 6.81% 6.27% 5.96% NA 6.83% 4.16%
West Virginia Municipal 6.60% 7.39% 4.33%
Bond(1),(2) 01/21/97 7.37% 5.86% 5.76%
Arizona Municipal Bond1,(2) 01/21/97 7.27% 6.09% 5.88% 6.92% 7.38% 4.36%
Treasury & Agency(1) 01/21/97 6.94% 7.37% 6.05% NA 7.33% 6.04%
</TABLE>
EQUITY FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Disciplined Value 03/02/89 20.56% 18.88% 14.70% NA 12.51% 1.10%
Income Equity 07/02/87 30.90% 25.43% 17.85% 13.11% 13.10% 1.49%
Equity Index 07/02/91 34.30% 28.46% 19.25% NA 18.03% 1.56%
Large Company Value 03/01/91 27.10% 20.92% 13.90% NA 13.63% 1.61%
Growth Opportunities 03/02/89 22.75% 22.36% 17.29% NA 16.89% %
International Equity Index(3) 10/28/92 14.64% 9.93% NA NA 13.57% NA
Asset Allocation 04/05/93 20.16% 16.97% NA NA 11.81% %
Large Company Growth 02/28/92 33.11% 23.93% 18.57% NA 17.11% 0.40%
Gulf South Growth 07/01/91 13.44% 15.48% 15.06% NA 16.06% -.034%
Value Growth 12/29/89 31.97% 22.97% 17.24% NA 16.10% 0.81%
</TABLE>
THE ONE GROUP INVESTOR FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Investor Conservative Growth 12/10/96 NA NA NA NA 6.00% NA
Investor Balanced 12/10/96 NA NA NA NA 8.48% NA
Investor Growth & Income 12/10/96 NA NA NA NA 10.87% NA
Investor Growth 12/10/96 NA NA NA NA 13.50% NA
</TABLE>
70
<PAGE> 316
CLASS A SHARES
FIXED INCOME FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Income Bond(2) 02/18/92 7.85% 7.64% 6.14% NA 6.42% 6.16%
With Sales Charge 2.99% 5.98% 5.16% NA 5.51%
Limited Volatility Bond 02/18/92 6.47% 6.33% 5.47% NA 5.77% 5.75%
With Sales Charge 3.29% 5.25% 4.83% NA 5.17%
Intermediate Tax-Free(2) 02/18/92 7.39% 6.38% 5.61% NA 5.82% 4.13%
With Sales Charge 2.56% 4.76% 4.64% NA 4.91%
Ohio Municipal Bond(2) 02/18/93 6.95% 6.06% 5.84% NA 6.19% 3.88%
With Sales Charge 2.09% 4.44% 4.88% NA 5.28%
Municipal Income(2) 02/23/93 7.24% 6.26% NA NA 5.17% 4.73%
With Sales Charge 2.38% 4.63% NA NA 4.06%
Government Bond 03/05/93 7.83% 7.70% NA NA 4.91% 5.72%
With Sales Charge 2.98% 6.06% NA NA 3.80%
Ultra Short-Term Income 03/10/93 7.00% 5.75% NA NA 4.79% 5.66%
With Sales Charge 3.82% 4.70% NA NA 4.05%
Intermediate Bond 11/30/94 7.40% NA NA NA 8.72% 5.82%
With Sales Charge 2.52% NA NA NA 6.80%
Kentucky Municipal Bond(2) 01/20/95 6.46% 6.28% NA NA 4.94% 3.90%
With Sales Charge 1.70% 4.66% NA NA 3.82%
Louisiana Municipal Bond(2) 12/29/89 6.55% 6.15% 5.89% NA 6.79% 3.73%
With Sales Charge 1.73% 4.54% 4.93% NA 6.13%
West Virginia Municipal Bond(1,2) 01/21/97 7.47% 5.72% 5.57% 6.37% 7.15% 3.89%
With Sales Charge 2.65% 4.11% 4.60% 5.89% 6.79%
Arizona Municipal Bond(1,2) 01/21/97 5.56% 5.35% 5.33% 6.51% 7.03% 3.93%
With Sales Charge 0.79% 3.75% 4.36% 6.02% 6.75%
Treasury & Agency(1) 01/21/97 6.79% 7.14% 5.81% NA 7.08% 5.63%
With Sales Charge 3.60% 6.08% 5.16% NA 6.73%
</TABLE>
EQUITY FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Disciplined Value 02/18/92 20.21% 18.46% 14.45% NA 13.65% 0.81%
With Sales Charge 14.82% 16.66% 13.40% NA 12.68
Income Equity 02/18/92 30.39% 25.10% 17.55% NA 16.43% 1.19%
With Sales Charge 24.52% 23.19% 16.46% NA 15.43%
Equity Index 02/18/92 33.94% 28.11% 18.98% NA 17.67% 1.26%
With Sales Charge 27.87% 26.14% 17.89% NA 16.66
Large Company Value 02/18/92 26.90% 20.49% 13.72% NA 12.70% 1.29%
With Sales Charge 21.15% 18.64% 12.68% NA 11.73%
Growth Opportunities 02/18/92 22.52% 22.10% 17.12% NA 13.24% -0.53%
With Sales Charge 17.03% 20.24% 16.05% NA 12.28%
International Equity Index(3) 04/23/93 14.31% 9.71% NA NA 10.43% NA
With Sales Charge 9.18% 7.99% NA NA 9.18%
Asset Allocation 04/02/93 19.85% 16.67% NA NA 11.52% 2.80%
With Sales Charge 14.46% 14.90% NA NA 10.31%
Large Company Growth 01/01/94 32.57% 23.47% NA NA 20.39% 0.15%
With Sales Charge 26.57% 21.58% NA NA 18.74%
Gulf South Growth 07/01/91 13.52% 15.36% 14.99% NA 16.00% -0.55%
With Sales Charge 8.38% 13.60% 13.93% NA 15.11%
Value Growth 12/29/89 31.53% 22.80% 17.15% NA 16.04% 0.54%
With Sales Charge 25.61% 20.92% 16.06% NA 15.33%
</TABLE>
71
<PAGE> 317
THE ONE GROUP INVESTOR FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Investor Conservative Growth 12/10/96 NA NA NA NA 5.46% NA
With Sales Charge 0.72%
Investor Balanced 12/10/96 NA NA NA NA 8.41% NA
With Sales Charge 3.53%
Investor Growth & Income 12/10/96 NA NA NA NA 11.50% NA
With Sales Charge 6.48%
Investor Growth 12/10/96 NA NA NA NA 12.84% NA
With Sales Charge 7.76%
</TABLE>
CLASS B SHARES
FIXED INCOME FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Income Bond(2) 01/14/94 7.15% 7.11% NA NA 4.48% 5.79%
With Sales Charge 3.15% 6.24% NA NA 3.73%
Limited Volatility Bond 01/14/94 5.74% 5.73% NA NA 4.39% 5.42%
With Sales Charge 2.74% 5.43% NA NA 4.14%
Intermediate Tax-Free(2) 01/14/94 6.82% 5.73% NA NA 3.56% 3.67%
With Sales Charge 2.82% 4.84% NA NA 2.78%
Ohio Municipal Bond(2) 01/14/94 6.26% 5.41% NA NA 3.44% 3.41%
With Sales Charge 2.26% 4.51% NA NA 2.66%
Municipal Income(2) 01/14/94 6.55% 5.59% NA NA 4.22% 4.30%
With Sales Charge 2.55% 4.71% NA NA 3.45%
Government Bond 01/14/94 7.14% 7.04% NA NA 4.52% 5.34%
With Sales Charge 3.14% 6.18% NA NA 3.77%
Ultra Short-Term Income 01/14/94 6.22% 5.21% NA NA 4.47% 5.33%
With Sales Charge 3.22% 4.91% NA NA 4.22%
Intermediate Bond 11/30/94 6.83% NA NA NA 7.51% 5.44%
With Sales Charge 2.83% NA NA NA 6.47%
Kentucky Municipal Bond(2) 03/16/95 5.81% NA NA NA 5.96% 3.44%
With Sales Charge 1.81% NA NA NA 4.32%
Louisiana Municipal Bond(2) 09/16/94 5.87% NA NA NA 5.51% 3.26%
With Sales Charge 1.87% NA NA NA 4.51%
West Virginia Municipal Bond(1,2) 01/21/97 6.63% 4.99% 4.86% 5.68% 6.46% 3.43%
With Sales Charge 2.63% 4.07% 4.69% 5.68% 6.46%
Arizona Municipal Bond(1,2) 01/21/97 4.68% 4.60% 4.61% 5.81% 6.33% 0.00%
With Sales Charge 0.68% 3.68% 4.44% 5.81% 6.33%
Treasury & Agency(1) 01/21/97 6.30% 6.62% 5.29% NA 6.55% 5.36%
With Sales Charge 2.30% 5.74% 5.12% NA 6.55%
</TABLE>
72
<PAGE> 318
EQUITY FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Disciplined Value 01/14/94 19.19% 17.66% 14.45% NA 13.45% 0.11%
With Sales Charge 15.19% 16.94% 13.40% NA 12.81%
Income Equity 01/14/94 29.48% 24.20% 17.55% NA 19.49% 0.52%
With Sales Charge 25.48% 23.56% 16.46% NA 18.92%
Equity Index 01/14/94 32.93% 27.12% 18.98% NA 21.11% 0.59%
With Sales Charge 28.93% 26.50% 17.89% NA 20.56%
Large Company Value 01/14/94 25.86% 19.88% 13.72% NA 15.83% 0.63%
With Sales Charge 21.86% 19.19% 12.68% NA 15.23%
Growth Opportunities 01/14/94 21.73% 21.22% 17.12% NA 14.96% -1.28%
With Sales Charge 17.73% 20.54% 16.05% NA 14.34%
International Equity Index(3) 01/14/94 13.37% 8.75% NA NA 8.54% NA
With Sales Charge 9.37% 7.90% NA NA 7.84%
Asset Allocation 01/14/94 18.90% 15.84% NA NA 11.59 2.20%
With Sales Charge 14.90% 15.10% NA NA 10.93%
Large Company Growth 01/14/94 31.74% 22.77% NA NA 10.23% -0.58%
With Sales Charge 27.74% 22.10% NA NA 18.67%
Gulf South Growth 09/09/94 12.74% NA NA NA 13.68% -1.30%
With Sales Charge 8.74% NA NA NA 12.83%
Value Growth 12/29/89 30.52% NA NA NA 20.65% -0.16%
With Sales Charge 26.52% NA NA NA 19.89%
</TABLE>
THE ONE GROUP INVESTOR FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Investor Conservative Growth 5.30%
With Sales Charge 12/10/96 NA NA NA NA 0.30% NA
Investor Balanced 8.22%
With Sales Charge 12/10/96 NA NA NA NA 3.22% NA
Investor Growth & Income 11.02%
With Sales Charge 12/10/96 NA NA NA NA 6.02% NA
Investor Growth 12/10/96 NA NA NA NA 13.88%
With Sales Charge 8.88% NA
</TABLE>
(1)The quoted performance of these funds ("Mutual Funds") advised by Banc
One Investment Advisors Corporation includes performance of certain
collective trust fund ("Commingled") accounts for periods dating back to
12/31/83 for the West Virginia Municipal Bond Fund, 11/30/79 the Arizona
Municipal Bond Fund and 4/30/88 for the Treasury & Agency Fund. Prior to the
Mutual Funds commencement of for operations on 1/21/97, the Commingled
accounts were adjusted to reflect the expenses associated with the Mutual
Funds. The Commingled accounts were not registered with the Securities and
Exchange Commission and, therefore, were not subject to the investment
restrictions imposed by law on registered mutual funds. If the Commingled
accounts had been registered, the Commingled accounts' performance may have
been adversely affected.
(2)A portion of the income may be subject to the federal alternative minimum
tax.
(3)Foreign investing involves a greater degree of risk and volatility.
Performance information showing a Fund's and/or particular Class's
distribution rate may be presented from time to time in advertising and sales
literature regarding the Bond Funds and Equity Funds. The distribution rate is
calculated as follows:
distribution yield = a/(b) x 365
-----------
c
In the formula, "a" represents dividends distributed by a particular
class during that period; "b" represents month end offer price or net asset
value for a particular class; "c" represents the number of days in the period
being calculated. "365" is the number of days in a year, used to annualize the
distribution yield.
Performance will fluctuate from time to time and is not necessarily
representative of future results. Accordingly, a Fund's performance may not
provide for comparison with bank deposits or other investments that pay a fixed
return for a stated period of time. Performance is a function of a Fund's
quality, composition, and maturity, as well as expenses allocated to the Fund.
Fees imposed upon customer accounts at a bank, with regard to Fiduciary Class
Shares and Service Class Shares, or a Participating Organization, with regard to
Class A and Class B Shares, will reduce a Fund's effective yield to customers.
Performance data for the Funds through June 30, 1997 (calculated as described
above) is as follows:
73
<PAGE> 319
The above quoted performance for the Arizona Municipal Bond Fund, the West
Virginia Municipal Bond Fund, and the Treasury & Agency Fund, respectively,
includes the performance for the Arizona Municipal Bond Investment Fund, the
West Virginia Municipal Bond Investment Fund and the Treasury Only Government
Based Investment Trust, common trust funds managed by Banc One Advisors
(collectively the "CIFs"). The quoted performance of these Funds include
performance of the corresponding CIFs for periods dating back to December 31,
1983 for the West Virginia Municipal Bond Fund, November 30, 1979 for the
Arizona Municipal Bond Fund and April 30, 1988 for the Treasury & Agency Fund.
Because the management of the Funds is substantially the same as the CIFs, the
quoted performance of the Funds will include the performance of the CIFs for the
periods prior to January 20, 1997, the effectiveness of the Trust's registration
statement as it relates to the Funds. The quoted performance will be adjusted to
reflect the deduction of estimated current fees of the Funds on a class by class
basis absent any waivers. The CIFs were not registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), and therefore were not subject
to certain investment restrictions, limitations, and diversification
requirements that are imposed by the 1940 Act and the Code. If the CIFs had been
so registered, their performance might have been adversely affected.
In addition, the performance of each class of a Fund may from time to
time be compared to that of other mutual funds tracked by mutual fund rating
services, to that of broad groups of comparable mutual funds or to that of
unmanaged indices that may assume investment of dividends but do not reflect
deductions for administrative and management costs. Further, the performance of
each class of a Fund may be compared to other funds or to relevant indices that
may calculate total return without reflecting sales charges; in which case, a
Fund may advertise its total return in the same manner. If reflected, sales
charges would reduce these total return calculations.
The Money Market and Institutional Money Market Funds may quote actual
total return performance in advertising and other types of literature compared
to indices or averages of alternative financial products available to
prospective investors. The performance comparisons may include the average
return of various bank instruments, some of which may carry certain return
guarantees offered by leading banks and thrifts, as monitored by the BANK RATE
MONITOR, and those of corporate and government security price indices of various
durations prepared by Shearson Lehman Brothers, Salomon Brothers, Inc. and the
IBC/Donoghue organization. These indices are not managed for any investment
goals.
The Money Market and Institutional Money Market Funds may also use
comparative performance information computed by and available from certain
industry and general market research and publications, such as Lipper Analytical
Services, Inc.
Statistical and performance information compiled and maintained by CDA
Technologies, Inc. and Interactive Data Corporation may also be used. CDA is a
performance evaluation service that maintains a statistical data base of
performance, as reported by a diverse universe of independently-managed mutual
funds. Interactive Data Corporation is a statistical access service that
maintains a data base of various industry indicators, such as historical and
current price/earning information and individual stock and fixed income price
and return information.
Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H. 15), may also be used. Also current rate information on municipal
debt obligations of various durations, as reported daily by the Bond Buyer, may
also be used. The BOND BUYER is published daily and is an industry-accepted
source for current municipal bond market information.
Comparative information on the Consumer Price Index may also be
included. This Index, as prepared by the U.S. Bureau of Labor Statistics, is the
most commonly used measure of inflation. It indicates the cost fluctuations of a
representative group of consumer goods. It does not represent a return on
investment.
THE EQUITY, BOND AND MUNICIPAL BOND FUNDS AND THE FUNDS OF FUNDS may
quote actual total return performance from time to time in advertising and other
types of literature compared to results reported by the Dow Jones Industrial
Average.
The Dow Jones Industrial Average is an industry-accepted unmanaged
index of generally conservative securities used for measuring general market
performance. The performance reported will reflect the reinvestment of all
distributions on a quarterly basis and market price fluctuations. The index does
not take into account any brokerage commissions or other fees. Comparative
information on the Consumer Price Index may also be included.
The Equity Funds, the Bond Funds, the Municipal Bond Funds and the
Funds of Funds may also promote the yield and/or total return performance and
use comparative performance information computed by and available from certain
industry and general market research and publications, such as Lipper Analytical
Services, Inc.; they may also use indices such as the Standard & Poor's 400
Composite Stock Index, the Standard & Poor's 500 Composite Stock Index, the
Standard & Poor's 600 Composite Stock Index, the Russell 2000, or the Morgan
Stanley International European, Asian and Far East Gross Domestic Product Index
for performance comparison. Statistical and performance information compiled and
maintained by CDA Technologies, Inc. and Interactive Data Corporation may also
be used.
THE BOND FUNDS, THE FUNDS OF FUNDS AND THE ASSET ALLOCATION FUND may
quote actual yield and/or total return performance in advertising and other
types of literature compared to indices or averages of alternative financial
products available to prospective investors. The performance comparisons may
include the average return of various bank instruments, some of which may carry
certain return guarantees offered by leading banks and thrifts as monitored by
BANK RATE MONITOR, and those of corporate bond and government security price
indices of various durations. Comparative information on the Consumer Price
Index may also be included.
74
<PAGE> 320
The Bond Funds, the Funds of Funds and the Asset Allocation Fund may
also use comparative performance information computed by and available from
certain industry and general market research and publications, as well as
statistical and performance information, compiled and maintained by CDA
Technologies, Inc. and Interactive Data Corporation.
The Bond Funds, the Funds of Funds and the Asset Allocation Fund may
also use current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H. 15). In addition, current rate information on municipal debt
obligations of various durations, as reported daily by the Bond Buyer, may also
be used.
MISCELLANEOUS
The Trust is not required to hold a meeting of Shareholders for the
purpose of electing Trustees except that (i) the Trust is required to hold a
Shareholders' meeting for the election of Trustees at such time as less than a
majority of the Trustees holding office have been elected by Shareholders and
(ii) if, as a result of a vacancy on the Board of Trustees, less than two-thirds
of the Trustees holding office have been elected by the Shareholders, that
vacancy may only be filled by a vote of the Shareholders. In addition, Trustees
may be removed from office by a written consent signed by the holders of Shares
representing two-thirds of the outstanding Shares of the Trust at a meeting duly
called for the purpose, which meeting shall be held upon the written request of
the holders of Shares representing not less than 20% of the outstanding Shares
of the Trust. Except as set forth above, the Trustees may continue to hold
office and may appoint successor Trustees.
As used in the Trust's Prospectuses and in this Statement of
Additional Information, "assets belonging to a Fund" means the consideration
received by the Trust upon the issuance or sale of Shares in that Fund, together
with all income, earnings, profits, and proceeds derived from the investment
thereof, including any proceeds from the sale, exchange, or liquidation of such
investments, and any funds or payments derived from any reinvestment of such
proceeds, and any general assets of the Trust not readily identified as
belonging to a particular Fund that are allocated to that Fund by the Trust's
Board of Trustees. The Board of Trustees may allocate such general assets in any
manner it deems fair and equitable. It is anticipated that the factor that will
be used by the Board of Trustees in making allocations of general assets to
particular Funds will be the relative net asset values of the respective Funds
at the time of allocation. Assets belonging to a particular Fund are charged
with the direct liabilities and expenses in respect of that Fund, and with a
share of the general liabilities and expenses of the Trust not readily
identified as belonging to a particular Fund that are allocated to that Fund in
proportion to the relative net asset values of the respective Funds at the time
of allocation. The timing of allocations of general assets and general
liabilities and expenses of the Trust to particular Funds will be determined by
the Board of Trustees of the Trust and will be in accordance with generally
accepted accounting principles. Determinations by the Board of Trustees of the
Trust as to the timing of the allocation of general liabilities and expenses and
as to the timing and allocable portion of any general assets with respect to a
particular Fund are conclusive. For information regarding the allocations of
Class Expenses to particular classes of a Fund, see the respective Prospectus of
the Fund under "MANAGEMENT-Expenses."
As used in the Trust's Prospectuses and in this Statement of
Additional Information, a "vote of a majority of the outstanding Shares" of the
Trust, a particular Fund, or a particular class of Shares of a Fund, means the
affirmative vote of the lesser of (a) more than 50% of the outstanding Shares of
the Trust, such Fund, or such class of Shares of such Fund, or (b) 67% or more
of the Shares of the Trust, such Fund, or such class of Shares of such Fund
present at a meeting at which the holders of more than 50% of the outstanding
Shares of the Trust, such Fund, or such class of Shares of such Fund are
represented in person or by proxy.
The Trust is registered with the Securities and Exchange Commission
as a management investment company. Such registration does not involve
supervision by the Commission of the management or policies of the Trust.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Securities and Exchange Commission. Copies of such information may be
obtained from the Commission upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not
an offering of the securities herein described in any State in which such
offering may not lawfully be made. No salesman, dealer, or other person is
authorized to give any information or make any representation other than those
contained in the Prospectus and Statement of Additional Information.
As of August 5, 1997, BANC ONE CORPORATION, 100 East Broad Street,
Columbus, Ohio 43271-0152 (an Ohio Corporation) through Bank Subsidiaries,
acting on behalf of their underlying accounts, held of record substantially all
of the Fiduciary Class Shares of the Trust, and possessed voting or investment
power as follows:
PERCENT OF
BENEFICIAL
FUND OWNERSHIP
- ---- ----------
Large Company Growth Fund 91.80%
Disciplined Value Fund 90.47%
Growth Opportunities Fund 86.08%
Income Bond Fund 91.22%
Intermediate Tax-Free Bond Fund 97.01%
75
<PAGE> 321
Prime Money Market Fund 55.71%
U.S. Treasury Securities Money Market Fund 19.57%
Municipal Money Market Fund 78.69%
Income Equity Fund 93.49%
Equity Index Fund 83.02%
Large Company Value Fund 90.00%
Ohio Municipal Bond Fund 91.94%
Limited Volatility Bond Fund 90.87%
International Equity Index Fund 92.25%
Asset Allocation Fund 81.42%
Ohio Municipal Money Market Fund 68.07%
Municipal Income 96.07%
Kentucky Municipal Bond Fund 97.28%
Government Bond Fund 91.50%
Ultra Short-Term Income Fund 85.44%
Louisiana Municipal Bond Fund 97.60%
Value Growth Fund 90.05%
Small Capitalization Fund 94.79%
Intermediate Bond Fund 91.21%
Arizona Municipal Bond Fund 91.25%
West Virginia Municipal Bond Fund 98.88%
Investor Growth Fund 72.86%
Investor Growth & Income Fund 90.48%
Investor Balanced Fund 91.79%
Investor Conservative Growth Fund 87.31%
Treasury Only Money Market Fund 24.60%
Government Money Market Fund 27.06%
Treasury & Agency Fund 99.59%
As a result, Banc One Corporation may be deemed to be a "controlling person" of
the Fiduciary Class Shares of each of the aforementioned Funds other than the
Treasury Only Money Market Fund and the U.S. Treasury Securities Money Market
Fund, under the Investment Company Act of 1940.
In addition, as of August 5, 1997, 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:
25% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter Reynolds Arizona Municipal 32.61% Record
FBO Theodore Cesarano Bond Fund
4617 E. Bernell Drive Class A
Phoenix, AZ 85028-5520
The One Group Services Company Arizona Municipal 50.00% Record
Fund Administration Bond Fund
3435 Stelzer Road Class B
Columbus, Ohio 43219-6004
Dean Witter Funds Processing Arizona Municipal 50.00% Record
Account Bond Fund
5 World Trade Center 6th Floor Class C
New York, NY 10048-0205
Clark & Co. Arizona Municipal 98.80% Record
Database 2-One Group/Cash Mgmt. Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Clark & Co. Asset Allocation 49.27% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
</TABLE>
76
<PAGE> 322
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Asset Allocation 35.74% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Disciplined Value 53.71% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Disciplined Value 39.18% Record
Database 2 - Attn: One Group/Cash Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Equity Index Fund 73.74% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Banc One Securities Savings Plan Equity Index Fund 30.25% Beneficial
235 West Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Government Bond 65.29% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Government Bond 28.33% Record
Database 2 - Attn: One Group/Cash Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Government 32.31% Record
Bank One Trust Co. Money Market Fund
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Government Money 31.98% Record
Database 2 - Attn: One Group/Cash Market Fund
Mgmt
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co./Cash Div. Growth 52.20% Record
Bank One Trust Co. Opportunities Fund
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Growth 36.68% Record
Database 2 - Attn: One Group/Cash Opportunities Fund
Mgmt. Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Gulf South Growth 88.56% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
77
<PAGE> 323
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Income Bond Fund 63.14% Record
Bank One Trust Co. Fiduciary
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Income Bond Fund 30.24% Record
Database 2 - Attn: One Group/Cash Fiduciary
Mgmt
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Income Equity Fund 57.28% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Income Equity Fund 37.34% Record
Database 2 - Attn: One Group/Cash Fiduciary
Mgmt
235 W. Schrock Road
Westerville, Ohio 43081-2874
Clark & Co. Intermediate Bond 46.65% Record
Database 2 - Attn: One Group/Cash Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Intermediate Bond 48.26% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, OH 43215-3607
Clark & Co. Intermediate Tax- 53.50% Record
Database 2-Attn: One Group/Cash Free Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Intermediate Tax- 46.10% Record
Attn: Mutual Funds 0393 Free Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. International Equity 59.57% Record
Attn: Mutual Funds 0393 Index Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. International Equity 34.75% Record
Database 2 - Attn: One Group/Cash Index Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
</TABLE>
78
<PAGE> 324
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter FBO David H Behm & Investor Balanced 39.79% Record
Christine A Behm JT TEN Class C
Church St Station - P.O. Box 250
New York, NY 10277
Dean Witter FBO Alexis B Newell Investor Balanced 34.55% Record
7812 Meadow Park Drive #228 Class C
Church St Station - P.O. Box 250
New York, NY 10013-0250
Strafe & Co. Investor Balanced 57.80% Record
Bank One Trust Co. Fund
Attn: Mutual Funds Fiduciary
100 E. Broad Street
Columbus, OH 43215-3607
Clark & Co. Investor Balanced 36.70% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, OH 43081-2874
Dean Witter FBO Ninfa D Cayayan Investor Growth 27.59% Record
MD PFT SHR PL Class C
Ninfa A Cayayan MD TTEE
Church St Station - P.O. Box 250
New York, NY 10277
Strafe & Co. Investor Growth 60.29% Record
Bank One Trust Co. Fund
Attn: Mutual Funds Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Investor Growth 28.88% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Dean Witter Reynolds Cust For Investor Growth & 59.70% Record
Merle E Clucas Income Fund
IRA Rollover/SEP DTD 05/06/97 Class C
Church St Station - P.O. Box 250
New York, NY 10277
Strafe & Co. Investor Growth & 76.30% Record
Bank One Trust Co. Income Fund
Attn: Mutual Funds Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Revco D.S., Inc. SERP-Trust A Investor Growth & 28.52% Beneficial
Strafe & Co. Income Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Kentucky Municipal 99.22% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Large Company 60.13% Record
Attn: Mutual Funds 0393 Growth Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
79
<PAGE> 325
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Large Company 33.74% Record
Database 2 - Attn: One Group/Cash Growth Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Large Company 66.40% Record
Attn: Mutual Funds 0393 Value Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Large Company 25.64% Record
Database 2 - Attn: One Group/Cash Value Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Limited Volatility 58.45% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Limited Volatility 35.68% Record
Database 2 - Attn: One Group/Cash Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Louisiana Municipal 99.74% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Municipal Income 49.81% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Municipal Income 48.70% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
BISYS Fund Services, Inc. Municipal Money 35.79% Record
FBO Bank One Corporate Sweep Market Fund
Attn: Linda Zerbe Class A
First and Market Building Suite 300
Pittsburgh, PA 15222
Strafe & Co. (D) Municipal Money 57.60% Record
Bank One Ohio Trust Co., NA Market Fund
Department 0393 S.T.I.F Fiduciary
Columbus, Ohio 43271
Clark & Co. Municipal Money 38.87% Record
Database 2 - Attn: One Group/Cash Market Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Ohio Municipal 98.69% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
80
<PAGE> 326
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Ohio Municipal 94.35% Record
Bank One Trust Co. Money Market Fund
Attn: Mutual Funds Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Strafe & Co. Prime Money 57.44% Record
Bank One Ohio Trust Co., NA Market Fund
Department 0393 S.T.I.F. Fiduciary
Columbus, Ohio 43271
Clark & Co. Prime Money 33.23% Record
Database 2 - Attn: One Group/Cash Market Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Dean Witter FBO City of Treasury & Agency 83.57% Record
Montgomery Fund
10101 Montgomery Road Class A
Church St Station - P.O. Box 250
New York, NY 10013-0250
Dean Witter FBO Helen D Johnson Treasury & Agency 31.02% Record
Rt 2 Box 118 Fund
Church St Station- P.O. Box 250 Class B
New York, NY 10277-0001
Strafe & Co. Treasury & Agency 94.57% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Treasury Only 57.02% Record
Bank One Trust Co. Money Market Fund
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
BISYS Fund Services, Inc. U.S. Treasury 39.89% Record
FBO Bank One Corporate Sweep Securities Money
Attn: Linda Zerbe Market
First and Market Bldg., Ste. 300 Class A
Pittsburgh, PA 15222
State Street Bank & Trust Co. U.S. Treasury 47.03% Record
Cust for the IRA of Securities
Edward Hillman III Money Market
121 S. Walnut Street Class B
Troy, OH 45373-3530
Strafe & Co. (N) U.S. Treasury 56.05% Record
Bank One Ohio Trust Co., NA Securities
Department 0393 S.T.I.F. Money Market
Columbus, Ohio 43271 Fiduciary
Dean Witter for the Benefit of Ultra Short-Term 25.34% Record
St. Joseph Hospital Income Fund
Attn: Rick West Class A
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Strafe & Co. Ultra Short-Term 54.55% Record
Attn: Mutual Funds 0393 Income Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
81
<PAGE> 327
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Ultra Short-Term 40.93% Record
Database 2 - Attn: One Group/Cash Income Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Value Growth Fund 68.56% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Dean Witter for the Benefit of West Virginia 61.58% Record
Stephen A. Lewis Municipal Bond
3720 Noves Ave. Fund
5 World Trade Center 6th Floor Class A
New York, NY 10048-0205
Strafe & Co. West Virginia 98.70% Record
Attn: Mutual Funds 0393 Municipal Bond
100 E. Broad Street Fund
Columbus, OH 43215-3607 Fiduciary
</TABLE>
As a result, the aforementioned persons may be deemed to be "controlling
persons' of the class of Shares of the Fund in which they own such Shares under
the Investment Company Act of 1940.
The table below indicates record and beneficial owners of over 5% of any class
of Shares of any Fund of the Trust.
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter for the Benefit of Kentucky 11.54% Record
Roger J. Shott and Municipal
Diane J. Shott JT TEN Bond Fund
P.O. Box 23403 Class A
Anchorage, KY 40223-0403
Yong K. Liu Kentucky 5.82% Record
Rui Bo Liu JT WROS Municipal
6304 Shadow Wood Drive Bond Fund
Prospect, KY 40059-9626 Class A
Dean Witter for the Benefit of Kentucky 7.75% Record
Floyd Logan Municipal
201 Country Ln. Bond Fund
Frankfort, KY 40601-3841 Class B
Dean Witter FBO Vivian S Lucas Kentucky 7.55% Record
787 Robin Road Municipal
5 World Trade Center 6th Floor Bond Fund
New York, NY 10048-0205 Class B
Strafe & Co. Kentucky 99.22% Record
Attn: Mutual Funds 0393 Municipal
100 E. Broad Street Bond Fund
Westerville, Ohio 43215-3607 Fiduciary
Strafe & Co. Large Company 60.13% Record
Attn: Mutual Funds 0393 Growth Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
82
<PAGE> 328
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Large Company 33.74% Record
Database 2 - Attn: One Group/Cash Mgmt Growth Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Corporation Large Company 11.11% Beneficial
235 West Schrock Road Growth Fund
Westerville, Ohio 43081-2874 Fiduciary
Banc One Securities Savings Plan Large Company 9.31% Beneficial
235 West Schrock Road Growth Fund
Westerville, Ohio 43081-2874 Fiduciary
Strafe & Co. Disciplined Value 53.71% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Disciplined Value 39.18% Record
Database 2 - Attn: One Group/Cash Mgmt Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Corporation Disciplined Value 14.92% Beneficial
235 West Schrock Road Fund
Westerville, Ohio 43081-2874 Fiduciary
Strafe & Co. Gulf South Growth 88.56% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Premier Bancorp Retirement Plan Gulf South Growth 7.12% Beneficial
P.O. Box 91210 Fund
Baton Rouge, LA 70821 Fiduciary
Strafe & Co./Cash Div. Growth 52.20% Record
Bank One Trust Co. Opportunities Fund
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Growth 36.68% Record
Database 2 - Attn: One Group/Cash Mgmt. Opportunities Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Corporation Growth 10.53% Beneficial
235 West Schrock Road Opportunities Fund
Westerville, Ohio 43081-2874 Fiduciary
Strafe & Co. Value Growth 68.56% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Value Growth 23.70% Record
Database 2-One Group/Cash Mgmt. Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
</TABLE>
83
<PAGE> 329
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter for the Benefit of Income Bond Fund 8.74% Record
Alpert Corp. Money Purchase Plan Class A
Steven Kurtz TTEE
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Dean Witter for the Benefit of Income Bond Fund 6.57% Record
Signalsoft Corp. Class A
2045 Broadway
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Strafe & Co. Income Bond Fund 63.14% Record
Bank One Trust Co. Fiduciary
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Income Bond Fund 30.24% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Banc One Securities Savings Plan Income Bond Fund 5.45% Beneficial
235 West Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Louisiana 99.74% Record
Attn: Mutual Funds 0393 Municipal Bond
100 E. Broad Street Fund
Columbus, Ohio 43215-3607 Fiduciary
Strafe & Co. International 59.57% Record
Attn: Mutual Funds 0393 Equity Index Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. International 34.75% Record
Database 2 - Attn: One Group/Cash Mgmt Equity Index Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Corporation International 17.10% Beneficial
235 West Schrock Road Equity
Westerville, Ohio 43081-2874 Index Fund
Fiduciary
Strafe & Co. Equity Index 6.45% Beneficial
Indianapolis Power & Light Co. Fund
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Dean Witter FBO Emma Lou Lancaster Intermediate Tax- 13.47% Record
Box 354 Free Bond Fund
Frisco, TX 75034-0354 Class A
J. Noland Singletary Intermediate Tax- 10.68% Record
7350 Bocage Blvd. Free Bond Fund
Baton Rouge, LA 70809-1138 Class A
</TABLE>
84
<PAGE> 330
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter FBO The Rose Family Living Intermediate Tax- 5.56% Record
Trust - Stephen Rose TTEE Free Bond Fund
Church St Station - P.O. Box 250 Class B
New York, NY 10277
Dean Witter FBO Katherine Poe Intermediate Tax- 5.31% Record
606 River Lane Free Bond Fund
5 World Trade Center, 6th Floor Class B
New York, NY 10048-0205
Clark & Co. Intermediate Tax- 53.50% Record
Database 2-Attn: One Group/Cash Free Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Intermediate Tax- 46.10% Record
Attn: Mutual Funds 0393 Free Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Wallace & Co. Limited Volatility 5.50% Record
P.O. Box 21119 Bond Fund
Shreveport, LA 71152-0001 Class A
Strafe & Co. Limited Volatility 58.45% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Limited Volatility 35.68% Record
Database 2 - Attn: One Group/Cash Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
BISYS Fund Services, Inc. Prime Money 22.64% Record
FBO Bank One Corporate Sweep Market
Attn: Linda Zerbe Fund
First & Market Building Suite 300 Class A
Pittsburgh, PA 15222
State Street Bank & Trust Co. Prime Money 11.18% Record
Cust for the IRA of Market
Edward Hillman III Fund
121 S. Walnut Street Class B
Troy, OH 45373-3530
Dean Witter for the Benefit of Prime Money 10.64% Record
Ronald L. Bottoms Market
4106 Garland Avenue Fund
5 World Trade Center, 6th Floor Class B
New York, NY 10048-0205
State Street Bank & Trust Co Prime Money 9.68% Record
Cust for the Rollover IRA of Market Fund
Ronald F Aebly Class B
3625 Mountain Drive
Brookfield, WI 53045-1409
</TABLE>
85
<PAGE> 331
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
State Street Bank & Trust Co. Prime Money 7.41% Record
Cust for the Rollover IRA of Market Fund
Kenneth S. Leighton Class B
10423 W. Reade Avenue
Glendale, AZ 85307-4225
State Street Bank & Trust Co. Prime Money 6.48% Record
Cust for the IRA of Richard Miller Market Fund
3929 Tanglewilde Street Class B
Houston, TX 77063-5170
State Street Bank & Trust Co Prime Money 6.30% Record
Cust for the IRA of Mary Rita Pike Market Fund
9301 Watterson Trail Class B
Louisville, KY 40299-3409
State Street Bank & Trust Co Prime Money 5.07% Record
Cust for the IRA of Lee V McNulty Market Fund
9725 E Pershing Ave Class B
Scottsdale, AZ 85260-4440
State Street Bank & Trust Co Prime Money 5.01% Record
Cust for the Rollover IRA of Market Fund
Dorothy L Satchel Class B
4319 Brandemere Way Street
Houston, TX 77066-3616
Strafe & Co. Prime Money 57.44% Record
Bank One Ohio Trust Co., NA Market Fund
Department 0393 S.T.I.F. Fiduciary
Columbus, Ohio 43271
Clark & Co. Prime Money 33.23% Record
Database 2 - Attn: One Group/Cash Mgmt Market Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Bank One Trust Company NA Prime Money 7.13% Record
Omnibus - Corporate Cash Sweep Acct. Market Fund
Attn: Cash Management DB3 Fiduciary
235 W Schrock Road
Westerville, Ohio 43081-2874
Dean Witter for the Benefit of Ohio Municipal 7.54% Record
James E. Sauls and Bond Fund
Vivian R. Sauls JT TN Class A
519 Chapel Road
Amelia, Ohio 45102-9738
Strafe & Co. Ohio Municipal 98.69% Record
Attn: Mutual Funds 0393 Bond
100 E. Broad Street Fund
Columbus, Ohio 43215-3607 Fiduciary
NES Group, Inc. Ohio Municipal 7.64% Beneficial
Corp. Invest Account Bond Fund
Strafe & Co. Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
BISYS Fund Services, Inc. U.S. Treasury 39.89% Record
FBO Bank One Corporate Sweep Securities Money
Attn: Linda Zerbe Market
First and Market Bldg., Ste. 300 Class A
Pittsburgh, PA 15222
</TABLE>
86
<PAGE> 332
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
BISYS Fund Services Pittsburgh U.S. Treasury 16.12% Record
FBO Bank One TX Sweep Customers Securities Money
Attn: Linda Zerbe Market
First and Market Bldg., Ste. 300 Class A
Pittsburgh, PA 15222
State Street Bank & Trust Co. U.S. Treasury 47.03% Record
Cust for the IRA of Securities
Edward Hillman III Money Market
121 S. Walnut Street Class B
Troy, OH 45373-3530
State Street Bank & Trust Co. U.S. Treasury 19.12% Record
Cust for the Rollover IRA of Securities
Corrine R. Berg Money Market
1020 E. Northern Ave. Class B
Phoenix, AZ 85020-4118
State Street Bank & Trust Co U.S. Treasury 15.13% Record
Cust for the IRA of Securities
Joe D Bolding Money Market
803 Holly Circle Class B
Allen, TX 75002-5216
State Street Bank & Trust Co. U.S. Treasury 7.51% Record
Cust for the IRA of Securities
Deborah K Ludwick Money Market
9508 Cedar Creek Road Class B
Louisville, KY 40228-1905
State Street Bank & Trust Co. U.S. Treasury 5.84% Record
Cust for the Rollover IRA of Securities Money
Glenda B. Osborn Market Fund
25 Forest Drive Class B
Jeffersonville, IN 47130-6864
Strafe & Co. (N) U.S. Treasury 56.05% Record
Bank One Ohio Trust Co., NA Securities
Department 0393 S.T.I.F. Money Market
Columbus, Ohio 43271 Fiduciary
Bank One Trust Company NA U.S. Treasury 22.08% Record
Omnibus-Corporate Cash Sweep Acct. Securities Money
Attn: Cash Management DB3 Market
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Clark & Co. U.S. Treasury 21.12% Record
Database 2 - Attn: One Group/Cash Mgmt Securities
235 W. Schrock Road Money Market
Westerville, Ohio 43081-2874 Fiduciary
Bank One TTEE Large Company 6.50% Record
Harrison Holding Corp. 401k Value Fund
BISYS Qualified Plan Services Class A
Springhouse Corp. Center II-Invest A/C
323 Norristown Road Attn: S. Loch
Amber, PA 19002-2756
Strafe & Co. Large Company 66.40% Record
Attn: Mutual Funds 0393 Value Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
87
<PAGE> 333
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Large Company 25.64% Record
Database 2 - Attn: One Group/Cash Mgmt Value Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Corporation Large Company 22.85% Beneficial
235 West Schrock Road Value Fund
Westerville, Ohio 43081-2874 Fiduciary
Municipal Money 35.79% Record
BISYS Fund Services, Inc. Market Fund
FBO Bank One Corporate Sweep Class A
Attn: Linda Zerbe
First & Market Building Suite 300
Pittsburgh, PA 15222
Municipal Money 6.73% Record
Kitty Hawk Group, Inc. Market Fund
Attn: Rick Wadsworth Class A
P.O. Box 612787
DFW Airport, TX 75261-2787
Robert Weitz Municipal Money 5.28% Record
Elsie Weitz Market Fund
402 Keystone Loop Class A
Houma, LA 70360-6009
Strafe & Co. (D) Municipal Money 57.60% Record
Bank One Ohio Trust Co., NA Market Fund
Department 0393 S.T.I.F Fiduciary
Columbus, Ohio 43271
Clark & Co. Municipal Money 38.87% Record
Database 2 - Attn: One Group/Cash Mgmt Market Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Securities Corp FBO Equity Index Fund 9.92% Record
The One Investment Solution Class A
733 Greencrest Dr.
Westerville, Ohio 43081-4903
Strafe & Co. Equity Index Fund 73.74% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Banc One Securities Savings Plan Equity Index Fund 30.25% Beneficial
235 West Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Clark & Co. Equity Index Fund 13.53% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
NCR Benefit Acct - Trust #1 Equity Index Fund 5.60% Beneficial
Strafe & Co. Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Strafe & Co. Income Equity 57.28% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
88
<PAGE> 334
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Income Equity 37.34% Record
Database 2 - Attn: One Group/Cash Mgmt Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Government Bond 65.29% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Government Bond 28.33% Record
Database 2 - Attn: One Group/Cash Mgmt Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Clark & Co. Asset Allocation 49.27% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Asset Allocation 35.74% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Asset Allocation 5.83% Beneficial
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Banc One Securities Corp. Intermediate Bond 24.95% Record
FBO The One Investment Solution Fund
733 Greencrest Drive Class A
Westerville, Ohio 43081-4903
Clark & Co. Intermediate Bond 46.65% Record
Database 2 - Attn: One Group/Cash Mgmt Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Intermediate Bond 48.26% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, OH 43215-3607
Dean Witter for the Benefit of Ultra Short-Term 25.34% Record
St. Joseph Hospital Income Fund
Attn: Rick West Class A
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Dean Witter FBO Bank One Collateral Acct Ultra Short- Term 11.30% Record
FBO Thermex Energy Corporation Income Fund
Church St Station - P.O. Box 250 Class A
New York, NY 10277
Dean Witter for the Benefit of
Thermex Energy Corporation Ultra Short-Term 7.63% Record
P.O. Box 701746 Income Fund
5 World Trade Center, 6th Floor Class A
New York, NY 10048-0205
</TABLE>
89
<PAGE> 335
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter for the Benefit of Ultra Short-Term 9.41% Record
Daniel M. Galbreath Revoc Trust Income Fund
Lizanne Galbreath Megrue TTEE Class A
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Dean Witter FBO Paul Pogue, Inc. Ultra Short Term 5.39% Record
P.O. Box 3359 Income Fund
Sherman, TX 75091-3359 Class A
Dean Witter for the Benefit of Ultra Short-Term 9.18% Record
Jeanette P. Reilly Income Fund
3777 Bay Road North Drive Class B
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Dean Witter FBO First Presbyterian Church Ultra Short-Term 5.76% Record
of Dallas TX Community Ministries Fund Income Fund
5 World trade Center 6th Floor Class B
New York, NY 10048-0205
Strafe & Co. Ultra Short-Term 54.55% Record
Attn: Mutual Funds 0393 Income Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Ultra Short-Term 40.93% Record
Database 2 - Attn: One Group/Cash Mgmt Income Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Rio Verde Services, Inc. Agy Ultra Short-Term 6.25% Beneficial
Clarke & Co. Income Fund
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Dean Witter Ohio Municipal 9.16% Record
FBO John M. Mills Money
810 Pipestone Market Fund
Church Street Station Class A
P.O. Box 250
New York, NY 10277-0001
Strafe & Co. Ohio Municipal 94.35% Record
Bank One Trust Co. Money
Attn: Mutual Funds Market Fund
100 E. Broad Street Fiduciary
Columbus, Ohio
Strafe & Co. Ohio Municipal 9.56% Beneficial
Ruth R. Miller Tr. DTD 7/5/85 Money
Attn: Mutual Funds Market Fund
100 E. Broad Street Fiduciary
Columbus, Ohio
</TABLE>
90
<PAGE> 336
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Henny Penny Corp. Money Market Account Ohio Municipal 9.14% Beneficial
Strafe & Co. Money Market
100 E. Broad Street Fund
Columbus, Ohio 43215-3607 Fiduciary
Strafe & Co.
Wallick Properties, Inc Ohio Municipal 6.20% Beneficial
Attn: Mutual Funds Money Market
100 E. Broad Street Fund
Columbus, Ohio Fiduciary
Sandman & Co. Ohio Municipal 5.65% Record
State Street Bank & Trust Money
P.O. Box 1713 Market Fund
Boston, MA 02105-1713 Fiduciary
Banc One Securities Corp FBO Municipal Income 18.49% Record
The One Investment Solution Fund
733 Greencrest Dr. Class A
Westerville, Ohio 43081-4903
Clark & Co. Municipal Income 49.81% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Municipal Income 48.70% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Treasury Only 57.02% Record
Bank One Trust Co. Money Market
Attn: Mutual Funds Fund
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Treasury Only 15.77% Record
Database 2 - Attn: One Group/Cash Mgmt Money Market
235 W. Schrock Road Fund
Westerville, Ohio 43081-2874
Bank One Texas NA Treasury Only 9.32% Record
1717 Main Street Money Market
Dallas, TX 75201-4605 Fund
BISYS Fund Services, Inc. 15.25% Record
FBO Bank One Corporate Sweep Treasury Only
Attn: Linda Zerbe Money
First and Market Bldg-Suite 300 Market Fund
Pittsburgh, PA 15222
Strafe & Co. Government 32.31% Record
Bank One Trust Co. Money Market
Attn: Mutual Funds Fund
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Government 31.98% Record
Database 2 - Attn: One Group/Cash Mgmt Money Market
235 W. Schrock Road Fund
Westerville, Ohio 43081-2874
</TABLE>
91
<PAGE> 337
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Bank One Texas NA Government 17.06% Record
1717 Main Street Money Market
Dallas, TX 75201-4605 Fund
Bank One Trust Company NA Government 11.53% Record
Corporate Cash Sweep Account Money Market
Attn: Cash Management DB3 Fund
235 West Schrock Road
Westerville, Ohio 43081-2874
Syben Treasury & Agency 16.40% Record
FBO Cletus Ratterman Fund
PO Box 32890 Class A
Louisville, KY 40232-2890
Dean Witter FBO Jessie H Scruggs & Treasury & Agency 20.79% Record
Beulah L Scruggs Jtten Fund
Church St Station - P.O. Box 250 Class B
New York, NY 10013-0250
Treasury & Agency
Dean Witter FBO Highlawn United Fund 16.85% Record
Methodist Church Class B
620 30th Street
5 World Trade Center 6th Floor
New York, NY 10048-025
Strafe & Co. Treasury & Agency 94.57% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Treasury & Agency 5.31% Record
Database 2 - Attn: One Group/Cash Mgmt Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Dean Witter Reynolds Arizona Municipal 32.61% Record
FBO Theodore Cesarano Bond Fund
4617 E. Bernell Drive Class A
Phoenix, AZ 85028-5520
Dean Witter Reynolds Arizona Municipal 14.13% Record
FBO Elizabeth Ryan Miller Bond Fund
P.O. Box 2443 Class A
5 World Trade Center
New York, NY 10048-0205
Dean Witter Reynolds Arizona Municipal 14.13% Record
FBO Sally Ryan Stults Bond Fund
P.O. Box 2443 Class A
5 World Trade Center
New York, NY 10048-0205
</TABLE>
92
<PAGE> 338
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter FBO Nanette Beeson Arizona Municipal 6.72% Record
2550 E Fairmount Ave Bond Fund
5 World Trade Center 6th Floor Class B
New York, NY 10048-0205
The One Group Services Company Arizona Municipal 50.00% Record
Fund Administration Bond Fund
3435 Stelzer Road Class B
Columbus, Ohio 43219-6004
Dean Witter FBO Funds Processing Arizona Municipal 50.00% Record
Account Bond Fund
5 World Trade Center 6th Floor Class B
New York, NY 10048-0205
Clark & Co. Arizona Municipal 98.80% Record
Database 2-One Group/Cash Mgmt. Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Dean Witter for the Benefit of West Virginia 61.58% Record
Stephen A. Lewis Municipal Bond
3720 Noves Ave. Fund
5 World Trade Center 6th Floor Class A
New York, NY 10048-0205
Dean Witter FBO C. Carl Tully West Virginia 23.36% Record
4530 Spring Hill Municipal Bond
5 World Trade Center, 6th Floor Fund
New York, NY 10048-0205 Class A
Dean Witter for the Benefit of West Virginia 15.04% Record
Ruth A. Harper Municipal Bond
P.O. Box 196 Fund
5 World Trade Center 6th Floor Class A
New York, NY 10048-0205
Dean Witter for the Benefit of West Virginia 13.70% Record
Erma G. Shafer Municipal Bond
142 Spencer Road Fund
5 World Trade Center 6th Floor Class B
New York, NY 10048-0205
Dean Witter for the Benefit of West Virginia 9.78% Record
Mary G. Coleman Municipal Bond
3607 Virginia Avenue SE Fund
5 World Trade Center 6th Floor Class B
New York, NY 10048-0205
Dean Witter FBO Helen H. Hall West Virginia 9.78% Record
59 Meade Street Municipal Bond
5 World Trade Center 6th Floor Fund
New York, NY 10048-0205 Class B
Dean Witter FBO Ann S. Jackson West Virginia 6.99% Record
2317 Jefferson Avenue Municipal Bond
5 World Trade Center 6th Floor Fund
New York, NY 10048-0205 Class B
Dean Witter FBO William R. Butler and West Virginia 5.49% Record
Prible D. Butler JT TEN Municipal Bond
5 World Trade Center 6th Floor Fund
New York, NY 10048-0205 Class B
</TABLE>
93
<PAGE> 339
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter FBO Billie J. Zegger West Virginia 5.03% Record
P.O. Box 2 Municipal Bond
5 World Trade Center, 6th Floor Fund
New York, NY 10048-0205 Class B
Strafe & Co. West Virginia 98.70% Record
Attn: Mutual Funds 0393 Municipal Bond
100 E. Broad Street Fund
Columbus, OH 43215-3607 Fiduciary
Clark & Co. Investor Growth 28.88% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Virginia R. Corrin Investor Growth 22.37% Beneficial
Strafe & Co. Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Banc One Securities Savings Plan Investor Growth 16.63% Beneficial
235 West Schrock Road Fund
Westerville, Ohio 43081-2874 Fiduciary
Bank One TTEE Investor Growth 5.18% Record
Therm-O-Disc Inc. 401K Fund
BISYS Qualified Plan Services Fiduciary
Springhouse Corp. Ctr. II-Invest A/C
323 Norristown Road Attn: S. Loch
Ambler, PA 19002-2756
Dean Witter Reynolds for Investor Growth & 19.54% Record
Robert E. Carlovsky IRA Income Fund
5 World Trade Center 6th Floor Class A
New York, NY 10048-0205
Bank One TTEE Investor Growth & 9.72% Record
The Brown Publishing Co. Income Fund
C/O/ Bank One Investment Management Class A
Retirement Services- Daily R/K
190 Heatherdown Drive
Westerville, Ohio 43081-2868
Dean Witter Reynolds Cust For Investor Growth & 59.70% Record
Merle E Clucas Income Fund
IRA Rollover/SEP DTD 05/06/97 Class C
Church St Station - P.O. Box 250
New York, NY 10277
Dean Witter FBO Kathleen Ann Maxwell Investor Growth & 18.65% Record
61 Waltham Ave # Income Fund
Church St Station - P.O. Box 250 Class C
New York, NY 10013-0250
Dean Witter Reynolds Cust for Eva I Bolz Investor Growth & 18.15% Record
IRA Rollover Dated 09/23/96 Income Fund
Church St Station - P.O. Box 250 Class C
New York, NY 10013-0250
Strafe & Co. Investor Growth & 76.30% Record
Bank One Trust Co. Income Fund
Attn: Mutual Funds Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
</TABLE>
94
<PAGE> 340
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Investor Growth & 16.84% Record
Database 2-Attn: One Group/Cash Income Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Revco D.S., Inc. SERP-Trust A Investor Growth & 28.52% Beneficial
Strafe & Co. Income Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Banc One Securities Savings Investor Growth & 9.44% Beneficial
Strafe & Co. Income Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Dean Witter for the Benefit of Investor Balanced 9.04% Record
Sara Lee Youngs Fund
10832 Linwood Road Class A
5 World Trade Center 6th Floor
New York, NY 10048-0205
State Street Bank & Trust Co. Investor Balanced 7.31% Record
Cust for the Rollover IRA of Granville L Fund
Crothers Class A
2133 E. Ranch Rd
Tempe, AZ 85284- 3547
Dean Witter FBO John R. Wood and Investor Balanced 6.88% Record
Terressa M Wood JT TEN Fund
Church St Station - P.O. Box 250 Class A
New York, NY 10013-0250
Dean Witter FBO Worley Douglas Warfe Investor Balanced 6.80% Record
806 Harrison Street Fund
Church St Station - P.O. Box 250 Class A
New York, NY 10277
Dean Witter FBO David H Behm & Investor Balanced 39.79% Record
Christine A Behm JT TEN Class C
Church St Station P.O. Box 250
New York, NY 10277
Dean Witter FBO Alexis B Newell Investor Balanced 34.55% Record
7812 Meadow Park Drive #228 Fund
Church St Station - P.O. Box 250 Class C
New York, NY 10013-0250
Dean Witter Reynolds Cust for Investor Balanced 19.21% Record
Anne H Shiner Fund
IRA Standard Dated 06/09/97 Class C
Church St Station - P.O. Box 250
New York, NY 10277
Dean Witter FBO Mary Joy Jensen Investor Balanced 5.51% Record
2574 N 124th Apt 445 Fund
Church St Station - P.O. Box 250 Class C
New York, NY 10277
Strafe & Co.
Bank One Trust Co. Investor Balanced 57.80% Record
Attn: Mutual Funds Fund
100 E. Broad Street Fiduciary
Columbus, OH 43215-3607
</TABLE>
95
<PAGE> 341
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Investor Balanced 36.70% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, OH 43081-2874
Black Clawson Co. Investor Balanced 17.48% Beneficial
Member Pension Plan Fund
Strafe & Co. Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Centennial Liquor Retirement Plan Investor Balanced 7.52% Beneficial
Strafe & Co. Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Bank One TTEE Investor 12.58% Record
The Brown Publishing Co. Conservative
C/O Banc One Investment Mgmt Growth Fund
Retirement Services - Daily R/K Class A
190 Heatherdown Drive
Westerville, Ohio 43081-2868
Dean Witter FBO Carolyn A Hill Investor 7.22% Record
231 Highland Avenue Conservative
Oak Hill, WV 25901-3443 Growth Fund
Class A
Dean Witter for the Benefit of Investor 5.58% Record
James W. Blair Conservative
95 Elizabeth Street Growth Fund
5 World Trade Center, 6th Floor Class A
New York, NY 10048-0205
State Street Bank & Trust Co Investor 60.74% Record
Cust For the IRA of Ruben Hernandez Conservative
914 Jennings Growth
San Antonio, TX 78225-1328 Class C
Dean Witter Reynolds Cust For Investor 20.10% Record
Shirley M Brewer Conservative
IRA Standard Dated 11/18/96 Growth
Church St Station - P.O. Box 250 Class C
New York, NY 10277
Dean Witter FBO Mary Cimino Investor 14.15% Record
Tod Melba M Cimino Conservative
Church St Station - P.O. Box 250 Growth
New York, NY 10277 Class C
Strafe & Co. Investor 56.67% Record
Bank One Trust Co. Conservative
Attn: Mutual Funds Growth Fund
100 E. Broad Street Fiduciary
Columbus, OH 43215-3607
</TABLE>
96
<PAGE> 342
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Investor 29.97% Record
Database 2-Attn: One Group/Cash Conservative
235 W. Schrock Road Growth Fund
Westerville, Ohio 43081-2874 Fiduciary
Clark & Co. Investor 19.25% Beneficial
Kenosha Carpenters Conservative
Database 2-Attn: One Group/Cash Growth Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Securities Savings Plan Investor 10.80% Beneficial
Strafe & Co. Conservative
100 E. Broad Street Growth Fund
Columbus, Ohio 43215-3607 Fiduciary
Ermco, Inc. Pension Plan Investor 7.44% Beneficial
Strafe & Co. Conservative
100 E. Broad Street Growth Fund
Columbus, Ohio 43215-3607 Fiduciary
Bank One TTEE Investor 7.27% Record
Therm-O-Disk Inc. 401K Conservative
BISYS Qualified Plan Services Growth Fund
Springhouse Corp. Ctr. II-Invest A/C Fiduciary
323 Norristown Road, Attn: S. Loch
Ambler, PA 19002-2756
</TABLE>
As a group, the Trustee and Officers of the Trust owned less than 1% of the
Shares of each class of the Trust.
97
<PAGE> 343
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<S> <C> <C>
ASSET BACKED SECURITIES (2.2%):
140 Advanta Credit Card Master Trust,
5.95%, 8/31/99..................... $ 140
513 Advanta Mortgage Loan Trust, Series
1994-3, Class A2, 7.60%, 7/25/10... 516
250 Case Equipment Loan Trust, Series
1996-B, Class A3, 6.65%, 9/15/03... 251
480 Green Tree Financial Corp., Series
1996-3, Class A3, 6.70%, 5/15/27... 481
98 Honda Auto Receivables Grantor Trust,
Series 1994-A, 4.80%, 8/15/99...... 98
106 KeyCorp Auto Grantor Trust, Series
1995-A A, 5.80%, 7/15/00........... 106
500 Nationsbank Auto Owner Trust, Series
1996-A A3, 6.38%, 7/15/00.......... 504
325 Olympic Automobile Receivables Trust,
6.05%, 8/15/02..................... 322
1,025 Olympic Automobile Receivables Trust,
Series 1996-B, Class A4, 6.70%,
3/15/02............................ 1,033
259 The Money Store Home Equity Trust,
Series 1994-B, Class A2, 6.80%,
2/15/13............................ 259
102 Union Federal Savings Bank Trust,
Series 1994 A A, 5.08%, 5/15/00.... 101
--------
Total Asset Backed Securities 3,811
--------
COMMON STOCKS (54.1%):
Capital Goods (3.9%):
13 BW/IP Holdings, Inc.................. 254
6 Case Corp............................ 427
11 Cooper Industries, Inc............... 537
16 Emerson Electric Co.................. 887
40 General Electric Co.................. 2,621
13 Ingersoll Rand Co.................... 772
21 Teleflex, Inc........................ 644
15 Thermo Electron Corp. (b)............ 524
--------
6,666
--------
Consumer Durable (1.4%):
25 Autozone, Inc. (b)................... 591
28 Chrysler Corp........................ 910
13 Lear Corp. (b)....................... 568
7 Whirlpool Corp....................... 398
--------
2,467
--------
Consumer Non-Durable (6.1%):
29 Archer-Daniels-Midland Co............ 672
12 Coca Cola Co......................... 844
10 Dole Food, Inc. (c).................. 415
14 McCormick & Co., Inc................. 348
34 PepsiCo, Inc......................... 1,285
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Consumer Non-Durable, continued:
42 Philip Morris Co., Inc............... $ 1,872
6 Proctor & Gamble Co.................. 890
13 Quaker Oats Co....................... 570
17 Revlon, Inc. (b)..................... 902
21 RJR Nabisco Holdings Corp............ 703
21 Supervalu, Inc....................... 735
23 Sysco Corp........................... 850
7 Universal Corp....................... 229
--------
10,315
--------
Consumer Services (3.2%):
10 Belo (A.H.) Corp., Series A.......... 404
16 Callaway Golf Co. (c)................ 557
30 CUC International, Inc. (b)(c)....... 769
23 Hasbro, Inc. (c)..................... 660
23 Hilton Hotels Corp................... 598
12 Mattel, Inc. (c)..................... 420
10 MGM Grand, Inc. (b)(c)............... 374
22 Time Warner, Inc. (c)................ 1,080
6 Walt Disney Co....................... 506
--------
5,368
--------
Energy (4.0%):
9 Ashland, Inc......................... 408
10 Atlantic Richfield Co................ 733
8 Devon Energy Corp.................... 290
7 Dresser Industries, Inc. (c)......... 276
29 Exxon Corp........................... 1,783
15 Mapco, Inc........................... 457
19 Mobil Corp........................... 1,314
20 Tosco Corp........................... 587
20 USX-Marathon Group................... 566
10 Weatherford Enterra, Inc. (b)........ 389
--------
6,803
--------
Financial Services (8.1%):
1 American International Group, Inc.... 194
14 BankAmerica Corp..................... 917
5 Cigna Corp........................... 941
20 Equitable Co., Inc. (c).............. 658
31 Federal National Mortgage Assoc...... 1,351
11 First Union Corp..................... 971
5 First Virginia Banks, Inc............ 302
13 Fleet Financial Group, Inc........... 797
11 Hartford Financial Services Group.... 935
15 Mellon Bank Corp. (c)................ 659
15 Morgan Stanley Dean Witter
Discover........................... 659
15 National City Corp................... 809
11 Pacific Century Financial Corp....... 495
5 Provident Co., Inc................... 262
12 Regions Financial Corp............... 386
16 Southtrust Corp...................... 641
</TABLE>
Continued
25
<PAGE> 344
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
14 SunTrust Banks, Inc.................. $ 793
6 TransAmerica Corp.................... 589
20 Travelers Group, Inc................. 1,274
6 Washington Mutual, Inc. (c).......... 370
--------
14,003
--------
Health Care (6.7%):
17 Abbott Labs.......................... 1,128
9 Amgen, Inc. (b)...................... 517
13 Baxter International, Inc............ 695
9 Boston Scientific Corp. (b).......... 571
20 Bristol Myers Squibb Co.............. 1,604
7 Cardinal Health, Inc. (c)............ 384
7 Centocor, Inc. (b)................... 205
13 Columbia/HCA Healthcare Corp. (c).... 491
12 Eli Lilly & Co....................... 1,268
7 Guidant Corp......................... 561
4 HBO & Co............................. 269
20 Merck & Co., Inc..................... 2,080
9 Phycor, Inc. (b)(c).................. 300
20 Schering Plough Corp................. 967
10 Vencor, Inc. (b)..................... 441
--------
11,481
--------
Raw Materials (2.9%):
13 B. F. Goodrich Co.................... 576
9 Betzdearborn, Inc. (c)............... 581
11 Du Pont (EI) de Nemours & Co......... 666
11 Ferro Corp........................... 411
11 Lubrizol Corp........................ 440
13 Monsanto Co.......................... 560
14 Morton International, Inc............ 426
13 Nalco Chemical Co.................... 483
9 Praxair, Inc......................... 521
20 Wellman, Inc......................... 339
--------
5,003
--------
Retail (3.1%):
17 Dollar General Corp.................. 632
27 Just For Feet, Inc. (b)(c)........... 469
22 Kroger Co. (b)....................... 650
34 Officemax, Inc. (b).................. 497
9 Outback Steakhouse, Inc. (b)......... 220
13 TJX Co., Inc. (c).................... 332
20 Toys R Us, Inc. (b)(c)............... 707
51 Wal-Mart Stores, Inc................. 1,731
--------
5,238
--------
Shelter (1.1%):
25 Kaufman & Broad Home Corp............ 434
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Shelter, continued:
12 Masco Corp. (c)...................... $ 484
12 Pentair, Inc......................... 388
9 Weyerhaeuser Co...................... 489
--------
1,795
--------
Technology (8.1%):
5 Altera Corp. (b)(c).................. 273
17 Analog Devices, Inc. (b)(c).......... 454
9 Applied Materials, Inc. (b).......... 630
9 BMC Software, Inc. (b)............... 509
11 Cadence Design Systems, Inc. (b)..... 355
16 Cisco Systems, Inc. (b).............. 1,081
6 Compaq Computer Corp. (b)............ 615
7 Dell Computer Corp. (b).............. 787
4 General Motors Corp., Class H........ 254
18 Hewlett Packard Co................... 1,008
14 Intel Corp........................... 1,914
17 International Business Machines...... 1,524
6 Lockheed Martin Corp................. 601
8 Lucent Technologies, Inc............. 548
20 Microsoft Corp. (b).................. 2,465
15 Orbital Sciences Corp. (b)(c)........ 241
12 Rohr Industries, Inc. (b)............ 272
7 Teradyne, Inc. (b)................... 287
--------
13,818
--------
Utilities (5.5%):
8 AES Corp. (b)(c)..................... 580
10 Century Telephone Enterprises........ 327
35 Edison International................. 858
19 Enron Corp. (c)...................... 771
18 General Public Utilities Corp........ 646
30 GTE Corp............................. 1,307
17 MCI Communications Corp.............. 651
12 MCN Corp............................. 377
10 National Fuel Gas Co................. 428
25 New York State Electric & Gas........ 530
22 SBC Communications, Inc.............. 1,361
18 Sprint Corp. (c)..................... 942
16 Texas Utilities...................... 544
--------
9,322
--------
Total Common Stocks 92,279
--------
CORPORATE BONDS (12.0%):
Banking, Finance & Insurance (7.6%):
$ 1,000 Association Corp., 8.27%, 11/8/01.... $ 1,055
1,000 Bankamerica Corp., 8.13%, 2/1/02..... 1,049
500 Chrysler Financial Corp., 5.88%,
2/7/01............................. 488
420 Circuit City Credit Card Master
Trust, 6.38%, 8/15/05.............. 419
1,000 First Hawaiian, Inc., 6.25%,
8/15/00............................ 985
</TABLE>
Continued
26
<PAGE> 345
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Banking, Finance & Insurance, continued:
$ 610 Ford Credit Auto Loan Master Trust,
5.50%, 2/15/03..................... $ 588
500 Ford Motor Credit Corp., 8.38%,
1/15/00............................ 521
250 General Motors Acceptance Corp.,
7.00%, 3/1/00...................... 253
1,000 General Motors Acceptance Corp.,
8.25%, 2/24/04..................... 1,057
1,000 Goldman Sachs Group, 7.20%, 3/1/07,
144 A.............................. 1,004
750 Huntington National Bank, 6.75%,
6/15/03............................ 740
250 Lehman Brothers Holdings, Inc.,
6.38%, 6/1/98...................... 251
300 Lehman Brothers Holdings, Inc.,
8.88%, 11/1/98..................... 310
500 Lehman Brothers, Inc., 9.88%,
10/15/00........................... 544
550 MBNA Master Credit Card, 5.40%,
3/15/99............................ 546
800 McDonnell Douglas Corp., 9.30%,
9/11/02............................ 842
500 Midland Bank PLC, 6.95%, 3/15/11..... 483
250 Nationsbank Texas, 6.75%, 8/15/00.... 251
1,000 Society National Bank, 6.75%,
6/15/03............................ 991
500 Suntrust Banks, 7.38%, 7/1/02........ 511
--------
12,888
--------
Industrials (2.5%):
250 Anheuser Busch Co., 8.75%, 12/1/99... 263
500 Campbell Soup Co., 5.63%, 9/15/03.... 471
250 Coca-Cola Co., 7.88%, 9/15/98........ 255
500 Dayton Hudson Corp., 7.25%, 9/1/04... 502
200 Du Pont (EI) de Nemours & Co., 8.70%,
2/7/01............................. 213
250 Ford Motor Co., 9.00%, 9/15/01....... 269
200 Illinois Tool Works, 7.50%,
12/1/98............................ 203
500 J C Penney & Co., 5.38%, 11/15/98.... 494
250 Johnson & Johnson, 7.38%, 6/29/02.... 257
500 Occidental Petroleum, 9.25%,
8/1/19............................. 581
750 Sears Roebuck Acceptance, 7.13%,
5/2/03............................. 758
--------
4,266
--------
Transportation (0.3%):
500 Union Pacific Co., 7.60%, 5/1/05..... 513
--------
Utilities (1.6%):
500 AT&T Corp., 6.00%, 8/1/00............ 492
500 AT&T Corp., 7.50%, 6/1/06............ 516
250 Duke Power Co., 7.00%, 7/1/00........ 253
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Utilities, continued:
$ 250 Southern California Edison, 7.50%,
4/15/99............................ $ 255
500 Virginia Electric & Power, 6.63%,
4/1/03............................. 494
675 Virginia Electric & Power MTN, 9.15%,
6/10/99............................ 707
--------
2,717
--------
Total Corporate Bonds 20,384
--------
FEDERAL AGENCY DEBENTURES (1.2%):
Federal National Mortgage Assoc. (1.2%):
1,000 5.55%, 9/8/98........................ 997
1,000 5.53%, 2/10/99....................... 988
--------
Total Federal Agency Debentures 1,985
--------
U.S. GOVERNMENT AGENCY MORTGAGES (14.8%):
Federal Home Loan Mortgage Corp. (5.2%):
182 10.00%, 9/1/03, Pool #E30407......... 192
308 8.00%, 3/1/08, Pool #E45796.......... 317
983 7.00%, 1/1/12, Pool #E66116.......... 984
331 10.50%, 10/1/20, Pool #D24679........ 367
828 8.00%, 4/1/25, Pool #C00401.......... 850
925 8.00%, 5/1/25, Pool #D60455.......... 949
482 7.00%, 2/1/26, Pool #D69343.......... 474
705 6.50%, 2/1/26, Pool #D68616.......... 677
975 6.50%, 2/1/26, Pool #D68124.......... 936
491 7.00%, 3/1/26, Pool #D69430.......... 482
951 7.50%, 5/1/26, Pool #C00460.......... 956
890 8.50%, 7/1/26, Pool #C00472.......... 926
991 7.00%, 10/1/26, Pool #D75494......... 974
--------
9,084
--------
Federal National Conventional Loan (0.7%):
667 8.00%, 6/1/24, Pool #270402.......... 684
417 8.00%, 6/1/24, Pool #250085.......... 428
--------
1,112
--------
Federal National Mortgage Assoc. (3.8%):
275 6.40%, 3/25/03....................... 268
250 6.40%, 1/13/04....................... 243
300 8.05%, 7/14/04....................... 300
929 6.50%, 5/1/11, Pool #337195.......... 912
924 7.00%, 7/1/25, Pool #317252.......... 908
914 6.50%, 2/1/26, Pool #337115.......... 875
936 7.50%, 5/1/26, Pool #344916.......... 939
979 7.00%, 5/1/26, Pool #346269.......... 960
983 7.50%, 11/1/26, Pool #363626......... 986
--------
6,391
--------
Government National Mortgage Assoc. (5.1%):
772 5.50%, 4/20/11, Pool #2222........... 722
118 8.00%, 4/15/17, Pool # 192100........ 122
</TABLE>
Continued
27
<PAGE> 346
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 77 8.00%, 5/15/22, Pool #329176......... $ 79
90 6.50%, 1/15/24, Pool #376656......... 87
236 8.00%, 4/15/24, Pool #376038......... 242
1,231 8.00%, 8/15/24, Pool #394024......... 1,266
1,428 7.00%, 8/15/25, Pool #413007......... 1,407
990 6.50%, 4/15/26, Pool #424185......... 947
994 6.50%, 4/15/26, Pool #416192......... 951
929 7.50%, 5/15/26, Pool #375345......... 933
990 7.00%, 5/15/26, Pool #375344......... 973
925 8.50%, 1/15/27, Pool #432266......... 962
--------
8,691
--------
Total U.S. Government Agency Mortgages 25,278
--------
U.S. TREASURY OBLIGATIONS (14.3%):
U.S. Treasury Bills (0.1%):
110 7/10/97 (d).......................... 110
35 7/17/97 (d).......................... 35
90 8/21/97 (d).......................... 89
--------
234
--------
U.S. Treasury Bonds (4.7%):
750 11.25%, 2/15/15...................... 1,089
900 7.50%, 11/15/16...................... 962
4,700 8.13%, 8/15/19 (c)................... 5,362
500 7.88%, 2/15/21 (c)................... 557
--------
7,970
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Notes (9.5%):
$ 3,500 7.25%, 2/15/98 (c)................... $ 3,532
600 9.00%, 5/15/98....................... 616
200 8.88%, 2/15/99....................... 209
300 5.88%, 3/31/99....................... 299
3,250 7.00%, 4/15/99 (c)................... 3,301
300 6.00%, 10/15/99 (c).................. 299
250 7.75%, 11/30/99...................... 259
2,500 7.75%, 1/31/00 (c)................... 2,590
3,000 6.50%, 5/31/01....................... 3,015
300 6.50%, 8/31/01....................... 301
150 6.25%, 2/15/03 (c)................... 149
1,500 6.50%, 5/15/05 (c)................... 1,496
--------
16,066
--------
Total U.S. Treasury Obligations 24,270
--------
REPURCHASE AGREEMENTS (1.6%):
2,640 Aubrey G. Lanston & Co., 5.90%,
7/1/97 (Collateralized by $2,640
U.S. Treasury Notes, 6.25%,
1/31/02, market value-$2,761) 2,640
--------
Total Repurchase Agreements 2,640
--------
Total (Cost--$153,456) (a) $170,647
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $170,250.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $77. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $18,134
Unrealized depreciation.................................................. (1,020)
-------
Net unrealized appreciation.............................................. $17,114
=======
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
(d) Serves as collateral for futures contracts.
<TABLE>
<CAPTION>
CURRENT
NUMBER OPENING MARKET
OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- ---------- --------------------------------- --------- -------
<C> <S> <C> <C>
Long S&P 500 September 1997
1 Futures $428 $445
</TABLE>
See notes to financial statements.
28
<PAGE> 347
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INCOME EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (88.6%):
Business Equipment & Services (3.2%):
85 Automatic Data Processing, Inc.
(b)............................... $ 3,995
210 Browning-Ferris Industries, Inc.
(b)............................... 6,983
225 Dun & Bradstreet Corp............... 5,906
180 National Service Industries, Inc.... 8,764
--------
25,648
--------
Capital Goods (5.1%):
215 Cooper Industries, Inc.............. 10,696
80 Deere & Co.......................... 4,390
300 General Electric Co................. 19,614
70 Johnson Controls, Inc. (b).......... 2,874
155 Westinghouse Electric Corp.......... 3,581
--------
41,155
--------
Consumer Durable (1.9%):
70 Briggs & Stratton Corp.............. 3,500
320 Ford Motor Co....................... 12,080
--------
15,580
--------
Consumer Non-Durable (15.7%):
110 American Greetings Corp., Class A... 4,084
240 Campbell Soup Co.................... 12,000
75 Clorox Co........................... 9,900
230 Coca Cola Co........................ 16,041
235 ConAgra, Inc........................ 15,069
145 Eastman Kodak Co.................... 11,129
160 H.J. Heinz Co....................... 7,380
125 International Flavors & Fragrances,
Inc............................... 6,313
60 McCormick & Co., Inc................ 1,515
80 PepsiCo, Inc........................ 3,005
360 Philip Morris Co., Inc.............. 15,975
95 Proctor & Gamble Co. (b)............ 13,419
55 Quaker Oats Co...................... 2,468
100 RJR Nabisco Holdings Corp........... 3,300
60 V.F. Corp........................... 5,108
--------
126,706
--------
Consumer Services (1.1%):
150 McGraw-Hill Co., Inc................ 8,822
--------
Energy (10.9%):
160 Amoco Corp.......................... 13,910
100 Atlantic Richfield Co............... 7,050
150 Dresser Industries, Inc............. 5,588
300 Exxon Corp.......................... 18,450
85 Halliburton Co...................... 6,736
240 Mobil Corp.......................... 16,770
360 Royal Dutch Petroleum Co............ 19,575
--------
88,079
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services (16.2%):
160 Allstate Corp....................... $ 11,680
250 American Express Co. (b)............ 18,625
300 BankAmerica Corp.................... 19,367
60 Chase Manhattan Corp................ 5,824
50 Citicorp............................ 6,028
180 Federal National Mortgage Assoc..... 7,853
130 First Tennessee National Corp.
(b)............................... 6,240
145 J.P. Morgan & Co., Inc.............. 15,134
190 Lincoln National Corp............... 12,231
85 National City Corp.................. 4,463
100 Reliastar Financial Corp............ 7,313
100 TransAmerica Corp................... 9,356
115 U.S. Bancorp (b).................... 7,374
--------
131,488
--------
Health Care (11.7%):
185 American Home Products Co........... 14,153
260 Baxter International, Inc........... 13,585
285 Bristol Myers Squibb Co............. 23,083
50 Merck & Co., Inc.................... 5,175
75 Pfizer, Inc......................... 8,963
220 Schering Plough Corp................ 10,533
150 Warner Lambert Co................... 18,638
--------
94,130
--------
Multi-Industry (1.1%):
85 Minnesota Mining & Manufacturing
Co................................ 8,670
--------
Raw Materials (4.2%):
170 Dow Chemical Co..................... 14,811
140 Du Pont (EI) de Nemours & Co........ 8,803
170 Nalco Chemical Co................... 6,566
150 Pall Corp. (b)...................... 3,488
--------
33,668
--------
Retail (2.5%):
120 Albertsons, Inc..................... 4,380
115 May Department Stores Co............ 5,434
185 Wal-Mart Stores, Inc................ 6,255
80 Walgreen Co......................... 4,290
--------
20,359
--------
Shelter (0.4%):
60 Weyerhaeuser Co..................... 3,120
--------
Technology (6.8%):
100 AMP, Inc. (b)....................... 4,175
100 Boeing Co. (b)...................... 5,306
110 Hewlett Packard Co.................. 6,160
30 Intel Corp.......................... 4,254
60 International Business Machines..... 5,411
65 Lockheed Martin Corp................ 6,732
</TABLE>
Continued
29
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INCOME EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
90 United Technologies Corp............ $ 7,470
200 Xerox Corp.......................... 15,775
--------
55,283
--------
Transportation (0.8%):
95 Union Pacific Corp. (b)............. 6,698
--------
Utilities (7.0%):
170 AT&T Corp. (b)...................... 5,961
175 BellSouth Corp...................... 8,116
175 Central & South West Corp........... 3,719
160 Entergy Corp. (b)................... 4,380
210 GTE Corp............................ 9,214
120 Ku Energy Cop. (b).................. 4,095
110 Questar Corp........................ 4,441
200 SBC Communications, Inc............. 12,374
80 Sprint Corp......................... 4,210
--------
56,510
--------
Total Common Stocks 715,916
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
CONVERTIBLE BONDS (5.0%):
$ 7,000 Alza Corp., 5.00%, 5/1/06........... $ 7,096
6,500 Hilton Hotels Corp., 5.00%,
5/15/06........................... 6,923
6,500 Home Depot, Inc., 3.25%, 10/1/01,
Callable 10/1/99 @ 100.81......... 7,425
7,000 Masco Corp., 5.25%, 2/15/12......... 7,368
5,500 Medical Care International, 6.75%,
10/1/06........................... 5,528
5,500 Pep Boys-Manny, Moe & Jack, 4.00%,
9/1/99............................ 5,665
--------
Total Convertible Bonds 40,005
--------
PREFERRED STOCKS (5.0%):
160 Corning Delaware.................... 13,920
120 Crown Cork & Seal Co................ 6,060
120 Cyprus Amax Minerals Co............. 6,660
45 Microsoft Corp...................... 3,915
155 Sonoco Products..................... 9,939
--------
Total Preferred Stocks 40,494
--------
REPURCHASE AGREEMENTS (1.2%):
9,787 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $10,031
U.S. Treasury Note, 5.75%,
10/31/00, market value $9,983).... 9,787
--------
Total Repurchase Agreements 9,787
--------
Total (Cost--$449,883) (a) $806,202
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $807,501.
(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.................................................. $357,471
Unrealized depreciation.................................................. (1,152)
--------
Net unrealized appreciation.............................................. $356,319
========
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
30
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EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (95.4%):
Business Equipment & Services (1.9%):
31 Automatic Data Processing, Inc.
(c)............................... $ 1,454
22 Browning-Ferris Industries, Inc..... 741
9 Canadian Moore Corp., Ltd........... 181
8 Ceridian Corp. (b)(c)............... 336
18 Cognizant Corp...................... 725
8 Computer Sciences Corp. (b)......... 563
9 Deluxe Corp......................... 303
18 Dun & Bradstreet Corp............... 470
7 Ecolab, Inc......................... 327
16 Equifax, Inc........................ 584
47 First Data Corp. (c)................ 2,071
11 H & R Block......................... 344
13 Ikon Office Solutions............... 336
9 Interpublic Group Co., Inc.......... 521
3 John H. Harland Co.................. 65
31 Laidlaw Inc., Class B, Non-Voting... 432
5 National Service Industries, Inc.... 255
16 Pitney Bowes, Inc................... 1,124
16 R.R. Donnelley & Sons Co............ 596
9 Ryder Systems, Inc.................. 281
6 Safety-Kleen Corp................... 108
24 Service Corp. International (c)..... 783
48 WMX Technologies, Inc............... 1,526
--------
14,126
--------
Capital Goods (5.8%):
3 Aeroquip-Vickers, Inc............... 121
9 Black & Decker Corp................. 335
8 Case Corp........................... 517
20 Caterpillar, Inc.................... 2,170
4 Cincinnati Milacron, Inc............ 105
12 Cooper Industries, Inc.............. 619
4 Crane Co............................ 187
4 Cummins Engine, Inc................. 301
27 Deere & Co.......................... 1,471
12 Dover Corp.......................... 721
47 Emerson Electric Co................. 2,586
9 Fluor Corp.......................... 490
4 Foster Wheeler Corp................. 160
345 General Electric Co................. 22,547
5 General Signal Corp. (c)............ 237
3 Giddings & Lewis, Inc............... 69
6 Grainger W.W., Inc.................. 463
5 Harnischfeger Industries, Inc.
(c)............................... 217
13 Honeywell, Inc...................... 1,009
25 Illinois Tool Works (c)............. 1,249
11 Ingersoll Rand Co................... 669
9 Johnson Controls, Inc............... 353
0 Nacco Industries, Inc............... 22
8 Navistar International Corp. (b).... 142
5 Owens-Corning Fiberglass Corp....... 235
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Capital Goods, continued:
8 Paccar, Inc......................... $ 366
8 Parker-Hannifin Corp................ 481
19 PPG Industries, Inc................. 1,117
18 Sherwin-Williams Co................. 570
7 Snap-On, Inc........................ 270
9 Stanley Works....................... 367
16 Thermo Electron Corp. (b)........... 530
6 Timken Co........................... 201
17 Tyco International, Ltd. (c)........ 1,214
65 Westinghouse Electric Corp.......... 1,509
--------
43,620
--------
Consumer Durable (2.2%):
16 Autozone, Inc. (b).................. 375
2 Briggs & Stratton Corp.............. 99
74 Chrysler Corp....................... 2,425
9 Cooper Tire & Rubber Co............. 198
10 Dana Corp........................... 395
8 Eaton Corp.......................... 726
7 Echlin, Inc......................... 239
125 Ford Motor Co....................... 4,701
77 General Motors Corp................. 4,270
19 Genuine Parts Co.................... 650
16 Goodyear Tire & Rubber Co........... 1,008
12 ITT Industries, Inc................. 313
11 Maytag Corp......................... 281
8 Whirlpool Corp...................... 442
--------
16,122
--------
Consumer Non-Durable (12.4%):
5 Alberto Culver Co., Class B (c)..... 150
8 American Greetings Corp., Class A... 301
52 Anheuser Busch Co., Inc............. 2,182
58 Archer-Daniels-Midland Co........... 1,372
14 Avon Products, Inc.................. 1,016
3 Ball Corp........................... 79
6 Bemis Co............................ 261
7 Brown-Forman Corp., Class B......... 361
49 Campbell Soup Co.................... 2,461
6 Clorox Co........................... 743
260 Coca Cola Co........................ 18,155
31 Colgate Palmolive Co. (c)........... 1,998
25 ConAgra, Inc........................ 1,612
4 Coors Adolph Co., Class B........... 102
15 CPC International................... 1,412
13 Crown Cork & Seal Co. (c)........... 698
35 Eastman Kodak Co.................... 2,717
4 Fleming Co., Inc.................... 68
18 Fortune Brands, Inc................. 688
8 Fruit of the Loom, Inc., Class A
(b)............................... 257
17 General Mills, Inc. (c)............. 1,086
58 Gillette Co......................... 5,514
</TABLE>
Continued
31
<PAGE> 350
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Non-Durable, continued:
39 H.J. Heinz Co....................... $ 1,776
16 Hershey Foods Corp.................. 893
12 International Flavors &
Fragrances, Inc................... 582
4 Jostens, Inc........................ 112
23 Kellogg Co. (c)..................... 1,948
8 Liz Claiborne, Inc. (c)............. 382
17 Newell Co........................... 667
30 Nike, Inc., Class B................. 1,769
162 PepsiCo, Inc........................ 6,096
255 Philip Morris Co., Inc.............. 11,331
9 Pioneer Hi-Bred International,
Inc............................... 736
5 Polaroid Corp....................... 277
71 Proctor & Gamble Co................. 10,034
14 Quaker Oats Co...................... 624
11 Ralston Purina Group................ 899
6 Reebok International Ltd. (b)....... 293
16 Rubbermaid, Inc..................... 487
4 Russell Corp........................ 120
51 Sara Lee, Corp...................... 2,105
39 Seagram Co., Ltd.................... 1,577
1 Springs Industries, Inc., Class A... 66
6 Stride Rite Corp.................... 73
8 Supervalu, Inc...................... 262
19 Sysco Corp.......................... 699
7 Tupperware Corp..................... 249
17 Unilever N V........................ 3,569
21 UST, Inc............................ 578
7 V.F. Corp........................... 589
12 Wrigley (Wm.) Junior Co. (c)........ 813
--------
92,839
--------
Consumer Services (3.3%):
10 Brunswick Corp...................... 315
34 Comcast Corp., Class A.............. 736
41 CUC International, Inc. (b)(c)...... 1,065
10 Dow Jones & Co., Inc................ 410
15 Gannett, Inc........................ 1,459
10 Harrah's Entertainment, Inc. (b).... 191
14 Hasbro, Inc. (c).................... 390
26 Hilton Hotels Corp.................. 696
16 Hospitality Franchise Systems, Inc.
(b)............................... 951
12 ITT Corp. (b)....................... 735
4 King World Productions, Inc. (b).... 131
10 Knight-Ridder, Inc.................. 513
13 Marriott International, Inc......... 813
29 Mattel, Inc. (c).................... 977
11 McGraw-Hill Co., Inc................ 627
5 Meredith Corp....................... 155
10 New York Times Co., Class A......... 525
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Services, continued:
69 Tele-Communications, Inc.,
Class A (b)(c).................... $ 1,019
60 Time Warner, Inc.................... 2,878
11 Times Mirror Co., Class A (c)....... 632
14 Tribune Co.......................... 669
49 U.S. West, Inc. (b)................. 1,856
38 Viacom, Inc., Class B (b)........... 1,131
71 Walt Disney Co...................... 5,705
--------
24,579
--------
Energy (8.5%):
10 Amerada Hess Corp................... 538
52 Amoco Corp.......................... 4,512
7 Ashland, Inc........................ 316
34 Atlantic Richfield Co............... 2,393
15 Baker Hughes, Inc................... 578
13 Burlington Northern................. 582
68 Chevron Corp. (c)................... 5,022
19 Dresser Industries, Inc............. 690
260 Exxon Corp.......................... 15,988
13 Halliburton Co...................... 1,043
2 Helmerich & Payne, Inc.............. 114
6 Kerr McGee Corp..................... 363
3 Louisiana Land & Exploration Co..... 187
6 McDermott International, Inc........ 182
82 Mobil Corp.......................... 5,764
33 Occidental Petroleums Corp. (c)..... 839
10 Oryx Energy Co. (b)................. 217
5 Pennzoil Co......................... 387
27 Phillips Petroleum Co............... 1,201
9 Rowan Cos., Inc. (b)(c)............. 251
224 Royal Dutch Petroleum Co............ 12,192
9 Santa Fe Energy Resources, Inc.
(b)............................... 137
25 Schlumberger Ltd.................... 3,184
8 Sun, Inc. (c)....................... 243
19 Tenneco, Inc........................ 837
27 Texaco, Inc......................... 2,984
26 Union Pacific Resources Group,
Inc............................... 648
26 Unocal Corp......................... 1,000
30 USX-Marathon Group.................. 875
6 Western Atlas, Inc. (b)............. 461
--------
63,728
--------
Financial Services (14.4%):
47 Allstate Corp....................... 3,411
50 American Express Co................. 3,711
25 American General Corp. (c).......... 1,209
49 American International Group,
Inc............................... 7,385
17 Aon Corp............................ 854
46 Banc One Corp. (c).................. 2,212
42 Bank of New York Co., Inc. (c)...... 1,805
75 BankAmerica Corp.................... 4,871
</TABLE>
Continued
32
<PAGE> 351
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
16 Bankboston Corp..................... $ 1,122
9 Bankers Trust New York Corp. (c).... 764
22 Barnett Banks, Inc.................. 1,146
6 Beneficial Corp..................... 427
18 Charles Schwab Corp................. 749
46 Chase Manhattan Corp................ 4,432
18 Chubb Corp.......................... 1,229
8 Cigna Corp.......................... 1,438
49 Citicorp............................ 5,876
12 Comerica, Inc....................... 789
19 Conseco, Inc. (c)................... 692
22 Corestates Financial Corp........... 1,169
11 Country Wide Credit................. 337
74 Federal Home Loan Mortgage Corp..... 2,558
111 Federal National Mortgage Assoc..... 4,862
11 Fifth Third Bancorp................. 911
14 First Bank System, Inc.............. 1,195
33 First Chicago NBD Corp.............. 2,002
29 First Union Corp. (c)............... 2,712
27 Fleet Financial Group, Inc.......... 1,713
9 General Re Corp..................... 1,617
7 Golden West Financial Corp.......... 470
14 Great Western Financial Corp........ 754
14 Green Tree Financial Corp........... 509
12 H.F. Ahmanson & Co.................. 509
12 Hartford Financial Services Group... 997
11 Household International, Inc........ 1,314
19 J.P. Morgan & Co., Inc.............. 2,019
8 Jefferson Pilot Corp................ 543
24 KeyCorp............................. 1,341
11 Lincoln National Corp............... 694
17 Marsh & McLennan Co................. 1,228
4 MBIA, Inc........................... 496
35 MBNA Corp. (c)...................... 1,280
28 Mellon Bank Corp. (c)............... 1,263
35 Merrill Lynch & Co.................. 2,071
13 MGIC Investment Corp. (c)........... 604
60 Morgan Stanley Dean Witter
Discover.......................... 2,584
23 National City Corp.................. 1,223
77 NationsBank Corp.................... 4,937
39 Norwest Corp. (c)................... 2,169
34 PNC Bank Corp....................... 1,405
10 Providian Financial................. 324
6 Republic N Y Corp................... 645
13 SAFECO Corp......................... 599
11 Salomon, Inc. (c)................... 614
9 St. Paul Co., Inc. (c).............. 688
24 SunTrust Banks, Inc................. 1,325
8 Torchmark Corp...................... 552
7 TransAmerica Corp................... 646
67 Travelers Group, Inc................ 4,223
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
COMMON STOCKS, CONTINUED:
Financial Services, continued:
16 U.S. Bancorp........................ $ 1,047
16 UNUM Corp........................... 680
12 USF & G Corp. (c)................... 286
18 Wachovia Corp....................... 1,044
9 Wells Fargo & Co. (c)............... 2,548
--------
106,829
--------
Health Care (11.1%):
82 Abbott Labs......................... 5,445
15 Aetna............................... 1,578
7 Allergan, Inc....................... 220
9 Alza Corp. (b)...................... 258
68 American Home Products Co. (c)...... 5,167
28 Amgen, Inc. (b)..................... 1,616
6 Bard C.R., Inc...................... 223
6 Bausch & Lomb, Inc.................. 302
29 Baxter International, Inc........... 1,505
14 Becton Dickinson & Co. (c).......... 697
9 Beverly Enterprises, Inc. (b)....... 152
12 Biomet, Inc. (c).................... 226
20 Boston Scientific Corp. (b)......... 1,247
105 Bristol Myers Squibb Co............. 8,482
11 Cardinal Health, Inc. (c)........... 653
70 Columbia/HCA Healthcare Corp. (c)... 2,738
58 Eli Lilly & Co...................... 6,315
8 Guidant Corp........................ 646
36 Healthsouth Corp. (b)(c)............ 898
17 Humana, Inc. (b).................... 393
139 Johnson & Johnson................... 8,972
8 Mallinckrodt Group, Inc............. 320
7 Manor Care, Inc..................... 222
25 Medtronic, Inc...................... 2,046
126 Merck & Co., Inc.................... 13,078
5 Millipore Corp...................... 220
67 Pfizer, Inc......................... 8,052
53 Pharmacia & Upjohn, Inc. (c)........ 1,841
77 Schering Plough Corp................ 3,684
2 Shared Medical Systems Corp. (c).... 94
9 St. Jude Medical Center, Inc.
(b)(c)............................ 347
30 Tenet Healthcare Corp. (b).......... 884
7 U.S. Surgical, Corp................. 242
19 United Healthcare Corp.............. 987
28 Warner Lambert Co................... 3,532
--------
83,282
--------
Multi-Industry (1.7%):
29 Allied Signal, Inc.................. 2,472
24 Corning, Inc. (c)................... 1,337
4 FMC Corp. (b)....................... 283
8 Harcourt General, Inc............... 383
12 Loews Corp.......................... 1,232
44 Minnesota Mining & Manufacturing
Co................................ 4,487
</TABLE>
Continued
33
<PAGE> 352
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Multi-Industry, continued:
17 Textron, Inc........................ $ 1,146
14 TRW, Inc............................ 769
11 Whittman Corp....................... 272
--------
12,381
--------
Raw Materials (3.8%):
12 Air Products & Chemical, Inc........ 955
23 Alcan Aluminum Ltd.................. 813
18 Allegheny Teledyne, Inc............. 491
18 Aluminum Co. of America (c)......... 1,385
11 Armco, Inc. (b)..................... 41
5 ASARCO, Inc......................... 139
12 Avery Dennison Corp................. 479
6 B. F. Goodrich Co................... 244
37 Barrick Gold Corp. (c).............. 821
24 Battle Mountain Gold Co............. 134
11 Bethlehem Steel Corp. (b)........... 118
10 Cyprus Amax Minerals Co............. 253
25 Dow Chemical Co..................... 2,141
118 Du Pont (EI) de Nemours & Co........ 7,440
9 Eastman Chemical Co................. 556
13 Echo Bay Mines Ltd. (b)............. 72
15 Engelhard Corp. (c)................. 317
21 Freeport-McMoran Copper & Gold,
Class B (c)....................... 660
7 Great Lakes Chemical Corp........... 367
11 Hercules, Inc. (c).................. 535
15 Homestake Mining Co................. 193
17 Inco Ltd............................ 525
5 Inland Steel Industries, Inc........ 135
61 Monsanto Co......................... 2,646
15 Morton International, Inc........... 464
7 Nalco Chemical Co................... 286
16 Newmont Mining Corp................. 629
9 Nucor Corp.......................... 524
12 Pall Corp. (c)...................... 282
7 Phelps Dodge Corp................... 580
25 Placer Dome, Inc.................... 408
16 Praxair, Inc........................ 881
7 Reynolds Metals Co.................. 485
7 Rohm & Haas Co...................... 603
11 Sigma-Aldrich Corp.................. 375
14 Union Carbide Corp.................. 674
9 USX-U.S. Steel Group, Inc........... 305
8 W.R. Grace & Co..................... 418
10 Worthington Industries, Inc......... 175
--------
28,549
--------
Retail (4.8%):
26 Albertsons, Inc..................... 965
15 American Stores Co.................. 752
11 Charming Shoppes (b)................ 55
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Retail, continued:
10 Circuit City Stores, Inc. (c)....... $ 359
21 Costco Companies, Inc. (b).......... 674
17 CVS Corp............................ 895
17 Darden Restaurants, Inc............. 153
23 Dayton Hudson Corp.................. 1,207
12 Dillard Department Stores, Inc.,
Class A........................... 406
21 Federated Department Stores, Inc.
(b)............................... 740
31 Gap, Inc............................ 1,186
6 Giant Food Inc., Class A............ 208
4 Great Atlantic & Pacific Tea,
Inc............................... 107
50 Home Depot, Inc..................... 3,451
27 J.C. Penney, Inc.................... 1,387
48 K Mart, Inc. (b)(c)................. 593
26 Kroger Co. (b)...................... 744
28 Limited, Inc........................ 577
3 Longs Drug Stores, Inc.............. 74
18 Lowe's Co........................... 663
26 May Department Stores Co............ 1,236
73 McDonald's Corp..................... 3,537
4 Mercantile Stores Co., Inc.......... 223
9 Nordstrom, Inc...................... 436
7 Pep Boys-Manny, Moe & Jack.......... 229
12 Rite Aid Corp....................... 603
41 Sears Roebuck & Co.................. 2,195
7 Tandy Corp.......................... 380
16 TJX Co., Inc. (c)................... 422
29 Toys R Us, Inc. (b)................. 1,027
240 Wal-Mart Stores, Inc................ 8,121
26 Walgreen Co......................... 1,397
13 Wendy's International, Inc.......... 343
16 Winn Dixie Stores, Inc.............. 588
14 Woolworth Corp. (b)................. 329
--------
36,262
--------
Shelter (1.5%):
4 Armstrong World Industries, Inc..... 276
5 Boise Cascade Corp. (c)............. 190
3 Centex Corp......................... 110
10 Champion International Co........... 540
3 Fleetwood Enterprises, Inc.......... 103
9 Georgia Pacific Corp................ 810
31 International Paper Co.............. 1,524
9 James River Corp. of Virginia (c)... 329
4 Kaufman & Broad Home Corp........... 70
59 Kimberly Clark Corp................. 2,916
11 Louisiana Pacific Corp.............. 236
17 Masco Corp. (c)..................... 693
6 Mead Corp........................... 387
3 Potlatch Corp....................... 116
2 Pulte Corp.......................... 79
</TABLE>
Continued
34
<PAGE> 353
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Shelter, continued:
10 Stone Container Corp. (b)........... $ 139
6 Temple Inland, Inc.................. 344
7 Union Camp Corp..................... 373
11 Westvaco Corp....................... 331
21 Weyerhaeuser Co..................... 1,104
6 Williamette Industries, Inc. (c).... 441
--------
11,111
--------
Technology (14.1%):
35 3Com Corp. (b)(c)................... 1,566
7 Adobe Systems, Inc.................. 259
14 Advanced Micro Devices, Inc. (b).... 510
12 Amdahl Corp. (b).................... 107
22 AMP, Inc............................ 936
9 Andrew Corp. (b).................... 265
13 Apple Computer, Inc. (b)............ 180
18 Applied Materials, Inc. (b)......... 1,303
5 Auto Desk, Inc...................... 201
20 Bay Networks, Inc. (b).............. 521
75 Boeing Co. (c)...................... 3,976
16 Cabletron Systems, Inc. (b)......... 447
69 Cisco Systems, Inc. (b)............. 4,645
29 Compaq Computer Corp. (b)(c)........ 2,864
38 Computer Associates International,
Inc............................... 2,126
3 Data General Corp. (b)(c)........... 90
18 Dell Computer Corp. (b)............. 2,067
16 Digital Equipment Corp. (b)......... 556
12 DSC Communications Corp. (b)........ 263
6 EG&G, Inc........................... 129
26 EMC Corp. (b)....................... 1,006
7 General Dynamics Corp............... 509
13 General Instrument Corp. (b)(c)..... 315
4 Harris Corp......................... 332
106 Hewlett Packard Co.................. 5,960
86 Intel Corp.......................... 12,179
5 Intergraph Corp. (b)................ 44
104 International Business Machines..... 9,399
20 Lockheed Martin Corp................ 2,092
13 LSI Logic Corp. (b)................. 429
66 Lucent Technologies, Inc............ 4,788
23 McDonnell Douglas Corp.............. 1,579
22 Micron Technology, Inc. (b)(c)...... 859
126 Microsoft Corp. (b)................. 15,885
62 Motorola, Inc....................... 4,686
13 National Semiconductor Corp. (b).... 409
27 Northern Telecom, Ltd............... 2,417
6 Northrop Grumman Corp. (c).......... 543
38 Novell, Inc. (b).................... 264
69 Oracle Corp. (b).................... 3,458
13 Parametric Technology Corp. (b)..... 566
5 Perkin-Elmer Corp................... 371
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
5 Raychem Corp........................ $ 346
26 Raytheon Co. (c).................... 1,308
23 Rockwell International Corp......... 1,349
8 Scientific-Atlanta, Inc............. 181
26 Seagate Technology, Inc. (b)........ 925
17 Silicon Graphics, Inc. (b).......... 261
39 Sun Microsystems, Inc. (b).......... 1,452
12 Tandem Computers (b)................ 246
3 Tektronix, Inc...................... 194
19 Tellabs, Inc. (b)................... 1,034
20 Texas Instruments, Inc.............. 1,655
5 Thomas & Betts Corp................. 281
18 Unisys, Corp. (b)(c)................ 136
25 United Technologies Corp............ 2,113
34 Xerox Corp.......................... 2,683
--------
105,265
--------
Transportation (1.2%):
9 AMR Corp. (b)....................... 870
16 Burlington Northern Santa Fe
Corp. (c)......................... 1,429
4 Caliber Systems, Inc................ 151
2 Consolidated Freightways Corp.
(b)............................... 30
22 CSX Corp. (c)....................... 1,216
8 Delta Air Lines, Inc................ 625
12 Federal Express Corp. (b)(c)........ 719
13 Norfolk Southern Corp............... 1,359
15 Southwest Airlines Co............... 393
26 Union Pacific Corp.................. 1,805
6 US Air Group (b)(c)................. 219
--------
8,816
--------
Utilities (8.7%):
52 Airtouch Communications, Inc. (b)... 1,425
20 Alltel Corp......................... 669
20 American Electric Power, Inc........ 825
58 Ameritech Corp...................... 3,951
169 AT&T Corp. (c)...................... 5,930
15 Baltimore Gas & Electric Co......... 412
46 Bell Atlantic Corp. (c)............. 3,487
104 BellSouth Corp...................... 4,816
16 Carolina Power & Light Co........... 587
22 Central & South West Corp........... 468
16 Cinergy Corp........................ 563
11 Coastal Corp........................ 562
6 Columbia Gas System, Inc............ 400
25 Consolidated Edison Co. of New York,
Inc............................... 724
10 Consolidated Natural Gas Co......... 521
15 Detroit Edison Co................... 423
18 Dominion Resources, Inc. of
Virginia.......................... 662
37 Duke Power Co., Inc................. 1,792
</TABLE>
Continued
35
<PAGE> 354
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities, continued:
1 Eastern Enterprises................. $ 44
43 Edison International................ 1,067
26 Enron Corp. (c)..................... 1,070
7 Enserch Corp........................ 163
24 Entergy Corp. (c)................... 658
20 Florida Power & Light Group, Inc.... 902
17 Frontier Corp....................... 339
12 General Public Utilities Corp....... 434
101 GTE Corp............................ 4,431
27 Houston Industries (c).............. 571
72 MCI Communications Corp............. 2,767
15 Niagara Mohawk Power Corp. (b)...... 129
6 NICOR, Inc.......................... 212
13 Noram Energy Corp................... 200
7 Northern States Power Co............ 379
46 NYNEX Corp.......................... 2,677
16 Ohio Edison Co...................... 349
2 Oneok, Inc.......................... 78
9 Pacific Enterprises................. 302
30 Pacificorp.......................... 663
23 Peco Energy Corp.................... 489
3 Peoples Energy Corp................. 126
44 PG & E Corp. (c).................... 1,077
17 PP&L Resources, Inc................. 331
26 Public Service Enterprise Group..... 640
96 SBC Communications, Inc............. 5,972
9 Sonat, Inc.......................... 466
70 Southern Co......................... 1,529
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
COMMON STOCKS, CONTINUED:
Utilities, continued:
45 Sprint Corp......................... $ 2,384
23 Texas Utilities..................... 806
65 U.S. West Media Group............... 1,323
22 Unicom Corp......................... 498
11 Union Electric Co................... 396
16 Williams Cos., Inc. (c)............. 721
94 WorldCom, Inc. (b)(c)............... 2,995
--------
65,405
--------
Total Common Stocks 712,914
--------
U.S. TREASURY OBLIGATIONS (0.1%):
U.S. Treasury Bills (0.1%):
$ 495 7/17/97 (d)......................... 493
175 8/14/97 (d)......................... 174
290 8/21/97 (d)......................... 288
30 8/28/97 (d)......................... 30
85 9/25/97 (d)......................... 84
--------
Total U.S. Treasury Obligations 1,069
--------
REPURCHASE AGREEMENTS (4.3%):
31,897 Aubrey G. Lanston & Co., 5.90%,
7/1/97 (Collateralized by $31,819
U.S. Treasury Notes, 6.13%,
8/31/98, market value-$33,181).... 31,896
--------
Total Repurchase Agreements 31,896
--------
Total (Cost--$518,526) (a) $745,879
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $747,856.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $616. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $231,704
Unrealized depreciation.................................................. (4,967)
--------
Net unrealized appreciation.............................................. $226,737
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
(d) Serves as collateral for futures contracts.
<TABLE>
<CAPTION>
CURRENT
NUMBER OPENING MARKET
OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- ---------- --------------------------------- --------- -------
<C> <S> <C> <C>
Long S&P 500 September 1997
68 Futures $30,649 $30,269
</TABLE>
See notes to financial statements.
36
<PAGE> 355
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
VALUE GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (98.3%):
Capital Goods (7.0%):
64 BW/IP Holdings, Inc................. $ 1,302
32 Case Corp........................... 2,218
56 Cooper Industries, Inc.............. 2,796
83 Emerson Electric Co................. 4,592
202 General Electric Co................. 13,225
63 Ingersoll Rand Co................... 3,915
105 Teleflex, Inc....................... 3,266
79 Thermo Electron Corp. (b)(c)........ 2,669
--------
33,983
--------
Consumer Durable (2.6%):
131 Autozone, Inc. (b).................. 3,077
144 Chrysler Corp....................... 4,725
69 Lear Corp. (b)...................... 3,049
38 Whirlpool Corp...................... 2,068
--------
12,919
--------
Consumer Non-Durable (11.5%):
146 Archer-Daniels-Midland Co........... 3,419
97 Coca Cola Co........................ 6,759
49 Dole Food, Inc...................... 2,108
72 McCormick & Co., Inc................ 1,813
178 PepsiCo, Inc........................ 6,667
220 Philip Morris Co., Inc.............. 9,776
33 Proctor & Gamble Co. (c)............ 4,647
66 Quaker Oats Co...................... 2,966
91 Revlon, Inc. (b).................... 4,710
111 RJR Nabisco Holdings Corp........... 3,670
111 Supervalu, Inc...................... 3,833
121 Sysco Corp. (c)..................... 4,431
37 Universal Corp...................... 1,184
--------
55,983
--------
Consumer Services (5.6%):
49 Belo (A.H.) Corp., Series A......... 2,044
80 Callaway Golf Co. (c)............... 2,822
155 CUC International, Inc. (b)(c)...... 3,996
118 Hasbro, Inc. (c).................... 3,357
114 Hilton Hotels Corp.................. 3,031
65 Mattel, Inc. (c).................... 2,198
51 MGM Grand, Inc. (b)(c).............. 1,876
114 Time Warner, Inc.................... 5,486
33 Walt Disney Co...................... 2,616
--------
27,426
--------
Energy (7.2%):
46 Ashland, Inc........................ 2,133
55 Atlantic Richfield Co............... 3,863
41 Devon Energy Corp................... 1,507
38 Dresser Industries, Inc. (c)........ 1,430
151 Exxon Corp.......................... 9,274
74 Mapco, Inc.......................... 2,322
96 Mobil Corp.......................... 6,708
101 Tosco Corp.......................... 3,018
102 USX-Marathon Group.................. 2,942
53 Weatherford Enterra, Inc. (b)....... 2,033
--------
35,230
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services (15.0%):
7 American International Group,
Inc............................... $ 986
101 BankAmerica Corp.................... 6,521
29 Cigna Corp.......................... 5,183
103 Equitable Co., Inc. (c)............. 3,435
158 Federal National Mortgage Assoc..... 6,869
53 First Union Corp. (c)............... 4,940
26 First Virginia Banks, Inc........... 1,568
66 Fleet Financial Group, Inc.......... 4,193
54 Hartford Financial Services Group... 4,444
77 Mellon Bank Corp.................... 3,452
81 Morgan Stanley Dean Witter
Discover.......................... 3,484
79 National City Corp.................. 4,121
51 Pacific Century Financial Corp...... 2,359
25 Provident Co., Inc. (c)............. 1,348
62 Regions Financial Corp.............. 1,961
79 Southtrust Corp..................... 3,269
75 SunTrust Banks, Inc................. 4,124
33 TransAmerica Corp................... 3,088
102 Travelers Group, Inc................ 6,458
31 Washington Mutual, Inc. (c)......... 1,876
--------
73,679
--------
Health Care (12.4%):
88 Abbott Labs......................... 5,861
46 Amgen, Inc. (b)..................... 2,685
69 Baxter International, Inc........... 3,605
49 Boston Scientific Corp. (b)......... 3,004
104 Bristol Myers Squibb Co............. 8,400
34 Cardinal Health, Inc. (c)........... 1,947
35 Centocor, Inc. (b).................. 1,072
85 Columbia/HCA Healthcare Corp. (c)... 3,334
61 Eli Lilly & Co...................... 6,635
35 Guidant Corp........................ 2,958
20 HBO & Co............................ 1,384
105 Merck & Co., Inc.................... 10,908
44 Phycor, Inc. (b)(c)................. 1,529
105 Schering Plough Corp................ 5,008
51 Vencor, Inc. (b).................... 2,219
--------
60,549
--------
Raw Materials (5.3%):
69 B. F. Goodrich Co................... 2,971
46 Betzdearborn, Inc. (c).............. 3,023
55 Du Pont (EI) de Nemours & Co........ 3,458
57 Ferro Corp.......................... 2,094
53 Lubrizol Corp....................... 2,227
67 Monsanto Co......................... 2,902
75 Morton International, Inc........... 2,249
64 Nalco Chemical Co................... 2,472
49 Praxair, Inc........................ 2,727
100 Wellman, Inc........................ 1,731
--------
25,854
--------
Retail (5.5%):
85 Dollar General Corp................. 3,193
139 Just For Feet, Inc. (b)(c).......... 2,429
117 Kroger Co. (b)...................... 3,384
179 Officemax, Inc. (b)................. 2,580
</TABLE>
Continued
37
<PAGE> 356
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
VALUE GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Retail, continued:
48 Outback Steakhouse, Inc. (b)........ $ 1,154
65 TJX Co., Inc. (c)................... 1,709
106 Toys R Us, Inc. (b)(c).............. 3,700
260 Wal-Mart Stores, Inc................ 8,801
--------
26,950
--------
Shelter (1.9%):
125 Kaufman & Broad Home Corp........... 2,202
59 Masco Corp. (c)..................... 2,451
61 Pentair, Inc........................ 2,012
48 Weyerhaeuser Co..................... 2,480
--------
9,145
--------
Technology (14.7%):
27 Altera Corp. (b).................... 1,369
85 Analog Devices, Inc. (b)(c)......... 2,268
44 Applied Materials, Inc. (b)......... 3,144
46 BMC Software, Inc. (b).............. 2,558
53 Cadence Design Systems, Inc
(b)(c)............................ 1,782
95 Cisco Systems, Inc. (b)............. 6,404
45 Compaq Computer Corp. (b)(c)........ 4,446
34 Dell Computer Corp. (b)............. 3,946
23 General Motors Corp., Class H....... 1,299
90 Hewlett Packard Co.................. 5,034
67 Intel Corp.......................... 9,544
84 International Business Machines..... 7,612
30 Lockheed Martin Corp................ 3,107
40 Lucent Technologies, Inc............ 2,861
98 Microsoft Corp. (b)................. 12,361
77 Orbital Sciences Corp. (b)(c)....... 1,222
63 Rohr Industries, Inc. (b)........... 1,375
36 Teradyne, Inc. (b).................. 1,425
--------
71,757
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities (9.6%):
44 AES Corp. (b)(c).................... $ 3,141
49 Century Telephone Enterprises....... 1,661
162 Edison International................ 4,032
99 Enron Corp. (c)..................... 4,045
91 General Public Utilities Corp....... 3,279
151 GTE Corp............................ 6,638
82 MCI Communications Corp............. 3,147
64 MCN Corp. (c)....................... 1,957
51 National Fuel Gas Co................ 2,151
107 New York State Electric & Gas....... 2,240
112 SBC Communications, Inc............. 6,924
91 Sprint Corp......................... 4,794
80 Texas Utilities..................... 2,769
--------
46,778
--------
Total Common Stocks 480,253
--------
U.S. TREASURY OBLIGATIONS (0.2%):
U.S. Treasury Bills (0.2%):
$ 475 7/17/97 (d)......................... 474
445 8/14/97 (d)......................... 442
--------
Total U.S. Treasury Obligations 916
--------
REPURCHASE AGREEMENTS (1.6%):
7,683 Aubrey G. Lanston & Co., 5.90%,
7/1/97 (Collateralized by $7,674
U.S. Treasury Notes, 6.25%,
8/31/00, market value-$7,996)..... 7,683
--------
Total Repurchase Agreements 7,683
--------
Total (Cost--$412,230) (a) $488,852
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $488,660.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $8. Cost for federal income tax purposes differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $80,161
Unrealized depreciation.................................................. (3,547)
-------
Net unrealized appreciation.............................................. $76,614
=======
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
(d) Serves as collateral for futures contracts.
<TABLE>
<CAPTION>
CURRENT
NUMBER OPENING MARKET
OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- ---------- --------------------------------- --------- -------
<C> <S> <C> <C>
Long S&P 500 September 1997
18 Futures $7,680 $8,012
</TABLE>
See notes to financial statements.
38
<PAGE> 357
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
LARGE COMPANY VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<S> <C> <C>
COMMON STOCKS (93.5%):
Business Equipment & Services (0.8%):
180 Browning-Ferris Industries, Inc.
(c)............................... $ 5,985
--------
Capital Goods (2.5%):
100 Case Corp........................... 6,888
100 Ingersoll Rand Co................... 6,175
200 Westinghouse Electric Corp.......... 4,625
--------
17,688
--------
Consumer Durable (3.5%):
50 Autozone, Inc. (b).................. 1,178
250 Chrysler Corp....................... 8,203
275 General Motors Corp................. 15,314
--------
24,695
--------
Consumer Non-Durable (5.8%):
200 American Greetings Corp., Class A... 7,425
100 Archer-Daniels-Midland Co........... 2,350
115 Ball Corp........................... 3,457
50 IBP, Inc. (c)....................... 1,163
497 RJR Nabisco Holdings Corp........... 16,414
300 Supervalu, Inc...................... 10,350
--------
41,159
--------
Consumer Services (0.8%):
195 Viacom, Inc., Class A (b)........... 5,789
--------
Energy (18.7%):
100 Amoco Corp.......................... 8,694
50 Ashland, Inc........................ 2,319
330 Atlantic Richfield Co............... 23,265
50 Chevron Corp. (c)................... 3,697
100 Dresser Industries, Inc. (c)........ 3,725
500 Exxon Corp.......................... 30,748
262 Mobil Corp.......................... 18,307
456 Royal Dutch Petroleum Co. (c)....... 24,795
100 Tenneco, Inc........................ 4,519
440 USX-Marathon Group.................. 12,705
--------
132,774
--------
Financial Services (24.6%):
170 Allstate Corp....................... 12,410
239 BankAmerica Corp. (c)............... 15,430
56 Bankboston Corp..................... 4,021
60 Chase Manhattan Corp................ 5,824
63 Cigna Corp.......................... 11,094
220 Federal National Mortgage Assoc..... 9,598
115 First Union Corp.................... 10,638
80 Fleet Financial Group, Inc. (c)..... 5,060
165 Great Western Financial Corp........ 8,869
130 Hartford Financial Services Group... 10,758
100 J.P. Morgan & Co., Inc.............. 10,438
104 KeyCorp (c)......................... 5,794
110 Lincoln National Corp............... 7,081
130 Mellon Bank Corp. (c)............... 5,866
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
116 Morgan Stanley Dean Witter
Discover (c)...................... $ 4,974
245 NationsBank Corp.................... 15,803
50 Pacific Century Financial Corp...... 2,313
50 Southtrust Corp..................... 2,069
50 SunTrust Banks, Inc................. 2,753
40 TransAmerica Corp................... 3,743
320 Travelers Group, Inc................ 20,176
--------
174,712
--------
Health Care (4.0%):
65 Aetna (c)........................... 6,654
50 Bard C.R., Inc...................... 1,816
100 Baxter International, Inc........... 5,225
100 Biomet, Inc. (c).................... 1,863
100 Columbia/HCA Healthcare Corp. (c)... 3,931
100 Healthsource, Inc. (b).............. 2,169
118 Pharmacia & Upjohn, Inc. (c)........ 4,083
40 St. Jude Medical Center, Inc.
(b)(c)............................ 1,560
25 United Healthcare Corp.............. 1,300
--------
28,601
--------
Multi-Industry (0.4%):
30 Loews Corp.......................... 3,004
--------
Raw Materials (3.3%):
81 Alumax, Inc. (b).................... 3,073
40 Aluminum Co. of America (c)......... 3,015
50 B. F. Goodrich Co................... 2,166
150 Cyprus Amax Minerals Co. (c)........ 3,675
31 Dow Chemical Co..................... 2,701
220 Nalco Chemical Co. (c).............. 8,497
--------
23,127
--------
Retail (2.8%):
150 Dillard Department Stores, Inc.,
Class A........................... 5,194
180 May Department Stores Co. (c)....... 8,505
50 Rite Aid Corp. (c).................. 2,494
115 Toys R Us, Inc. (b)(c).............. 4,025
--------
20,218
--------
Shelter (2.7%):
125 International Paper Co. (c)......... 6,070
150 Masco Corp. (c)..................... 6,263
127 Weyerhaeuser Co..................... 6,604
--------
18,937
--------
Technology (12.3%):
100 Applied Materials, Inc. (b)......... 7,081
19 Boeing Co. (c)...................... 1,003
335 International Business Machines..... 30,195
200 Litton Industries, Inc. (b)......... 9,663
</TABLE>
Continued
39
<PAGE> 358
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
LARGE COMPANY VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
70 Lockheed Martin Corp................ $ 7,249
50 McDonnell Douglas Corp.............. 3,425
140 Motorola, Inc....................... 10,640
100 National Semiconductor Corp. (b).... 3,063
110 Rockwell International Corp......... 6,490
100 Texas Instruments, Inc. (c)......... 8,406
--------
87,215
--------
Transportation (0.4%):
30 Burlington Northern Santa Fe
Corp. (c)......................... 2,696
--------
Utilities (10.9%):
145 American Electric Power, Inc........ 6,090
108 Bell Atlantic Corp. (c)............. 8,195
200 BellSouth Corp...................... 9,274
72 Dominion Resources, Inc. of
Virginia.......................... 2,637
280 Edison International................ 6,965
31 El Paso Natural Gas................. 1,688
139 Enron Corp. (c)..................... 5,673
100 Florida Power & Light Group, Inc.... 4,606
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities, continued:
100 General Public Utilities Corp....... $ 3,588
82 GTE Corp............................ 3,598
200 MCI Communications Corp............. 7,656
50 NYNEX Corp.......................... 2,881
112 SBC Communications, Inc............. 6,930
87 Southern Co......................... 1,903
110 Sprint Corp......................... 5,789
--------
77,473
--------
Total Common Stocks 664,073
--------
REPURCHASE AGREEMENTS (6.5%):
$46,324 Prudential Securities, 6.05%,
due 7/1/97 (collateralized by
$63,935 various U.S. Government
Securities, 5.71%-7.70%,
6/23/98-5/1/25, market
value--$47,476)................... 46,324
--------
Total Repurchase Agreements 46,324
--------
Total (Cost--$581,154) (a) $710,397
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $710,276.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $2,392. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $130,950
Unrealized depreciation.................................................. (4,099)
--------
Net unrealized appreciation.............................................. $126,851
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
40
<PAGE> 359
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
DISCIPLINED VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (95.5%):
Business Equipment & Services (0.6%):
192 Olsten Corp......................... $ 3,732
--------
Capital Goods (5.6%):
48 Belden, Inc......................... 1,635
49 BW/IP Holdings, Inc................. 993
27 Crane Co............................ 1,141
73 Durco International, Inc............ 2,124
127 Harsco Corp......................... 5,135
153 Mark IV Industries, Inc............. 3,660
59 Medusa Corp......................... 2,245
213 Molex, Inc.......................... 7,785
87 Southdown, Inc...................... 3,795
51 Tecumseh Products Co................ 3,066
84 Teleflex, Inc....................... 2,631
--------
34,210
--------
Consumer Durable (1.3%):
116 Arvin Industries, Inc............... 3,168
55 Lear Corp. (b)...................... 2,441
40 Whirlpool Corp. (c)................. 2,183
--------
7,792
--------
Consumer Non-Durable (5.1%):
44 American Greetings Corp., Class A... 1,634
85 Dean Foods Co....................... 3,432
35 Dole Food, Inc...................... 1,496
125 Hormel Foods Corp................... 3,359
60 Intimate Brands, Inc. (c)........... 1,260
98 McCormick & Co., Inc................ 2,475
42 Newell Co........................... 1,664
30 Smithfield Foods, Inc. (b).......... 1,845
36 Sysco Corp.......................... 1,314
345 Tyson Foods, Inc., Class A.......... 6,597
110 Universal Corp...................... 3,493
81 Warnaco Group, Inc.................. 2,582
--------
31,151
--------
Consumer Services (3.5%):
32 Belo (A.H.) Corp., Series A......... 1,332
40 Callaway Golf Co. (c)............... 1,420
65 Hasbro, Inc. (c).................... 1,844
34 Houghton Mifflin Co................. 2,270
107 International Game Technologies..... 1,899
31 King World Productions, Inc. (b).... 1,085
143 MGM Grand, Inc. (b)................. 5,291
15 Washington Post Co.................. 5,970
--------
21,111
--------
Energy (2.8%):
52 Devon Energy Corp................... 1,911
163 Mapco, Inc.......................... 5,141
66 Parker & Parsley Petroleum Co.
(c)............................... 2,333
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Energy, continued:
73 Valero Energy Corp. (c)............. $ 2,657
70 Vintage Petroleum, Inc.............. 2,153
80 Weatherford Enterra, Inc. (b)....... 3,080
--------
17,275
--------
Financial Services (22.6%):
118 A.G. Edwards, Inc................... 5,089
194 Bear Stearns Co., Inc. (c).......... 6,632
33 Capmac Holdings, Inc................ 1,096
105 Central Fidelity Banks, Inc. (c).... 3,738
140 Crestar Financial Corp.............. 5,443
42 Equitable of Iowa Co................ 2,374
147 First American Bank Corp............ 6,732
180 First Security Corp................. 4,916
111 First Tennessee National Corp.
(c)............................... 5,304
95 First Virginia Banks, Inc........... 5,706
177 Firstar Corp........................ 5,553
60 Gatx Corp........................... 3,465
92 Mercantile Bancorporation (c)....... 5,589
81 Mercantile Bankshares Corp.......... 3,240
41 National City Corp.................. 2,126
151 Pacific Century Financial Corp...... 6,961
188 Paine Webber Group, Inc............. 6,580
117 PMI Group, Inc. (c)................. 7,298
164 Provident Co., Inc.................. 8,774
348 Regions Financial Corp.............. 11,005
84 Reliance Group Holdings, Inc........ 998
258 Southtrust Corp..................... 10,671
149 Summit Bancorp (c).................. 7,469
34 Transatlantic Holdings, Inc. (c).... 3,335
66 Washington Mutual, Inc. (c)......... 3,944
52 Wilmington Trust Corp............... 2,379
--------
136,417
--------
Health Care (7.8%):
48 Advanced Technology Labs, Inc.
(b)............................... 2,064
60 Bard C.R., Inc...................... 2,179
113 Bergen Brunswig Corp................ 3,157
86 Forest Laboratories, Class A (b).... 3,580
160 Genzyme Corp. (b)(c)................ 4,440
20 HBO & Co............................ 1,378
97 Healthsource, Inc. (b).............. 2,099
62 Hillenbrand Industry, Inc........... 2,945
115 McKesson Corp. (c).................. 8,914
276 Mylan Laboratories (c).............. 4,067
55 Pacificare Health (b)(c)............ 3,509
165 Vencor, Inc. (b)(c)................. 7,136
40 Watson Pharmaceutical, Inc. (b)..... 1,690
--------
47,158
--------
</TABLE>
Continued
41
<PAGE> 360
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
DISCIPLINED VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Raw Materials (7.2%):
89 Albemarle Corp...................... $ 1,875
57 Allegheny Teledyne, Inc............. 1,539
91 Alumax, Inc. (b).................... 3,452
43 B. F. Goodrich Co................... 1,862
96 Crompton & Knowles Corp............. 2,136
132 Ferro Corp.......................... 4,881
23 Fuller (H. B.) Co................... 1,238
98 Hanna (M.A.) Co..................... 2,831
150 Lubrizol Corp....................... 6,289
46 Nalco Chemical Co................... 1,777
120 Olin Corp........................... 4,688
75 Schulman, Inc....................... 1,835
54 Sigma-Aldrich Corp.................. 1,893
154 Wellman, Inc........................ 2,676
129 Witco Corp.......................... 4,894
--------
43,866
--------
Retail (4.6%):
89 Apple South, Inc. (c)............... 1,350
132 Cracker Barrel...................... 3,498
138 Family Dollar Stores................ 3,747
81 Fred Meyer, Inc. (b)(c)............. 4,171
66 Hannaford Brothers Co............... 2,344
70 Just For Feet, Inc. (b)(c).......... 1,221
320 Officemax, Inc. (b)................. 4,620
96 Outback Steakhouse, Inc. (b)........ 2,322
33 Sbarro, Inc......................... 910
50 Toys R Us, Inc. (b)................. 1,750
55 Waban, Inc. (b)..................... 1,770
--------
27,703
--------
Shelter (3.0%):
82 Bowater, Inc........................ 3,793
41 Consolidated Papers, Inc............ 2,225
168 Kaufman & Broad Home Corp........... 2,951
87 P.H. Glatfelter and Co.............. 1,740
137 Pentair, Inc........................ 4,509
69 Rayonier, Inc....................... 2,894
--------
18,112
--------
Technology (8.4%):
33 Advanced Micro Devices, Inc. (b).... 1,188
97 Analog Devices, Inc. (b)(c)......... 2,578
100 Arrow Electronics, Inc. (b)......... 5,318
121 Avnet, Inc.......................... 6,929
16 Compaq Computer Corp. (b)(c)........ 1,588
44 Lattice Semiconductor Corp. (b)..... 2,486
46 Litton Industries, Inc. (b)......... 2,222
126 Octel Communications Corp. (b)...... 2,963
100 Orbital Sciences Corp. (b).......... 1,595
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
220 Quantum Corp. (b)(c)................ $ 4,483
33 Seagate Technology, Inc. (b)........ 1,161
93 Storage Technology Corp. (b)........ 4,152
81 Stratus Computer (b)................ 4,025
200 Teradyne, Inc. (b).................. 7,849
36 Thiokol Corp........................ 2,520
--------
51,057
--------
Transportation (2.0%):
53 APL Ltd............................. 1,656
100 ASA Holdings, Inc................... 2,863
137 CNF Transportation, Inc............. 4,418
31 Kansas City Southern Industries..... 2,000
57 Yellow Corp. (b).................... 1,275
--------
12,212
--------
Utilities (21.0%):
62 AES Corp. (b)....................... 4,387
119 AGL Resources....................... 2,448
266 Allegheny Power Systems, Inc........ 7,099
140 American Water Works, Inc. (c)...... 2,993
98 Brooklyn Union Gas.................. 2,817
60 Calenergy, Inc. (b)................. 2,280
170 Century Telephone Enterprises....... 5,727
96 Cincinnati Bell, Inc. (c)........... 3,024
102 Cinergy Corp........................ 3,551
251 CMS Energy Corp. (c)................ 8,849
292 Edison International................ 7,273
78 El Paso Natural Gas................. 4,290
70 Florida Power & Light Group, Inc.... 3,224
85 General Public Utilities Corp....... 3,049
99 Kansas City Power & Light........... 2,829
263 L G & E Energy Corp................. 5,798
139 MCN Corp. (c)....................... 4,257
168 Midamerican Energy Holdings Co...... 2,909
118 Montana Power Co.................... 2,731
132 National Fuel Gas Co................ 5,536
402 Nextel Communications, Inc.,
Class A (b)(c).................... 7,603
103 Nipsco Industries, Inc. (c)......... 4,255
235 Pinnacle West Capital............... 7,053
164 Public Service Co. of Colorado
(c)............................... 6,806
120 Questar Corp........................ 4,845
84 Scana Corp.......................... 2,084
75 Southwestern Public Service Co...... 2,960
260 Teco Energy, Inc. (c)............... 6,646
--------
127,323
--------
Total Common Stocks............................ 579,119
--------
</TABLE>
Continued
42
<PAGE> 361
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
DISCIPLINED VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
REPURCHASE AGREEMENTS (4.8%):
29,318 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $29,953
various U.S. Government
Securities, 0.00% - 9.25%,
2/15/98 - 7/15/17, market value --
$29,905).......................... $ 29,318
--------
Total Repurchase Agreements 29,318
--------
Total (Cost--$510,158) (a) $608,437
========
</TABLE>
Percentages indicated are based on net assets of $606,710.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $224. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $101,949
Unrealized depreciation.................................................. (3,894)
--------
Net unrealized appreciation.............................................. $ 98,055
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
43
<PAGE> 362
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
LARGE COMPANY GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- ----------
<C> <S> <C>
COMMON STOCKS (98.1%):
Business Equipment & Services (1.8%):
240 Automatic Data Processing, Inc.
(c)............................ $ 11,280
35 Computer Sciences Corp. (b)...... 2,524
190 Interpublic Group Co., Inc....... 11,650
----------
25,454
----------
Capital Goods (9.2%):
340 Emerson Electric Co.............. 18,721
40 Fluor Corp....................... 2,208
1,100 General Electric Co.............. 71,912
85 Honeywell, Inc................... 6,449
100 Illinois Tool Works.............. 4,994
150 Ingersoll Rand Co................ 9,263
187 Molex, Inc. (c).................. 6,844
50 Thermo Electron Corp. (b)(c)..... 1,700
105 Tyco International, Ltd. (c)..... 7,304
----------
129,395
----------
Consumer Durable (0.2%):
105 Autozone, Inc. (b)............... 2,474
----------
Consumer Non-Durable (20.6%):
220 Anheuser Busch Co., Inc. (c)..... 9,226
745 Coca Cola Co..................... 51,976
270 Colgate Palmolive Co. (c)........ 17,618
95 CPC International................ 8,770
135 Eastman Kodak Co................. 10,361
195 Gillette Co...................... 18,533
410 H.J. Heinz Co.................... 18,911
50 Hershey Foods Corp............... 2,766
30 International Flavors &
Fragrances, Inc................ 1,515
80 Newell Co........................ 3,170
100 Nike, Inc., Class B (c).......... 5,838
690 PepsiCo, Inc..................... 25,918
1,020 Philip Morris Co., Inc........... 45,263
70 Pioneer Hi-Bred International,
Inc............................ 5,600
250 Proctor & Gamble Co.............. 35,313
25 Quaker Oats Co................... 1,122
250 Sara Lee, Corp................... 10,406
175 Sysco Corp....................... 6,388
50 Unilever N V..................... 10,703
----------
289,397
----------
Consumer Services (5.9%):
20 Comcast Corp., Class A........... 428
170 CUC International, Inc. (b)(c)... 4,388
160 Gannett, Inc..................... 15,800
180 Hilton Hotels Corp............... 4,781
175 Mattel, Inc. (c)................. 5,928
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- ----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Services, continued:
270 McGraw-Hill Co., Inc............. $ 15,879
305 Time Warner, Inc................. 14,716
250 Walt Disney Co................... 20,063
----------
81,983
----------
Energy (1.7%):
50 Halliburton Co................... 3,963
20 Mobil Corp....................... 1,398
90 Schlumberger Ltd................. 11,249
100 Union Pacific Resources Group,
Inc............................ 2,488
105 Unocal Corp...................... 4,075
----------
23,173
----------
Financial Services (6.8%):
125 American Express Co.............. 9,313
175 American International Group,
Inc............................ 26,139
40 Charles Schwab Corp.............. 1,628
185 Chase Manhattan Corp............. 17,957
490 Federal National Mortgage
Assoc.......................... 21,376
60 First Union Corp................. 5,550
40 J.P. Morgan & Co., Inc........... 4,175
50 Marsh & McLennan Co.............. 3,569
90 U.S. Bancorp..................... 5,771
----------
95,478
----------
Health Care (19.5%):
365 Abbott Labs...................... 24,364
305 Alza Corp. (b)(c)................ 8,826
160 American Home Products Co........ 12,240
140 Amgen, Inc. (b).................. 8,138
45 Baxter International, Inc........ 2,351
70 Boston Scientific Corp. (b)(c)... 4,301
360 Bristol Myers Squibb Co.......... 29,160
100 Cardinal Health, Inc. (c)........ 5,725
95 Columbia/HCA Healthcare Corp.
(c)............................ 3,735
240 Elan Corp., PLC (b)(c)........... 10,860
220 Eli Lilly & Co................... 24,049
10 Guidant Corp..................... 850
100 Healthsouth Corp. (b)(c)......... 2,494
395 Johnson & Johnson (c)............ 25,428
135 Medtronic, Inc................... 10,935
470 Merck & Co., Inc................. 48,643
235 Pfizer, Inc...................... 28,083
230 Schering Plough Corp............. 11,011
100 Warner Lambert Co................ 12,425
----------
273,618
----------
Multi-Industry (1.6%):
60 Allied Signal, Inc. (c).......... 5,040
165 Minnesota Mining & Manufacturing
Co............................. 16,830
----------
21,870
----------
</TABLE>
Continued
44
<PAGE> 363
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
LARGE COMPANY GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULEOF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- ----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Raw Materials (4.1%):
85 Air Products & Chemical, Inc..... $ 6,906
375 Du Pont (EI) de Nemours & Co..... 23,578
240 Monsanto Co...................... 10,335
225 Nalco Chemical Co................ 8,691
340 Pall Corp. (c)................... 7,905
----------
57,415
----------
Retail (5.6%):
60 Dayton Hudson Corp. (c).......... 3,191
140 Gap, Inc. (c).................... 5,443
210 Home Depot, Inc.................. 14,477
175 Kroger Co. (b)................... 5,075
30 May Department Stores Co......... 1,418
290 McDonald's Corp.................. 14,011
890 Wal-Mart Stores, Inc............. 30,092
90 Walgreen Co...................... 4,826
----------
78,533
----------
Shelter (1.3%):
360 Kimberly Clark Corp.............. 17,910
----------
Technology (16.2%):
15 3Com Corp. (b)(c)................ 675
40 Applied Materials, Inc. (b)...... 2,833
70 Cabletron Systems, Inc. (b)...... 1,982
330 Cisco Systems, Inc. (b).......... 22,151
110 Compaq Computer Corp.(b)(c)...... 10,918
95 Computer Associates
International, Inc............. 5,290
70 Dell Computer Corp. (b).......... 8,221
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- ----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
390 Hewlett Packard Co............... $ 21,840
313 Intel Corp....................... 44,387
80 International Business
Machines....................... 7,215
250 Lucent Technologies, Inc......... 18,016
480 Microsoft Corp. (b).............. 60,659
75 Northern Telecom, Ltd............ 6,825
200 Oracle Corp. (b)................. 10,075
45 Parametric Technology Corp.
(b)............................ 1,915
40 Texas Instruments, Inc........... 3,363
----------
226,365
----------
Utilities (3.6%):
25 Enron Corp. (c).................. 1,020
370 GTE Corp......................... 16,234
350 SBC Communications, Inc.......... 21,656
380 WorldCom, Inc. (b)............... 12,160
----------
51,070
----------
Total Common Stocks 1,374,135
----------
REPURCHASE AGREEMENTS (2.0%):
$ 28,027 Prudential Securities, 6.05%, due
7/1/97 (collateralized by
$28,883 various U.S. Government
Securities, 0.00%-5.75%,
9/25/97-10/31/00, market value
-- $28,588).................... 28,027
Total Repurchase Agreements 28,027
----------
Total (Cost--$953,962) (a) $1,402,162
==========
</TABLE>
- ------------
Percentages indicated are based on net assets of $1,401,042.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $700. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $450,466
Unrealized depreciation.................................................. (2,966)
--------
Net unrealized appreciation.............................................. $447,500
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
45
<PAGE> 364
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GROWTH OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (93.4%):
Business Equipment & Services (13.9%):
134 America Online, Inc. (b)............ $ 7,426
112 Cintas Corp......................... 7,714
227 Equifax, Inc........................ 8,427
58 Fiserv, Inc. (b).................... 2,579
71 Gtech Holdings Corp. (b)............ 2,299
115 Herman Miller, Inc.................. 4,126
27 HNC Software, Inc. (b)(c)........... 1,014
0 Imnet Systems, Inc. (b)(c)(d)....... 3
172 Manpower, Inc....................... 7,667
278 Office Depot, Inc. (b).............. 5,408
141 Omnicom Group, Inc.................. 8,714
235 Paychex, Inc. (c)................... 8,938
128 Reynolds & Reynolds Co.............. 2,011
317 Staples, Inc. (b)(c)................ 7,375
108 Sterling Commerce, Inc. (b)......... 3,558
114 Sungard Data Systems, Inc. (b)(c)... 5,292
268 U.S.A. Waste Services, Inc.
(b)(c)............................ 10,343
81 Wallace Computer Services........... 2,438
114 World Access, Inc. (b).............. 2,337
--------
97,669
--------
Capital Goods (4.0%):
108 Diebold, Inc........................ 4,203
43 Federal Signal Corp................. 1,088
93 Hubbell, Inc., Class B.............. 4,101
33 Precision Castparts Co.............. 1,974
100 Sundstrand Corp..................... 5,581
277 United States Filter Corp. (b)(c)... 7,551
75 York International Corp............. 3,445
--------
27,943
--------
Consumer Durable (1.8%):
111 Danaher Corp. (c)................... 5,620
142 Harley-Davidson, Inc. (c)........... 6,793
--------
12,413
--------
Consumer Non-Durable (7.6%):
691 Coca-Cola Enterprises (c)........... 15,883
95 Dial Corp........................... 1,484
75 Dole Food, Inc. (c)................. 3,211
394 Flowers Industries, Inc............. 6,621
4 General Cigar Holdings, Inc.
(b)(c)............................ 112
83 Interstate Bakeries Co. (c)......... 4,899
105 Intimate Brands, Inc. (c)........... 2,203
92 Jones Apparel Group, Inc. (b)....... 4,383
41 Lancaster Colony Corp............... 1,998
100 McCormick & Co., Inc................ 2,533
1 Nike, Inc., Class B................. 82
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Non-Durable, continued:
68 Nine West Group, Inc. (b)(c)........ $ 2,601
72 Payless Shoesource, Inc. (b)........ 3,948
95 Unifi, Inc.......................... 3,562
--------
53,520
--------
Consumer Services (3.5%):
52 Belo (A.H.) Corp., Series A......... 2,169
142 Callaway Golf Co. (c)............... 5,027
96 Hasbro, Inc. (c).................... 2,735
236 International Game Technologies..... 4,193
341 Mirage Resorts, Inc. (b)(c)......... 8,619
48 Promus Hotel Corp. (b).............. 1,868
--------
24,611
--------
Energy (8.2%):
108 Anadarko Petroleum Corp............. 6,498
151 Apache Corp. (c).................... 4,891
73 BJ Services Co.(b)(c)............... 3,931
99 Ensco International, Inc. (b)(c).... 5,212
261 Global Marine, Inc. (b)(c).......... 6,057
115 Nabors Industries, Inc. (b)(c)...... 2,856
50 Noble Affiliates, Inc............... 1,915
203 Noble Drilling Corp. (b)(c)......... 4,578
71 Reading & Bates Corp. (b)........... 1,905
55 Smith International, Inc. (b)....... 3,311
38 Tidewater, Inc...................... 1,650
307 Tosco Corp.......................... 9,183
57 Transocean Offshore, Inc............ 4,140
58 Varco International, Inc. (b)....... 1,874
--------
58,001
--------
Financial Services (12.3%):
234 AFLAC, Inc.......................... 11,038
71 Capital One Financial Corp. (c)..... 2,695
69 Charles Schwab Corp. (c)............ 2,795
201 Franklin Resources, Inc. (c)........ 14,571
269 Imperial Credit Industries, Inc.
(b)............................... 5,531
199 Northern Trust Corp. (c)............ 9,607
96 Price (T. Rowe) Associates.......... 4,971
193 Progressive Corp.- Ohio............. 16,810
124 Robert Half International, Inc.
(b)(c)............................ 5,826
0 St. Paul Co., Inc. (c)(d)........... 8
50 State Street Corp................... 2,294
145 SunAmerica, Inc. (c)................ 7,049
126 The Money Store, Inc. (c)........... 3,603
--------
86,798
--------
Health Care (7.9%):
105 Allegiance Corp..................... 2,859
50 Apria Healthcare Group, Inc.
(b)(c)............................ 888
150 Biogen, Inc. (b).................... 5,088
33 Cardinal Health, Inc. (c)........... 1,866
</TABLE>
Continued
46
<PAGE> 365
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GROWTH OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Health Care, continued:
123 Centocor, Inc. (b).................. $ 3,811
264 Chiron Corp. (b)(c)................. 5,501
58 Dentsply International, Inc......... 2,847
88 Health Care & Retirement Corp.
(b)............................... 2,934
57 Healthcare Compare Corp. (b)(c)..... 2,959
105 Hillenbrand Industry, Inc........... 4,964
147 Oxford Health Plans, Inc. (b)....... 10,517
40 R. P. Scherer Corp. (b)............. 2,065
183 Stryker Corp. (c)................... 6,396
71 Watson Pharmaceutical, Inc. (b)..... 2,983
--------
55,678
--------
Multi-Industry (0.6%):
103 Hartford Life, Inc. (b)............. 3,859
10 Rambus, Inc. (b)(c)................. 446
--------
4,305
--------
Raw Materials (1.4%):
145 Airgas, Inc. (b)(c)................. 2,863
52 Betzdearborn, Inc................... 3,445
29 Crompton & Knowles Corp............. 643
29 Cytec Industries, Inc. (b).......... 1,080
31 Lyondell Petrochemical (c).......... 683
80 RPM, Inc. (c)....................... 1,470
--------
10,184
--------
Retail (6.5%):
82 Bed Bath & Beyond, Inc. (b)(c)...... 2,485
96 Claire's Stores, Inc................ 1,678
14 CompUSA, Inc. (b)(c)................ 310
169 Consolidated Stores Co. (b)......... 5,885
260 Dollar General Corp................. 9,767
691 Just For Feet, Inc. (b)(c).......... 12,053
92 Kohl's Corp. (b).................... 4,854
60 Lands End, Inc. (b)................. 1,778
76 Outback Steakhouse, Inc. (b)........ 1,846
67 Starbucks Corp. (b)(c).............. 2,589
18 Sunglass Hut International, Inc.
(b)(c)............................ 112
57 Tiffany & Co........................ 2,633
--------
45,990
--------
Shelter (2.8%):
45 Hon Industries...................... 1,991
170 Leggett & Platt, Inc................ 7,327
71 Redwood Trust, Inc. (c)............. 3,315
81 Sealed Air Corp. (b)................ 3,829
215 Sunstone Hotel Investors, Inc....... 3,116
--------
19,578
--------
Technology (19.2%):
262 3Com Corp. (b)...................... 11,781
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
160 ADC Telecommunications, Inc. (b).... $ 5,343
207 Advanced Fibre Communication
(b)(c)............................ 12,474
133 Advanced Micro Devices, Inc. (b).... 4,770
199 Altera Corp. (b)(c)................. 10,039
83 American Power Conversion (b)....... 1,583
109 Analog Devices, Inc. (b)(c)......... 2,883
19 Applied Materials, Inc. (b)......... 1,353
262 Ascend Communications, Inc.
(b)(c)............................ 10,312
193 Atmel Corp. (b)(c).................. 5,393
195 BMC Software, Inc. (b).............. 10,776
197 Cadence Design Systems, Inc.
(b)(c)............................ 6,613
50 Cascade Communications Corp. (b).... 1,378
185 Compuware Corp. (b)................. 8,815
29 Dell Computer Corp. (b)............. 3,441
89 Electronic Arts, Inc. (b)........... 2,989
31 Hewlett Packard Co.................. 1,708
288 Informix Corp. (b).................. 2,592
47 Integrated Device Technology, Inc.
(b)............................... 494
9 KLA-Tencor Corp. (b)................ 453
72 Linear Technology Corp.............. 3,710
59 Maxim Integrated Products, Inc.
(b)............................... 3,373
70 Solectron Corp. (b)................. 4,900
63 Structural Dynamics (b)............. 1,649
24 Symbol Technologies, Inc. (b)(c).... 800
229 Teradyne, Inc. (b).................. 8,996
43 Varian Associates, Inc.............. 2,338
101 Xilinx, Inc. (b)(c)................. 4,936
--------
135,892
--------
Transportation (0.6%):
117 Illinois Central Corp............... 4,077
--------
Utilities (3.1%):
219 360 Communications Co. (b).......... 3,749
201 AES Corp. (b)(c).................... 14,199
29 LCI International, Inc. (b)......... 632
115 Seagull Energy Corp. (b)............ 2,014
35 Southern New England
Telecommunications, Inc........... 1,353
--------
21,947
--------
Total Common Stocks 658,606
--------
PREFERRED STOCKS (1.3%):
Financial Services (0.1%):
38 Arm Financial Group, Inc., Class A
(c)............................... 760
--------
Oil & Gas Exploration (0.4%):
81 Sante Fe International Corp......... 2,754
--------
Retail (0.7%):
169 Polo Ralph Lauren Corp.............. 4,626
--------
</TABLE>
Continued
47
<PAGE> 366
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GROWTH OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
PREFERRED STOCKS, CONTINUED:
Technology (0.1%):
15 Aris Corp........................... $ 317
20 Great Plains Software, Inc. (c)..... 527
--------
844
--------
Total Preferred Stocks 8,984
--------
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
REPURCHASE AGREEMENTS (5.6%):
$39,449 Prudential Securities, 6.05%, 7/1/97
(Collateralized by $49,148 various
U.S. Government Securities,
5.75%-6.01%, 10/31/00-8/1/34,
market value--$40,519)............ $ 39,449
--------
Total Repurchase Agreements 39,449
--------
Total (Cost--$611,506) (a) $707,039
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $704,690.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $3,969. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $103,914
Unrealized depreciation.................................................. (12,350)
--------
Net unrealized appreciation.............................................. $ 91,564
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
(d) Amount less than 1,000.
See notes to financial statements.
48
<PAGE> 367
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GULF SOUTH GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
COMMON STOCKS (95.3%):
Business Equipment & Services (11.9%):
25 Accustaff, Inc. (b) (c).............. $ 592
50 Acxiom Corp. (b) (c)................. 1,025
25 Billing Information Concepts (b)..... 872
15 Central Parking Corp................. 522
100 Communications Central, Inc. (b)..... 1,100
15 Computational Systems, Inc. (b)...... 208
45 Concord EFS, Inc. (b)................ 1,164
30 Corrections Corp. of America (b)
(c)................................ 1,193
30 Imnet Systems, Inc. (b) (c).......... 932
20 Norrell Corp......................... 660
30 Nova Corp. (b)....................... 778
35 Stewart Enterprises, Inc., Class A... 1,470
10 Stone & Webster, Inc................. 427
45 World Access, Inc. (b)............... 923
-------
11,866
-------
Capital Goods (3.3%):
20 Blount International, Inc............ 851
15 Ionics, Inc. (b)..................... 683
13 Kent Electronics Corp. (b)........... 477
25 Kuhlman Corp......................... 806
15 Wabash National Corp................. 418
-------
3,235
-------
Commercial Services (0.2%):
10 Pierce Leahy Corp. (b)............... 180
-------
Consumer Durable (1.2%):
75 Miller Industries, Inc. (b).......... 1,200
-------
Consumer Non-Durable (6.9%):
15 Coca-Cola Bottling Co................ 728
20 Dekalb Genetics Corp................. 1,594
6 Earthgrains Co....................... 393
38 K & G Men's Center, Inc. (b)......... 816
15 Nautica Enterprises, Inc. (b)........ 397
12 Richfood Holdings.................... 312
12 Smithfield Foods, Inc. (b)........... 738
24 Westpoint Stevens, Inc. (b).......... 939
30 Wolverine World Wide, Inc............ 911
-------
6,828
-------
Consumer Services (4.4%):
30 Action Performance Co., Inc. (b)..... 728
22 Grand Casinos (b).................... 325
35 International Family Entertainment,
Class B (b)........................ 1,202
25 International Speedway Corp. (b)
(c)................................ 491
15 Regal Cinemas, Inc. (b).............. 495
30 Sturm, Ruger & Co.................... 589
25 Suburban Lodges of America (b)....... 525
-------
4,355
-------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Energy (9.0%):
10 Devon Energy Corp.................... $ 368
6 Diamond Offshore Drilling (b)........ 467
10 Falcon Drilling Co., Inc. (b)........ 576
15 Global Industries Ltd. (b)........... 350
33 Maverick Tube Corp. (b).............. 1,218
36 Newpark Resources, Inc. (b).......... 1,215
10 Ocean Energy, Inc. (b)............... 463
20 Patterson Energy, Inc. (b)........... 908
30 Pride Petroleum Services, Inc. (b)... 720
7 Saint Mary Land and Exploration...... 246
5 Seacor Holdings, Inc. (b) (c)........ 235
10 Snyder Oil Corp...................... 184
32 Stone Energy Corp. (b)............... 876
25 Trico Marine Services, Inc. (b)...... 545
20 United Meridian Corp. (b)............ 600
-------
8,971
-------
Financial Services (16.6%):
50 Alabama National Bankcorp............ 1,119
50 Amresco, Inc. (b).................... 1,075
50 Bankunited Financial Corp. (b)....... 494
7 Cenit Bancorp, Inc................... 341
25 Central Fidelity Banks, Inc.......... 888
16 Charter One Financial, Inc. (c)...... 862
20 Colonial BancGroup, Inc.............. 485
26 Cooperative Bankshares, Inc. (b)..... 546
23 Cullen/Frost Bankers, Inc............ 975
22 Deposit Guaranty Corp................ 693
30 Eagle Bancshares, Inc................ 536
30 First American Corp.................. 1,151
40 First Financial Holdings, Inc........ 1,280
20 First Liberty Financial Corp......... 430
25 Protective Life Corp................. 1,256
15 Raymond James Financial (b).......... 411
35 Sirrom Capital Corp.................. 1,208
38 Triad Guaranty, Inc. (b)............. 1,699
15 United Cos. Financial Corp. (c)...... 394
18 Whitney Holding Corp................. 761
-------
16,604
-------
Health Care (9.6%):
20 Alpharma, Inc........................ 319
9 Ballard Medical Products............. 181
20 Core Laboratories N.V. (b)........... 520
30 Cryolife, Inc. (b)................... 358
6 Envoy Corp. (b) (c).................. 200
18 Genesis Health (b) (c)............... 608
20 Gulf South Medical Supply (b)........ 390
15 Invacare Corp........................ 351
7 Mentor Corp.......................... 216
22 Neoprobe Corp. (b)................... 308
10 North American Vaccine, Inc. (b)
(c)................................ 193
</TABLE>
Continued
49
<PAGE> 368
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GULF SOUTH GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Health Care, continued:
40 Omnicare, Inc........................ $ 1,253
30 Phycor, Inc. (b) (c)................. 1,033
9 Protein Design Labs, Inc. (b)........ 257
10 Quorum Health Group, Inc. (b)........ 358
24 Roberts Pharmaceutical Corp. (b)..... 269
9 Safeskin Corp. (b)................... 265
10 Spine-Tech, Inc. (b)................. 371
11 Steris Corp. (b)..................... 392
40 Summit Technology, Inc. (b).......... 265
12 Sunrise Assisted Living (b).......... 420
14 Sybron International Corp. (b)....... 558
8 Tecnol Medical Products (b).......... 178
8 Vertex Pharmaceuticals, Inc. (b)..... 306
-------
9,569
-------
Raw Materials (2.6%):
25 Chemfirst, Inc....................... 678
20 Coeur D'Alene Mines Corp. (b)........ 259
10 Cytec Industries, Inc. (b)........... 374
8 Mississippi Chemical Corp............ 173
35 Quanex Corp.......................... 1,074
-------
2,558
-------
Retail (6.6%):
37 Compucom Systems, Inc. (b)........... 264
35 CompUSA, Inc. (b) (c)................ 750
20 Gymboree Corp. (b)................... 480
30 Heilig Meyers Co..................... 589
30 Hibbet Sporting Goods, Inc. (b)...... 540
40 Just For Feet, Inc. (b).............. 698
20 Landry's Seafood Restaurants, Inc.
(b)................................ 460
30 Michaels Stores, Inc. (b) (c)........ 636
7 O'Reilly Automotive, Inc. (b)........ 270
20 Pier 1 Imports, Inc.................. 530
12 Proffitts, Inc. (b) (c).............. 527
15 Ruby Tuesday, Inc. (b)............... 337
15 Stein Mart, Inc. (b)................. 450
-------
6,531
-------
Shelter (2.5%):
24 Caraustar Industries, Inc............ 831
15 Ethan Allen Interiors, Inc........... 855
20 Oakwood Homes Corp................... 480
35 Southern Energy Homes, Inc. (b)...... 319
-------
2,485
-------
Technology (15.9%):
30 Aspect Telecommunications, Inc.
(b)................................ 668
25 Benchmark Electronics, Inc. (b)...... 1,008
20 Cadence Design Systems, Inc. (b)
(c)................................ 670
20 Comverse Technology, Inc. (b) (c).... 1,014
30 Datastream Systems, Inc. (b)......... 465
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
4 Dell Computer Corp. (b).............. $ 411
24 Digital Microwave Corp. (b).......... 720
40 Harbinger Corp. (b).................. 1,120
25 Intercel, Inc. (b)................... 344
14 Kemet Corp. (b)...................... 348
17 Komag, Inc. (b)...................... 270
11 Kulicke & Soffa Industries (b)....... 357
10 Lattice Semiconductor Corp. (b)...... 565
14 Microchip Technology, Inc. (b)....... 417
15 Network General Corp. (b)............ 223
60 Network Long Distance, Inc. (b)...... 563
7 Novellus Systems, Inc. (b)........... 606
13 Oak Industries (b)................... 374
17 Read-Rite Corp. (b).................. 355
15 Sanmina Corp. (b) (c)................ 953
12 SCI Systems, Inc. (b) (c)............ 765
13 Sterling Software (b)................ 406
20 Symmetricom, Inc. (b)................ 288
46 Tech Data Corp. (b).................. 1,444
25 Teradyne, Inc. (b)................... 981
22 VLSI Technology, Inc. (b)............ 520
-------
15,855
-------
Transportation (2.4%):
20 ASA Holdings, Inc.................... 573
25 Halter Marine Group, Inc. (b)........ 600
25 Heartland Express, Inc. (b).......... 588
25 MS Carriers, Inc. (b)................ 627
-------
2,388
-------
Utilities (2.2%):
13 K N Energy, Inc...................... 548
50 LCI International, Inc. (b).......... 1,094
20 Rural Cellular Corp. Class A (b)..... 206
25 Southwestern Energy Co............... 325
-------
2,173
-------
Total Common Stocks 94,798
-------
PREFERRED STOCKS (2.6%):
Computer Software (0.3%):
8 National Data Corp................... 347
-------
Financial Services (1.7%):
20 CCB Financial Corp. (c).............. 1,461
5 Southwest Securities Group, Inc...... 98
-------
1,559
-------
Oil & Gas Exploration (0.5%):
50 Comstock Resources, Inc.............. 522
-------
</TABLE>
Continued
50
<PAGE> 369
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GULF SOUTH GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
PREFERRED STOCKS, CONTINUED:
Telecommunications (0.1%):
7 Gray Communications Systems, Inc.
Class B............................ $ 142
-------
Total Preferred Stocks 2,570
-------
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
REPURCHASE AGREEMENTS (2.6%):
2,589 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $2,557
U.S. Treasury Note, 6.88%, 5/15/06,
market value -- $2,641)............ $ 2,589
-------
Total Repurchase Agreements 2,589
-------
Total (Cost--$75,832) (a) $99,957
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $99,452
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $25,837
Unrealized depreciation.................................................. (1,712)
-------
Net unrealized appreciation.............................................. $24,125
=======
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
51
<PAGE> 370
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (96.9%):
ARGENTINA (0.7%):
Automotive (0.0%):
29 CIADEA SA........................... $ 126
--------
Beverages & Tobacco (0.0%):
0 Buenos Aires Embottelladora SA,
Class B (b)(d).................... 27
--------
Oil & Gas Exploration, Production & Services (0.4%):
117 Perez Companc SA.................... 931
33 YPF Sociedad Anonima................ 999
--------
1,930
--------
Telecommunications (0.3%):
89 Telecom Argentina SA, Class B....... 463
215 Telefonica de Argentina SA, Class
B................................. 742
--------
1,205
--------
Total Argentina..................... 3,288
--------
AUSTRALIA (2.1%):
Banking (0.5%):
120 National Australia Bank Ltd......... 1,703
171 Westpac Banking Corp., Ltd.......... 1,020
--------
2,723
--------
Broadcasting & Publishing (0.2%):
157 News Corp., Ltd..................... 745
--------
Building Products (0.4%):
221 Boral Ltd........................... 689
135 CSR Ltd............................. 520
131 Pioneer International Ltd........... 503
--------
1,712
--------
Diversified (0.1%):
82 Southcorp Holdings Ltd.............. 305
--------
Metals (0.1%):
229 M.I.M. Holdings Ltd................. 336
36 RGC Ltd............................. 130
--------
466
--------
Metals & Mining (0.4%):
68 Aberfoyle Ltd....................... 189
111 Aud Normandy Mining Ltd............. 124
105 Broken Hill Proprietary Co. Ltd..... 1,525
35 Newcrest Mining Ltd................. 95
79 WMC Ltd............................. 497
--------
2,430
--------
Real Estate (0.3%):
186 General Property Trust.............. 369
177 Stockland Trust Group............... 462
186 Westfield Trust..................... 379
--------
1,210
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
AUSTRALIA, CONTINUED:
Retail Stores/Catalog (0.1%):
102 Coles Myer Ltd...................... $ 527
--------
Total Australia..................... 10,118
--------
AUSTRIA (1.2%):
Airlines (0.1%):
2 Austrian Airlines/Oesterreichische
Luftverskehrs AG (b).............. 347
--------
Automotive (0.0%):
7 Steyr-Daimler-Puch AG............... 139
--------
Banking & Financial Services (0.2%):
15 Ats Bank Of Austria Rights (d)...... 0
15 Bank Austria AG..................... 834
2 Bank Austria AG, Participating
Certificates...................... 63
8 Creditanstalt-Bankverein............ 479
--------
1,376
--------
Beverages & Tobacco (0.0%):
4 Osterreichische Brau-Beteiligungs
AG................................ 234
--------
Building Products (0.1%):
2 Wienerberger Baustoffindustrie AG... 488
--------
Chemicals (0.1%):
4 Lenzing AG (b)...................... 238
--------
Environmental Services (0.1%):
2 BWT AG.............................. 279
--------
Insurance (0.2%):
3 EA-Generali AG...................... 750
--------
Miscellaneous Manufacturing (0.1%):
9 Radex-Heraklith
Industriebeteiligungs AG.......... 379
--------
Oil & Gas Exploration, Production & Services (0.2%):
7 OMV AG.............................. 947
--------
Utilities--Electric & Gas (0.1%):
7 Osterreichische
Elekrizitaitswirtschafts-AG, Class
A................................. 518
--------
Total Austria....................... 5,695
--------
BELGIUM (1.8%):
Banking (0.3%):
1 Generale de Banque SA............... 568
1 Kredietbank NV...................... 377
1 Kredietbank VVPR.................... 514
--------
1,459
--------
Chemicals (0.2%):
1 Solvay SA........................... 798
--------
Industrial Holding Companies (0.1%):
4 Groupe Bruxelles Lambert SA......... 691
--------
</TABLE>
Continued
52
<PAGE> 371
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
BELGIUM, CONTINUED:
Insurance (0.3%):
4 Fortis AG........................... $ 742
2 Royale Belge........................ 549
--------
1,291
--------
Merchandising (0.2%):
18 Delhaize-Le Lion SA................. 949
--------
Metals & Mining (0.1%):
3 Union Miniere Group (b)............. 280
--------
Oil & Gas Exploration, Production & Services (0.2%):
2 PetroFina SA........................ 847
--------
Utilities--Electric & Gas (0.4%):
9 Electrabel SA....................... 1,978
--------
Total Belgium....................... 8,293
--------
BRAZIL (0.3%):
Beverages & Tobacco (0.0%):
41 Companhia Cervejaria Brahma......... 31
--------
Chemicals (0.0%):
242 Copesul--Companhia Pertoquimica do
Sul............................... 9
19 White Martins SA.................... 56
--------
65
--------
Glass Products (0.0%):
5 Companhia Vidraria Santa Maria...... 14
--------
Steel (0.0%):
3,589 Companhia Siderurgica Nacional...... 118
4 Companhia Vale do Rio Doce.......... 88
--------
206
--------
Telecommunications (0.1%):
2,277 Telecomunicacoes Brasileiras SA..... 308
193 Telecomunicacoes de Sao Paulo SA.... 57
--------
365
--------
Tobacco (0.0%):
10 Souza Cruz SA....................... 105
--------
Utilities--Electric & Gas (0.2%):
655 Centrais Electricas Brasilieras
SA................................ 367
307 Centrais Electricas Brasilieras SA,
Class B........................... 182
3,516 Companhia Paranaense de
Energia-Copel..................... 62
355 Light--Servicos de Eletricidade
SA................................ 171
--------
782
--------
Total Brazil........................ 1,568
--------
CHILE (0.2%):
Banking & Financial Services (0.0%):
6 Banco De Santiago................... 150
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
CHILE, CONTINUED:
Beverages & Tobacco (0.0%):
7 Embotelladora Andina SA,
Series A, ADR..................... $ 147
--------
Telecommunications (0.2%):
18 Telecomunicaciones
De Chile SA ADR................... 585
--------
Total Chile......................... 882
--------
DENMARK (1.5%):
Agriculture (0.0%):
3 Korn-OG Foderstof Kompagniet A/S.... 80
--------
Banking & Financial Services (0.2%):
7 Den Danske Bank..................... 653
6 Unidanmark A/S, Class A............. 315
--------
968
--------
Beverages & Tobacco (0.1%):
4 Carlsberg A/S, Class A.............. 195
7 Carlsberg A/S, Class B.............. 403
--------
598
--------
Commercial Services (0.0%):
3 ISS International Service System
A/S, Class B...................... 102
--------
Diversified (0.1%):
14 Superfos A/S........................ 338
--------
Engineering (0.1%):
11 FLS Industries A/S, Class B......... 382
--------
Pharmaceuticals (0.7%):
26 Novo Nordisk A/S, Class B........... 2,839
--------
Telecommunications (0.1%):
13 Tele Danmark A/S, Class B........... 658
--------
Transportation & Shipping (0.2%):
0 D/S 1912, Class B (d)............... 466
0 D/S Svendborg A/S, Class B (d)...... 465
0 Lauritzen (J.) Holding A/S (b)(d)... 30
--------
961
--------
Total Denmark....................... 6,926
--------
FINLAND (1.1%):
Banking & Financial Services (0.1%):
131 Merita Ltd., Class A................ 435
--------
Forest Products (0.1%):
1 Rauma Oy............................ 14
27 UPM-Kymmene Corp.................... 628
--------
642
--------
</TABLE>
Continued
53
<PAGE> 372
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
FINLAND, CONTINUED:
Insurance (0.1%):
11 Pohjola Insurance Group, Class B.... $ 311
3 Sampo Insurance Co. Ltd., Class A... 311
--------
622
--------
Metals (0.1%):
27 Outokumpo OY, Class A............... 525
--------
Telecommunications (0.7%):
25 Nokia AB, Class A................... 1,839
14 Nokia AB, Class K................... 1,013
--------
2,852
--------
Total Finland....................... 5,076
--------
FRANCE (10.3%):
Automotive (0.1%):
6 PSA Peugeot......................... 595
--------
Banking (0.9%):
24 Banque Nationale de Paris........... 974
19 Compagnie Financiere de Paribas..... 1,299
399 Ffr Cie De Suez Corp................ 982
10 Societe Generale.................... 1,137
--------
4,392
--------
Beverages & Tobacco (0.6%):
10 LVMH (Moet Hennessy
Louis Vuitton).................... 2,568
8 Pernod Ricard....................... 419
--------
2,987
--------
Broadcasting/Cable (0.1%):
3 Canal Plus.......................... 594
--------
Building Products (0.3%):
3 Imetal SA........................... 378
20 Lafarge SA.......................... 1,221
--------
1,599
--------
Business Services (0.6%):
17 Compagnie Generale des Eaux......... 2,148
8 Havas SA............................ 598
--------
2,746
--------
Chemicals (0.7%):
10 L'Air Liquide....................... 1,538
38 Rhone-Poulenc SA.................... 1,559
--------
3,097
--------
Commercial Services (0.3%):
1 Addeco SA........................... 573
1 Sodexho SA.......................... 667
--------
1,240
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
FRANCE, CONTINUED:
Construction (0.1%):
5 Bouygues............................ $ 379
--------
Defense (0.2%):
1 Sagem SA............................ 330
22 Thomson CSF......................... 574
--------
904
--------
Diversified (0.1%):
14 Lagardere SCA....................... 397
--------
Electrical & Electronic (0.8%):
17 Alcatel Alsthom..................... 2,190
5 Legrand SA.......................... 837
17 Schneider SA........................ 900
--------
3,927
--------
Energy (1.4%):
32 Elf Aquitane SA..................... 3,429
28 Total SA, Class B................... 2,853
--------
6,282
--------
Engineering (0.1%):
4 Compagnie Francaise d'Etudes et de
Construction Technip.............. 436
--------
Food & Household Products (0.1%):
4 Eridania Beghin-Say SA.............. 667
--------
Food Products & Services (0.3%):
8 Groupe Danone....................... 1,257
--------
Health & Personal Care (0.8%):
6 L'OREAL............................. 2,634
12 Sanofi SA........................... 1,129
--------
3,763
--------
Industrial Goods & Services (0.2%):
18 Michelin Class B, Registered........ 1,061
--------
Industrial Holding Companies (0.2%):
12 Lyonnaise des Eaux SA............... 1,180
--------
Insurance (0.4%):
34 AXA SA.............................. 2,104
--------
Leisure (0.2%):
4 Accor SA............................ 652
3 Salomon SA.......................... 191
--------
843
--------
Manufacturing-Consumer Goods (0.2%):
6 Societe BIC SA...................... 982
--------
Media (0.1%):
1 Pathe SA............................ 286
--------
</TABLE>
Continued
54
<PAGE> 373
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
FRANCE, CONTINUED:
Merchandising (1.2%):
4 Carrefour SA........................ $ 3,070
7 Etablissements Economiques du Casino
Guichard-Perrachon................ 364
3 Pinault-Printemps-Redoute SA........ 1,203
2 Promodes............................ 856
--------
5,493
--------
Miscellaneous Materials & Commodities (0.3%):
10 Compagnie de Saint Gobain........... 1,452
--------
Textile Products (0.0%):
2 Dollfus-Mieg & Cie.................. 41
--------
Total France........................ 48,704
--------
GERMANY (16.2%):
Airlines (0.2%):
55 Deutsche Lufthansa AG............... 1,061
--------
Automotive (1.9%):
65 Daimler-Benz AG..................... 5,320
3 Man AG.............................. 798
4 Volkswagen AG....................... 2,898
--------
9,016
--------
Banking (2.5%):
98 Bayer AG............................ 3,785
30 Bayerische Vereinsbank AG........... 1,229
82 Deutsche Bank AG.................... 4,800
51 Dresdner Bank AG.................... 1,783
--------
11,597
--------
Banking & Financial Services (0.2%):
26 Bayerische Hypotheken-und Weschel-
Bank AG........................... 775
--------
Building Materials (0.1%):
6 Heidelberger Zement AG.............. 571
--------
Business Services (0.4%):
9 SAP AG.............................. 1,873
--------
Chemicals (1.0%):
111 BASF AG............................. 4,082
15 Degussa AG.......................... 815
--------
4,897
--------
Conglomerates (1.8%):
13 Metro AG (b)........................ 1,382
3 Preussag AG......................... 818
86 VEBA AG............................. 4,874
3 Viag AG............................. 1,550
--------
8,624
--------
Construction (0.1%):
9 Hochtief AG......................... 403
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
GERMANY, CONTINUED:
Consumer Goods & Services (0.2%):
9 Adidas AG........................... $ 953
--------
Electrical & Electronic (1.0%):
78 Siemens AG.......................... 4,650
--------
Engineering (0.6%):
23 AGIV AG............................. 521
3 Bilfinger & Berger Bau AG........... 135
5 Mannesmann AG....................... 2,052
--------
2,708
--------
Health Care (0.3%):
15 Schering AG......................... 1,593
--------
Insurance (2.4%):
33 Allianz AG.......................... 6,977
0 AMB Aachener und Muenchener
Beteiligungs AG, Bearer Shares.... 98
1 AMB Aachener und Muenchener
Beteiligungs AG, Registered
Shares............................ 490
3 CKAG Colonia Konzern AG............. 281
0 Muenchener Rueckversicherungs
Gesellschaft AG, Bearer Shares.... 137
1 Muenchener Rueckversicherungs
Gesellschaft AG, Registered
Shares............................ 3,444
--------
11,427
--------
Machinery & Equipment (0.1%):
11 Kloeckner-Humbolt-Deutz AG (b)...... 111
1 Linde AG............................ 420
--------
531
--------
Metals & Mining (0.5%):
9 Fag Kugelfischer Georg Schaefer
AG................................ 162
8 Thyssen AG.......................... 2,031
--------
2,193
--------
Personal Care Products (0.3%):
27 Beiersdorf AG....................... 1,454
--------
Pharmaceuticals (0.3%):
29 Merck KGaA.......................... 1,260
--------
Retail Stores (0.1%):
1 Karstadt AG......................... 307
--------
Retail-General Merchandise (0.0%):
3 Douglas Holding AG.................. 125
--------
Telecommunications (1.6%):
302 Deutsche Telekom AG................. 7,417
--------
Textile Products (0.0%):
1 Escada AG........................... 102
--------
</TABLE>
Continued
55
<PAGE> 374
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
GERMANY, CONTINUED:
Utilities--Electric & Gas (0.6%):
65 RWE AG.............................. $ 2,818
--------
Total Germany....................... 76,355
--------
GREECE (0.8%):
Agriculture (0.0%):
6 Hellenic Sugar Industry SA.......... 37
--------
Banking & Financial Services (0.6%):
17 Alpha Credit Bank................... 1,127
7 Commercial Bank of Greece SA........ 275
13 Ergo Bank SA........................ 770
4 National Bank of Greece SA.......... 507
--------
2,679
--------
Beverages & Tobacco (0.1%):
11 Hellenic Bottling Co. SA............ 409
--------
Building Products (0.1%):
26 Heracles General Cement Co. SA...... 478
--------
Telecommunications (0.0%):
3 Intracom SA (b)..................... 127
--------
Total Greece........................ 3,730
--------
HONG KONG (1.1%):
Airlines (0.1%):
194 Cathay Pacific Airways.............. 402
--------
Banking (0.1%):
83 Bank of East Asia Ltd............... 347
6 HSBC Holdings PLC................... 180
--------
527
--------
Banking & Financial Services (0.1%):
38 Wing Lung Bank...................... 243
--------
Broadcasting & Publishing (0.1%):
95 Television Broadcasts Ltd........... 427
--------
Conglomerates (0.1%):
68 Swire Pacific Ltd., Class A......... 612
--------
Electrical Equipment (0.0%):
645 Elec & Eltek International
Holdings Ltd...................... 189
--------
Industrial Holding Companies (0.3%):
145 Hutchison Whampoa Ltd............... 1,254
--------
Printing & Publishing (0.0%):
263 Oriental Press Group Ltd............ 108
--------
Real Estate (0.1%):
56 Sun Hung Kai Properties Ltd......... 674
--------
Telecommunications (0.2%):
418 Hong Kong Telecommunications Ltd.... 997
--------
Total Hong Kong..................... 5,433
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
INDONESIA (0.8%):
Agriculture (0.1%):
369 PT SMART Corp....................... $ 334
--------
Auto Parts (0.0%):
31 PT Astra International--
Foreign Registry (b).............. 126
--------
Banking & Financial Services (0.1%):
298 PT Bank International Indonesia--
Foreign Registry.................. 258
--------
Building Products (0.1%):
222 Indocement Tunggal Prakarsa......... 344
--------
Forest Products (0.1%):
203 PT Barito Pacific Timber............ 173
--------
100 PT Inti Indorayon Utama--
Foreign Registry (b).............. 70
--------
243
--------
Telecommunications (0.2%):
108 PT Indosat.......................... 322
--------
285 PT Telekomunikasi Indonesia......... 464
--------
786
--------
Textile Products (0.1%):
1,246 PT Polysindo Eka Perkasa--
Foreign Registry.................. 692
--------
Tobacco (0.1%):
155 PT Gudang Garam..................... 648
51 PT Hanjaya Mandala Sampoerna........ 193
--------
841
--------
Total Indonesia..................... 3,624
--------
IRELAND (0.3%):
Banking (0.1%):
38 Allied Irish Banks PLC.............. 287
--------
Banking & Financial Services (0.2%):
132 Allied Irish Banks PLC.............. 1,012
--------
Beverages & Tobacco (0.0%):
77 James Crean PLC..................... 231
--------
Total Ireland....................... 1,530
--------
ITALY (6.7%):
Agriculture (0.1%):
306 Parmalat Finanziaria SpA............ 432
--------
Automotive (0.5%):
616 Fiat SpA............................ 2,216
136 Fiat SpA di Risp
(Non-convertible)................. 256
--------
2,472
--------
</TABLE>
Continued
56
<PAGE> 375
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
ITALY, CONTINUED:
Banking (0.6%):
378 Banca Commerciale Italiana.......... $ 782
86 Banco Ambrosiano Veneto SpA......... 249
344 Credito Italiano SpA................ 629
129 Istituto Bancario San Paolo di
Torino............................ 937
32 Riunione Adriatica di Sicurta SpA
di Risp........................... 158
--------
2,755
--------
Banking & Financial Services (0.1%):
42 Mediobanca SpA...................... 256
--------
Broadcasting & Publishing (0.2%):
190 Mediaset SpA........................ 807
--------
Building Products (0.0%):
28 Italcementi SpA (b)................. 174
--------
Chemicals (0.1%):
801 Montedison SpA (b).................. 528
--------
Computer Hardware (0.0%):
447 Olivetti Group SpA (b).............. 126
--------
Engineering (0.0%):
145 Impregilo SpA (b)................... 95
--------
Insurance (1.1%):
241 Assicurazioni Generali.............. 4,370
23 La Previdente....................... 121
56 Riuniune Adriatici de Sicurta SpA... 446
63 Societa Assicuratrice Industriale
(SAI) SpA......................... 486
5,423
--------
Oil & Gas Exploration, Production & Services (1.7%):
1,320 Ente Nazionale Idrocarburi SpA
(ENI)............................. 7,465
--------
Paper Products (0.0%):
34 Burgo (Cartiere) SpA................ 188
--------
Retail Stores (0.0%):
36 La Rinascente SpA................... 198
--------
Retail Stores/Catalog (0.0%):
36 Itl La Rinascente Rights............ 6
--------
Steel (0.0%):
22 Falck Acciaierie & Ferriere Lombarde
SpA............................... 81
--------
Telecommunications (1.9%):
56 Sirti SpA........................... 321
1,051 Telecom Italia Mobile SpA........... 3,145
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
STOCKS, CONTINUED:
ITALY, CONTINUED:
Telecommunications, continued:
1,198 Telecom Italia Mobile SpA di Risp
(Non-convertible)................. $ 3,873
329 Telecom Italia SpA.................. 588
333 Telecom Italia SpA di Risp
(Non-convertible)................. 659
--------
8,586
--------
Textile Products (0.1%):
35 Benetton Group SpA.................. 554
--------
Tire & Rubber (0.1%):
263 Pirelli SpA......................... 650
--------
Utilities--Electric & Gas (0.2%):
97 Edison SpA.......................... 481
121 Italgas SpA......................... 392
--------
873
--------
Total Italy......................... 31,669
--------
JAPAN (24.2%):
Agriculture (0.0%):
25 Nippon Beet Sugar Manufacturing..... 92
--------
Airlines (0.1%):
115 Japan Airlines (b).................. 524
--------
Aluminum (0.0%):
17 Nippon Light Metal Co............... 62
--------
Appliances & Household Products (1.2%):
127 Matsushita Electric Industrial Co.,
Ltd............................... 2,563
11 Pioneer Electronic Corp............. 267
95 Sanyo Electric Co................... 427
63 Sharp Corp.......................... 870
19 Sony Corp........................... 1,659
--------
5,786
--------
Automotive (2.1%):
60 Honda Motor Co., Ltd................ 1,809
151 Nissan Motor Co., Ltd............... 1,173
23 Toyoda Automatic Loom Works......... 523
204 Toyota Motor Corp................... 6,025
--------
9,530
--------
Banking (4.2%):
131 Asahi Bank Ltd...................... 1,116
298 Bank of Tokyo--Mitsubishi........... 5,982
78 Bank of Yokohama Ltd................ 440
75 Chiba Bank Ltd...................... 447
168 Fuji Bank Ltd....................... 2,525
115 Industrial Bank of Japan............ 1,789
48 Joyo Bank........................... 266
55 Mitsui Trust & Banking Co........... 416
198 Sakura Bank Ltd..................... 1,519
</TABLE>
Continued
57
<PAGE> 376
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Banking, continued:
50 Shizuoka Bank....................... $ 572
187 Sumitomo Bank....................... 3,072
119 Tokai Bank.......................... 1,227
--------
19,371
--------
Banking & Financial Services (0.1%):
29 Gunma Bank.......................... 261
--------
Basic Industry (0.1%):
42 Sekisui Chemical Co., Ltd........... 426
--------
Beverages & Tobacco (0.2%):
17 Asahi Breweries Ltd................. 254
49 Kirin Brewery Co., Ltd.............. 510
36 Takara Shuzo........................ 260
--------
1,024
--------
Brewery (0.0%):
18 Sapporo Breweries................... 150
--------
Building Products (0.1%):
20 Chichibu Onoda Cement Co............ 78
16 Nihon Cement Co., Ltd............... 77
12 Tostem Corp......................... 333
--------
488
--------
Chemicals (0.9%):
72 Asahi Chemical Industry Co., Ltd.... 431
2 Asahi Denka Kogyo K.K............... 14
97 Denki Kagaku Kogyo K.K.............. 268
32 Kaneka Corp......................... 201
98 Mitsubishi Chemical Corp............ 320
51 Mitsui Toatsu Chemicals............. 140
14 Nippon Shokubai K.K. Co............. 111
14 NOF Corp............................ 60
6 Rasa Industries Ltd................. 37
12 Shin-Etsu Chemical Co............... 329
59 Showa Denko K.K. (b)................ 155
100 Sumitomo Chemical Co................ 454
32 Takeda Chemical Industries.......... 902
80 Toray Industries, Inc............... 571
72 Tosoh Corp. (b)..................... 244
74 Ube Industries Ltd.................. 215
--------
4,452
--------
Construction (0.4%):
9 Aoki Corp. (b)...................... 11
11 Daiko, Inc.......................... 43
21 Daiwa House Industry Co., Ltd....... 257
22 Haseko (b).......................... 35
56 Kumagai Gumi Co., Ltd............... 93
12 Misawa Homes........................ 73
18 Okumura Corp........................ 95
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Construction, continued:
20 Penta-Ocean Construction Co.,
Ltd............................... $ 65
61 Sekisui House Ltd................... 619
59 Shimizu Corp........................ 354
43 Taisei Corp......................... 200
--------
1,845
--------
Consumer Goods & Services (0.2%):
35 Nippon Sheet Glass Co., Ltd......... 129
50 Toto Ltd............................ 610
--------
739
--------
Data Processing & Reproduction (0.3%):
117 Fujitsu Ltd......................... 1,626
--------
Distribution (0.1%):
77 Itochu Corp......................... 415
--------
Diversified (0.1%):
9 Amano Corp.......................... 102
18 Yamaha Corp......................... 331
--------
433
--------
Electrical & Electronic (0.6%):
9 Kyocera Corp........................ 716
116 Mitsubishi Electric Corp............ 650
16 Nikon Corp.......................... 270
17 Omron Corp.......................... 361
7 Rohm Co............................. 721
--------
2,718
--------
Electrical Equipment (0.1%):
7 SMC Corp............................ 601
--------
Electronic Components/Instruments (0.9%):
13 Fanuc Co., Ltd...................... 500
3 Hirose Electric..................... 213
195 Hitachi Ltd......................... 2,181
93 NEC Corp............................ 1,300
23 Yokogawa Electric Corp.............. 200
--------
4,394
--------
Energy (0.5%):
51 Cosmo Oil Co., Ltd.................. 244
211 Japan Energy Corp................... 553
264 Nippon Oil Co....................... 1,447
--------
2,244
--------
Engineering (0.3%):
9 Daito Trust Construction Co.,
Ltd............................... 106
36 Fujita Corp......................... 63
33 Hazama Corp......................... 68
36 Kajima Corp......................... 211
56 Kawasaki Heavy Industries........... 261
13 Kinden Corp......................... 183
</TABLE>
Continued
58
<PAGE> 377
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Engineering, continued:
19 Nishimatsu Construction............. $ 133
53 Obayashi Corp....................... 355
1 Sato Kogyo.......................... 2
--------
1,382
--------
Entertainment (0.1%):
6 Toei................................ 41
16 Tokyo Dome Corp..................... 215
--------
256
--------
Financial Services (0.8%):
11 Acom Co., Ltd....................... 531
55 Daiwa Securities Co., Ltd........... 435
57 Mitsubishi Trust & Banking Co....... 902
12 Nippon Shinpan Co................... 43
94 Nomura Securities Co................ 1,297
6 Orix Corp........................... 445
54 Yamaichi Securities Co., Ltd........ 161
43 Yasuda Trust & Banking.............. 165
--------
3,979
--------
Food & Household Products (0.2%):
27 Ajinomoto Co., Inc.................. 290
39 Kao Corp............................ 543
10 Nissin Food Products................ 260
--------
1,093
--------
Food Products & Services (0.1%):
34 Daiei, Inc.......................... 218
10 Kikkoman Corp....................... 66
28 Nichirei Corp....................... 140
8 Nippon Suisan Kaisha Ltd. (b)....... 27
12 Nisshin Oil Mills Ltd............... 68
--------
519
--------
Forest Products (0.3%):
22 Hokuetsu Paper Mills Ltd............ 134
38 Mitsubishi Paper Mills.............. 149
115 New Oji Paper Co.................... 714
70 Nippon Paper Industries Co.......... 406
--------
1,403
--------
Health & Personal Care (0.6%):
9 Chugai Pharmaceutical Co., Ltd...... 81
20 Kyowa Hakko Kogyo Co., Ltd.......... 150
21 Lion Corp........................... 96
27 Sankyo Co., Ltd..................... 908
57 Yamanouchi Pharmaceutical Co.,
Ltd............................... 1,535
--------
2,770
--------
Hotels & Lodging (0.0%):
11 Fujita Kanko, Inc................... 138
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Industrial Goods & Services (0.8%):
57 Bridgestone Corp.................... $ 1,326
50 Denso Corp.......................... 1,197
33 Mitsui Engineering & Shipbuilding
Co., Ltd. (b)..................... 72
36 NGK Insulators Ltd.................. 396
34 Sumitomo Electric Industries........ 570
--------
3,561
--------
Insurance (0.4%):
39 Mitsui Marine & Fire
Insurance Co., Ltd................ 282
14 Nichido Fire & Marine
Insurance Co., Ltd................ 100
12 Nippon Fire & Marine Insurance...... 65
22 Sumitomo Marine & Fire Insurance.... 181
85 Tokio Marine & Fire Insurance Co.... 1,114
--------
1,742
--------
Jewelry (0.1%):
40 Citizen Watch Co., Ltd.............. 309
--------
Leasing (0.1%):
45 Yamato Transport Co., Ltd........... 562
--------
Machinery & Equipment (1.1%):
20 Chiyoda Corp. (b)................... 96
9 Daifuku Co., Ltd.................... 119
18 Daikin Industries Ltd............... 164
14 Ebara Corp.......................... 210
49 Komatsu Ltd......................... 398
40 Koyo Seiko Co., Ltd................. 320
94 Kubota Corp......................... 461
32 Minebea Co., Ltd.................... 341
229 Mitsubishi Heavy Industries, Ltd.... 1,760
5 Mori Seiki.......................... 80
58 Niigata Engineering Co., Ltd. (b)... 106
25 NSK Ltd............................. 161
37 NTN Corp............................ 207
12 Okuma Corp.......................... 106
10 Tokyo Electron Ltd.................. 465
--------
4,994
--------
Manufacturing-Capital Goods (0.4%):
38 Fujikura Ltd........................ 355
16 Kokuyo Co., Ltd..................... 433
21 Makita Corp......................... 308
15 Murata Manufacturing Co., Ltd....... 599
12 Nippon Piston Ring Co., Ltd......... 37
5 Nippon Sharyo Ltd................... 32
22 Noritake Co., Ltd................... 198
</TABLE>
Continued
59
<PAGE> 378
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Manufacturing-Capital Goods, continued:
7 Tokai Carbon Co., Ltd............... $ 31
11 Topy Industries Ltd................. 40
--------
2,033
--------
Manufacturing-Consumer Goods (0.7%):
69 Canon, Inc.......................... 1,882
33 Fuji Photo Film Co., Ltd............ 1,329
5 Sega Enterprises.................... 166
--------
3,377
--------
Materials (0.0%):
15 Sumitomo Osaka Cement Co., Ltd...... 47
--------
Merchandising (0.5%):
28 ITO-Yokado Co., Ltd................. 1,628
14 JUSCO Co............................ 473
10 Marui Co., Ltd...................... 186
1 Seven-Eleven Japan Ltd.............. 68
--------
2,355
--------
Metals & Mining (0.2%):
17 Dowa Mining Co., Ltd................ 66
21 Furukawa Electric Co................ 134
46 Hitachi Zosen Corp.................. 183
66 Japan Steel Works (b)............... 129
67 Mitsubishi Materials Corp........... 269
30 Mitsui Mining & Smelting............ 133
3 Seika Corp.......................... 11
22 Sumitomo Metal Mining Co............ 156
--------
1,081
--------
Miscellaneous Materials & Commodities (0.1%):
66 Asahi Glass Co., Ltd................ 658
--------
Office Equipment & Services (0.3%):
57 Dai Nippon Printing Co., Ltd........ 1,290
--------
Oil & Gas Exploration, Production & Services (0.1%):
9 Arabian Oil Co...................... 303
66 Teikoku Oil Co...................... 296
--------
599
--------
Oil & Gas Transmission (0.0%):
10 Iwatani International Corp.......... 40
33 Mitsubishi Oil Co., Ltd............. 147
--------
187
--------
Packaging (0.0%):
10 Toyo Seikan Kaisha.................. 220
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Pharmaceuticals (0.2%):
12 Meiji Seika......................... $ 66
13 Shionogi & Co....................... 101
29 Taisho Pharmacuetical Co............ 783
--------
950
--------
Real Estate (0.5%):
98 Mitsubishi Estate Co................ 1,421
75 Mitsui Fudosan...................... 1,036
--------
2,457
--------
Restaurants (0.0%):
8 Skylark Co., Ltd.................... 122
--------
Retail Stores/Catalog (0.3%):
10 Hankyu Department Stores............ 106
12 Isetan Co........................... 149
52 Mycal Corp.......................... 750
26 Takashimaya Co...................... 354
--------
1,359
--------
Retail-General Merchandise (0.0%):
8 Mitsukoshi Ltd...................... 57
--------
Services (0.3%):
12 Secom............................... 881
35 Toppan Printing Co., Ltd............ 551
--------
1,432
--------
Steel (0.6%):
53 Daido Steel Co., Ltd................ 171
4 Japan Metals & Chemicals (b)........ 10
166 Kawasaki Steel Corp................. 541
4 Nippon Denko Co., Ltd............... 11
9 Nippon Metal Industry............... 27
360 Nippon Steel Co..................... 1,151
199 NKK Corp............................ 428
201 Sumitomo Metal Industries........... 573
--------
2,912
--------
Storage (0.0%):
3 Mitsubishi Logistics Corp........... 43
--------
Telecommunications (0.5%):
0 Nippon Telegraph & Telephone
Corp. (d)......................... 2,499
--------
Textile Products (0.3%):
244 Kanebo Ltd. (b)..................... 449
26 Kurabo Industries................... 70
31 Kuraray Co., Ltd.................... 309
16 Mitsubishi Rayon Co., Ltd........... 66
13 Nisshinbo Industries................ 118
4 Nitto Boseki Co., Ltd............... 14
27 Teijin Ltd.......................... 127
</TABLE>
Continued
60
<PAGE> 379
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Textile Products, continued:
27 Toyobo Ltd.......................... $ 71
48 Unitika Ltd. (b).................... 96
--------
1,320
--------
Tire & Rubber (0.0%):
14 Yokohama Rubber Co., Ltd............ 60
--------
Transportation & Shipping (0.2%):
27 Kamigumi Co., Ltd................... 152
93 Kawasaki Kisen Kaisha Ltd. (b)...... 188
33 Mitsui OSK Lines, Ltd. (b).......... 68
64 Nippon Yusen Kabushiki Kaisha....... 249
12 Seino Transportation................ 130
--------
787
--------
Transportation--Road & Railroad (0.7%):
91 Hankyu Corp......................... 503
30 Keihin Electric Express Railway..... 140
232 Kinki Nippon Railway................ 1,422
49 Nippon Express Co., Ltd............. 392
40 Odakyu Electric Railway............. 238
36 Tobu Railway Co., Ltd............... 166
49 Tokyu Corp.......................... 304
--------
3,165
--------
Utilities--Electric & Gas (0.7%):
38 Kansai Electric Power Co., Inc...... 734
82 Osaka Gas Co........................ 236
22 Tohoku Electric Power............... 396
81 Tokyo Electric Power................ 1,694
92 Tokyo Gas Co., Ltd.................. 256
--------
3,316
--------
Wholesale & International Trade (0.5%):
123 Marubeni Corp....................... 559
71 Mitsubishi Corp..................... 888
59 Mitsui & Co......................... 567
46 Sumitomo Corp....................... 438
--------
2,452
--------
Wire & Cable Products (0.0%):
4 Showa Electric Wire & Cable......... 14
8 Tokyo Rope MFG...................... 28
--------
42
--------
Total Japan......................... 114,709
--------
KOREA (0.6%):
Airlines (0.0%):
0 Korean Air (b)(d)................... 4
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
KOREA, CONTINUED:
Automotive (0.0%):
0 Hyundai Motor Co., Ltd. (d)......... $ 3
3 Kia Motors Corp. (b)................ 46
--------
49
--------
Banking (0.0%):
5 Cho Hung Bank Co., Ltd.............. 33
5 Commercial Bank of Korea............ 28
6 SeoulBank (b)....................... 25
0 Shinhan Bank (d).................... 0
--------
86
--------
Banking & Financial Services (0.0%):
5 Korea Exchange Bank................. 31
6 Korea First Bank.................... 23
2 Korea Long-Term Credit Bank......... 26
--------
80
--------
Chemicals (0.0%):
2 Han Wha Corp........................ 22
3 Hanwha Chemical Corp................ 25
7 LG Chemical Ltd..................... 93
--------
140
--------
Distribution (0.0%):
8 Daewoo Corp......................... 61
5 Samsung Corp........................ 66
--------
127
--------
Electrical & Electronic (0.1%):
9 Daewoo Electronics Co. (b).......... 70
8 LG Electronics...................... 148
1 Samsung Display Devices Co.......... 42
--------
260
--------
Electronic Components/Instruments (0.0%):
2 Samsung Electro-Mechanics Co........ 60
2 Samsung Electronics Co.............. 167
--------
227
--------
Engineering (0.1%):
6 Dong-Ah Construction Industrial
Co................................ 119
8 Hyundai Engineering &
Construction Co................... 194
--------
313
--------
Financial Services (0.0%):
2 Daewoo Securities Co. (b)........... 34
5 Hanil Bank.......................... 29
4 Hyundai Securities Co. (b).......... 61
</TABLE>
Continued
61
<PAGE> 380
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
KOREA, CONTINUED:
Financial Services, continued:
2 LG Securities (b)................... $ 22
2 Ssangyong Investment &
Securities Co., Ltd. (b).......... 15
--------
161
--------
Machinery & Equipment (0.0%):
9 Daewoo Heavy Industries............. 77
2 Hyundai Precision Industry Co....... 31
8 Samsung Heavy Industries (b)........ 81
--------
189
--------
Oil & Gas Exploration, Production & Services (0.0%):
2 Ssangyong Oil Refining Co., Ltd..... 43
5 Yukong Ltd.......................... 122
--------
165
--------
Retail-General Merchandise (0.0%):
0 Shinsegae Department Store Co.
(d)............................... 16
--------
Steel (0.2%):
5 Dongkuk Steel Mill Co............... 122
14 Hyundai Pipe Co., Ltd. (b).......... 117
4 Inchon Iron & Steel Co.............. 77
--------
316
--------
Telecommunication--Services & Equipment (0.0%):
1 LG Information & Communication
Ltd............................... 111
Utilities--Electric & Gas (0.2%):
18 Korea Electric Power Corp........... 525
--------
Total Korea......................... 2,769
--------
LUXEMBOURG (0.1%):
Aluminum (0.1%):
9 Hindalco Industries Ltd. GDR........ 332
--------
MALAYSIA (0.4%):
Agriculture (0.0%):
118 Highlands & Lowlands Berhad......... 180
--------
Building Products (0.0%):
80 Pan-Malaysia Cement Works Berhad.... 95
--------
Engineering (0.0%):
19 United Engineers (Malaysia) Ltd..... 134
--------
Financial Services (0.2%):
99 Idris Hydraulic (Malaysia) Berhad
(b)............................... 110
94 Rashid Hussain Berhad............... 596
13 Rashid Hussain Rights............... 0
--------
706
--------
Food Products & Services (0.1%):
54 Nestle (Malaysia) Berhad............ 404
--------
Forest Products (0.0%):
21 Land & General Berhad............... 24
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
MALAYSIA, CONTINUED
Telecommunications (0.0%):
41 Technology Resources Industries
Berhad (b)........................ $ 70
--------
Utilities--Electric & Gas (0.1%):
51 Tenaga Nasional Berhad.............. 250
--------
Total Luxembourg.................... 1,863
--------
MEXICO (0.7%):
Banking (0.0%):
105 Grupo Financiero Banamex Accival SA
de CV (b)......................... 51
--------
Beverages & Tobacco (0.0%):
13 Grupo Continental SA................ 34
27 Grupo Embotelladoras de Mexico SA de
CV................................ 55
--------
89
--------
Brewery (0.0%):
13 Fomento Economico Mexicano SA de CV,
Class B........................... 77
--------
Building Products (0.1%):
8 Apasco SA de CV..................... 57
32 Cemex SA de CV, Series A............ 138
20 Cemex SA de CV, Series B............ 98
15 Cemex SA de CV, Series CPO.......... 65
11 Tolmex SA de CV, Series B2 (b)...... 59
--------
417
--------
Diversified (0.2%):
22 ALFA SA de CV, Class A.............. 152
37 Carso Global Telecom, Series A-1.... 142
4 Desc SA de CV, Series A............. 28
4 Desc SA de CV, Series B............. 29
3 Desc SA de CV, Series C............. 23
37 Grupo Carso SA de CV, Series A-1.... 253
--------
627
--------
Engineering (0.0%):
8 Empresas ICA Sociedad Controladora
SA de CV.......................... 134
16 Grupo Tribasa SA de CV (b).......... 41
--------
175
--------
Financial Services (0.0%):
25 Grupo Financiero Banamex Accival SA
de CV (b)......................... 67
0 Grupo Financiero Inbursa SA de CV,
Class B (b)(d).................... 0
--------
67
--------
</TABLE>
Continued
62
<PAGE> 381
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
MEXICO, CONTINUED:
Food & Household Products (0.1%):
85 Kimberly-Clark de Mexico SA de CV,
Class A........................... $ 337
--------
Industrial Goods & Services (0.0%):
10 Grupo Industrial Bimbo SA de CV,
Series A.......................... 72
--------
Merchandising (0.0%):
38 Cifra SA de CV, Series B............ 70
51 Cifra SA de CV, Series C............ 81
--------
151
--------
Metals & Mining (0.0%):
18 Grupo Mexico SA, Series B........... 67
13 Industrias Penoles SA, Series CP.... 62
--------
129
--------
Retail General Merchandise (0.0%):
39 Controladora Comercial Mexicana SA
de CV............................. 36
--------
Retail Stores/Catalog (0.0%):
52 Cifra SA de CV, Series A............ 95
40 El Puerto de Liverpool SA de CV,
Series 1.......................... 51
10 Sears Roebuck de Mexico SA de CV
(b)............................... 23
--------
169
--------
Steel (0.0%):
26 Altos Hornos de Mexico SA (b)....... 63
10 Hylsamex SA......................... 51
--------
114
--------
Telecommunications (0.3%):
8 Grupo Televisa SA, Series CPO (b)... 121
269 Telefonos de Mexico SA, Series L.... 643
--------
764
--------
Tobacco (0.0%):
17 Empresas La Moderna SA de CV (b).... 88
--------
Transportation--Shipping (0.0%):
30 Vitro SA (b)........................ 109
--------
Wholesale Distribution (0.0%):
15 Grupo Casa Autrey SA de CV.......... 30
--------
Total Mexico........................ 3,502
--------
NETHERLANDS (2.8%):
Appliances & Household Products (0.2%):
14 Philips Electronics NV.............. 969
--------
Banking (0.3%):
81 ABN Amro Holding NV................. 1,506
--------
Beverages & Tobacco (0.1%):
2 Heineken NV......................... 398
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
NETHERLANDS, CONTINUED:
Broadcasting & Publishing (0.2%):
43 Elsevier NV......................... $ 715
--------
Chemicals (0.2%):
6 Akzo Nobel.......................... 755
1 DSM NV.............................. 90
--------
845
--------
Energy (0.8%):
82 Nlg Royal Dutch Petroleum........... 4,261
--------
Financial Services (0.5%):
52 ING Groep NV........................ 2,386
--------
Food Products & Services (0.3%):
6 Unilever NV CVA (b)................. 1,286
--------
Services (0.2%):
20 Koninklijke Royal PTT Nederland
NV................................ 804
--------
Total Netherlands................... 13,170
--------
NEW ZEALAND (0.3%):
Beverages & Tobacco (0.1%):
125 Lion Nathan Ltd..................... 317
--------
Telecommunications (0.2%):
205 Telecom Corp. of New Zealand Ltd.... 1,044
--------
Total New Zealand................... 1,361
--------
NORWAY (0.9%):
Engineering (0.1%):
7 Kvaerner ASA........................ 413
--------
Entertainment (0.0%):
43 NCL Holdings ASA (b)................ 135
--------
Forest Products (0.1%):
7 Norske Skogsindustrier ASA.......... 245
--------
Insurance (0.1%):
54 Storebrand ASA (b).................. 322
--------
Medical Equipment & Supplies (0.0%):
17 Hafslund ASA, Class A............... 90
--------
Metals & Mining (0.0%):
11 Elkem ASA........................... 208
Oil & Gas Exploration, Production & Services (0.5%):
7 Aker ASA, Class A................... 124
12 Aker ASA, Class B................... 227
33 Norsk Hydro ASA..................... 1,804
5 Petroleum Geo-Services ASA (b)...... 257
--------
2,412
--------
Pharmaceuticals (0.0%):
13 Nycomed ASA, Class B................ 183
--------
</TABLE>
Continued
63
<PAGE> 382
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
NORWAY, CONTINUED:
Transportation--Shipping (0.1%):
17 Leif Hoegh & Co. ASA................ $ 374
--------
Total Norway........................ 4,382
--------
PHILIPPINES (0.5%):
Agriculture (0.0%):
311 Vitarich Corp. (b).................. 31
--------
Banking & Financial Services (0.2%):
54 Far East Bank & Trust Co............ 135
10 Metropolitan Bank & Trust Co........ 215
11 Philippine Commercial International
Bank.............................. 104
21 Philippine National Bank (b)........ 144
--------
598
--------
Beverages & Tobacco (0.0%):
60 San Miguel Corp., Class B........... 158
--------
Building Products (0.0%):
374 Southeast Asia Cement Holdings, Inc.
(b)............................... 18
--------
Diversified (0.0%):
306 Ayala Corp., Class B................ 220
--------
Homebuilders (0.0%):
95 C&P Homes, Inc...................... 35
--------
Oil & Gas Exploration, Production & Services (0.1%):
999 Petron Corp......................... 254
--------
Real Estate (0.1%):
413 Ayala Land, Inc., Class B........... 379
78 Filinvest Land, Inc. (b)............ 20
246 SM Prime Holdings, Inc.............. 73
--------
472
--------
Telecommunications (0.1%):
19 Philippine Long Distance
Telephone Co...................... 9
15 Philipino Telephone Corp. (b)....... 480
--------
489
--------
Utilities--Electric & Gas (0.0%):
36 Manila Electric Co., Class B........ 179
--------
Total Philippines................... 2,454
--------
PORTUGAL (0.8%):
Banking (0.4%):
25 Banco Comercial Portugues SA........ 475
17 Banco Espirito Santo e Commerical de
Lisboa SA, Registered (b)......... 378
16 Banco Internacional do Funchal SA
(b)............................... 117
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
PORTUGAL, CONTINUED:
Banking, continued:
1 Banco Totta & Acores SA............. $ 17
17 BPI-SGPS SA, Registered............. 330
--------
1,317
--------
Beverages & Tobacco (0.0%):
11 UNICER-Uniao Cervejeira SA.......... 192
--------
Building Products (0.0%):
1 Cimpor-Cimentos de Portugal,
SGPS SA........................... 30
--------
Food & Household Products (0.1%):
9 Estabelecimentos Jeronimo Martins &
Filho SA.......................... 643
--------
Forest Products (0.1%):
8 Soporcel-Sociedade Portuguesa de
Celulose SA (b)................... 241
--------
Industrial Holding Companies (0.1%):
10 Sonae Investimentos SA.............. 431
--------
Insurance (0.0%):
6 Companhia de Seguros Tranquilidade,
Registered........................ 123
--------
Retail-General Merchandise (0.0%):
5 Modelo Continente-Sociedade Gestora
de Participacoes Sociais SA....... 220
--------
Telecommunications (0.1%):
16 Portugal Telecom SA................. 658
--------
3,855
--------
Singapore (0.4%):
Lodging (0.1%):
310 Hotel Properties Ltd................ 527
--------
Machinery & Equipment (0.0%):
19 Van Der Horst Ltd................... 35
--------
Real Estate (0.0%):
78 United Industrial Corp., Ltd........ 59
27 United Overseas Land Ltd. (b)....... 37
--------
96
--------
Telecommunications (0.1%):
334 Singapore Telecommunications Ltd.... 617
--------
Transportation & Shipping (0.2%):
468 Chuan Hup Holdings Ltd.............. 336
347 Neptune Orient Lines Ltd............ 311
647
--------
Total Portugal...................... 1,922
--------
</TABLE>
Continued
64
<PAGE> 383
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SOUTH AFRICA (0.7%):
Banking & Financial Services (0.2%):
7 Nedcor Ltd.......................... $ 146
3 Standard Bank Investment Corp.,
Ltd............................... 128
--------
274
--------
Brewery (0.0%):
7 South African Breweries Ltd......... 203
--------
Diversified (0.2%):
5 Anglovaal Industries Ltd............ 19
11 Barlow Ltd.......................... 115
41 Gencor Ltd.......................... 187
0 Haggie Ltd.......................... 1
18 Malbak Ltd.......................... 28
14 Rembrandt Group Ltd................. 149
13 Smith (C.G.) Ltd.................... 74
--------
573
--------
Engineering (0.0%):
31 Murray & Roberts Holdings Ltd....... 72
--------
Entertainment (0.0%):
55 Sun International (South Africa)
Ltd............................... 31
--------
Financial Services (0.0%):
12 Amalgamated Banks of South Africa... 84
7 First National Bank Holdings Ltd.... 59
--------
143
--------
Food & Household Products (0.0%):
3 Tiger Oats Ltd...................... 60
--------
Food Products & Services (0.0%):
2 Foodcorp Ltd........................ 15
--------
Forest Products (0.0%):
11 Nampak Ltd.......................... 49
13 Sappi Ltd........................... 113
--------
162
--------
Industrial Goods & Services (0.0%):
1 Anglo American Industrial Corp.,
Ltd............................... 48
--------
Insurance (0.0%):
5 Liberty Life Association of Africa
Ltd............................... 144
4 Southern Life Association Ltd....... 44
--------
188
--------
Metals & Mining (0.3%):
6 Anglo American Corp. of South Africa
Ltd............................... 357
1 Anglo American Gold Investment Co.,
Ltd............................... 30
9 DeBeers Centenary AG................ 343
5 Driefontein Consolidated Ltd........ 35
2 Gold Fields of South Africa Ltd..... 35
8 Johnnies Industrial Corp., Ltd...... 105
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SOUTH AFRICA, CONTINUED:
Metals & Mining, continued:
6 Kloof Gold Mining Company Ltd....... $ 33
8 Randfontein Estates Gold Mining
Co................................ 17
5 Rustenburg Platinum Holdings Ltd.... 86
4 Samancor Ltd........................ 41
--------
1,082
--------
Oil & Gas Exploration, Production & Services (0.0%):
14 Sasol Ltd........................... 185
--------
Pharmaceuticals (0.0%):
3 South African Druggists Ltd......... 24
--------
Retail-General Merchandise (0.0%):
2 Ellerine Holdings Ltd............... 18
7 New Clicks Holdings Ltd............. 7
--------
25
--------
Total South Africa.................. 3,085
--------
SPAIN (4.1%):
Banking (1.3%):
28 Banco Bilbao Vizcaya SA,
Registered........................ 2,261
23 Banco Central Hispanoamericano SA... 828
17 Corporacion Bancaria de Espana SA... 965
64 Esp Banco Santander Sa.............. 1,982
--------
6,036
--------
Beverages & Tobacco (0.1%):
12 El Aguila SA (b).................... 58
6 Tabacalera SA, Class A.............. 323
--------
381
--------
Building Products (0.0%):
15 Uralita SA.......................... 168
--------
Chemicals (0.0%):
54 Ercros SA (b)....................... 55
--------
Construction (0.0%):
7 Dragados Y Construcciones SA........ 146
--------
Energy (0.4%):
48 Repsol SA........................... 2,038
--------
Food & Household Products (0.1%):
17 Ebro Agricolas, Compania de
Alimentacion SA................... 330
--------
Forest Products (0.1%):
7 Empresa Nacional de Celulosas SA.... 129
38 Sarrio SA........................... 149
--------
278
--------
Industrial Holding Companies (0.2%):
6 Corporacion Financiara Alba......... 712
--------
Insurance (0.0%):
4 Corporacion Mapfre.................. 192
--------
</TABLE>
Continued
65
<PAGE> 384
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SPAIN, CONTINUED:
Miscellaneous Materials & Commodities (0.0%):
6 Viscofan Industria Navarra de
Envolturas Celulosicas SA......... $ 150
--------
Real Estate (0.2%):
9 Inmobiliaria Metropolitana Vasco
Central SA........................ 313
16 Vallehermoso SA..................... 424
--------
737
--------
Steel (0.1%):
3 Acerinox SA......................... 597
--------
Telecommunications (0.8%):
130 Telefonica de Espana................ 3,757
--------
Utilities--Electric & Gas (0.8%):
20 Empresa Nacional de Electricidad
SA................................ 450
3 Fomento de Construcciones y
Contratas SA...................... 358
5 Gas Natural SDG SA.................. 1,116
114 Iberdrola SA........................ 1,446
48 Union Electric Fenosa SA............ 440
--------
3,810
--------
Total Spain......................... 19,387
--------
SWEDEN (1.8%):
Automotive (0.1%):
15 Volvo AB, Series B.................. 388
--------
Banking & Financial Services (0.1%):
27 Skandiaviska Enskilda Banken, Class
A................................. 296
11 Svenska Handlesbanken, Class A...... 357
--------
653
--------
Engineering (0.2%):
32 ABB AB, A Shares.................... 442
8 ABB AB, B Shares.................... 112
4 Skanska AB, Series B................ 188
--------
742
--------
Forest Products (0.1%):
15 Stora Kopparbergs Bergslags
Aktiebolag, Series A.............. 244
6 Stora Kopparbergs Bergslags
Aktiebolag, Series B.............. 94
16 Svenska Cellulosa AB, Series B...... 330
--------
668
--------
Insurance (0.0%):
4 Skandia Forsakrings AB.............. 155
--------
Machinery & Equipment (0.1%):
13 Atlas Copco AB, Series A............ 347
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SWEDEN, CONTINUED:
Manufacturing-Consumer Goods (0.1%):
6 Electrolux AB, Series B............. $ 399
--------
Metals & Mining (0.0%):
4 SKF AB, Series B.................... 110
7 Trelleborg AB, Series B............. 117
--------
227
--------
Metals (Non-ferrous) (0.0%):
3 Granges AB.......................... 37
--------
Office Equipment & Services (0.0%):
5 Esselte AB, Series B................ 108
--------
Pharmaceuticals (0.5%):
26 Astra AB, A Shares.................. 489
80 Astra AB, B Shares.................. 1,416
--------
1,905
--------
Retail-General Merchandise (0.2%):
32 Hennes & Mauritz AB, B Shares....... 1,146
--------
Telecommunications (0.4%):
48 Telefonaktiebolaget LM Ericsson,
Series B.......................... 1,872
--------
Tobacco (0.0%):
20 Swedish Match AB.................... 68
--------
Total Sweden........................ 8,715
--------
SWITZERLAND (2.4%):
Banking (0.1%):
1 Swiss Bank Corp. (b)................ 356
--------
Chemicals (0.1%):
4 Ciba Specialty Chemicals AG......... 327
--------
Consumer Goods (0.0%):
1 Societe Suisse pour la
Microelectronique et l'Horlogerie
AG................................ 156
--------
Diversified (0.1%):
0 ABB AG, Bearer Shares (d)........... 394
0 Alusuisse-Lonza Holding AG,
Registered (d).................... 156
--------
550
--------
Financial Services (0.3%):
5 CS Holding AG, Registered........... 580
1 Union Bank of Switzerland........... 715
--------
1,295
--------
Food Products & Services (0.2%):
1 Nestle SA, Registered............... 753
--------
Insurance (0.1%):
0 Swiss Reinsurance Co., Registered
(d)............................... 552
--------
</TABLE>
Continued
66
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- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SWITZERLAND, CONTINUED:
Pharmaceuticals (1.5%):
4 Novartis AG, Bearer................. $ 5,658
0 Roche Holding AG (d)................ 550
0 Roche Holding AG, Bearer (d)........ 1,178
--------
7,386
--------
Transportation (0.0%):
1 Sfr Danzas Holding Ag Reg........... 98
--------
Total Switzerland................... 11,473
--------
THAILAND (0.3%):
Airlines (0.0%):
136 Thai Airways International Public
Co., Ltd., Foreign Registered
Shares............................ 200
--------
Banking (0.1%):
42 Bangkok Bank Public Co., Ltd.,
Foreign Registered Shares......... 287
182 Krung Thai Bank Ltd................. 192
--------
479
--------
Computer Hardware (0.1%):
51 Shinamatra Computer Public Co.
Ltd............................... 272
--------
Metals & Mining (0.0%):
655 Padaeng Industries Public Co., Ltd.
(b)............................... 187
--------
Telecommunications (0.1%):
30 Advanced Information Services PLC,
Foreign Registered Shares......... 261
77 TelecomAsia Corp. Public Co., Ltd.
(b)............................... 93
--------
354
--------
Total Thailand...................... 1,492
--------
TURKEY (0.9%):
Appliances & Household Products (0.0%):
1,518 Arcelik AS.......................... 205
--------
Automotive (0.0%):
150 Otosan Otomobil Sanayii AS.......... 80
1,702 Tofas Turk Otomobil Fabrikas AS..... 82
--------
162
--------
Banking & Financial Services (0.3%):
6,824 Akbank TAS.......................... 585
5,952 Turkiye Garanti Bankasi AS.......... 225
--------
810
--------
Beverages & Tobacco (0.0%):
388 Ege Biracilik ve Malt Sanayi AS..... 90
420 Ericiyas Biracilik ve Malt
Sanayii........................... 50
--------
140
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
TURKEY, CONTINUED:
Building Products (0.0%):
385 Akcansa Cimento AS.................. $ 53
266 Cimentas AS......................... 35
333 Cimsa Cimento Sanayi ve Ticaret
AS................................ 45
709 Turk Sise ve Cam Fabrikalari AS..... 45
--------
178
--------
Chemicals (0.0%):
129 Petkim Petrokimya Holding AS........ 44
--------
Diversified (0.2%):
1,714 Dogan Sirketler Grubu Holding AS.... 44
1,604 Koc Holding AS...................... 378
--------
422
--------
Electrical & Electronic (0.0%):
94 Raks Electronik Ev Aletleri......... 19
--------
Financial Services (0.3%):
1,464 Turkiye Is Bankasi AS, Class C...... 572
8,688 Yapi ve Kredi Bankasi AS............ 199
--------
771
--------
Food Products & Services (0.0%):
455 Tat Konserve Sanayii AS............. 34
--------
Forest Products (0.0%):
569 Kartonsan Karton Sanayi ve Ticaret
AS................................ 41
--------
Industrial Goods & Services (0.0%):
273 Kordsa Kord Bezi Sanayi ve Ticaret
AS................................ 23
273 Trl Kordsa Kord Bezi Sanayi
Rights............................ 0
--------
23
--------
Investment Companies (0.0%):
190 Koc Yatrim ve Sanayi Mamulleri
Pazarlama SA...................... 50
--------
Manufacturing-Capital Goods (0.0%):
708 Turk Demir Dokum Fabrikalari AS..... 36
--------
Metals & Mining (0.0%):
874 Eregli Demir ve Celik Fabrikalari
TAS............................... 146
2,209 Izmir Demir Celik Sanayi AS (b)..... 26
--------
172
--------
Oil & Gas Exploration, Production & Services (0.1%):
327 Aygaz AS............................ 67
548 Petrol Ofisi AS..................... 103
272 Tupras Turkiye Petrol Rafinerileri
AS (b)............................ 154
--------
324
--------
Telecommunications (0.0%):
293 Netas-Northern Elektrik
Telekomunikasyon AS (b)........... 81
--------
</TABLE>
Continued
67
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- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
TURKEY, CONTINUED:
Textile Products (0.0%):
206 Aksa Akrilik Kimya Sanayii AS....... $ 17
--------
Tire & Rubber (0.0%):
133 Brisa Bridgestone Sabanci Lastik
SAN, ve Tic AS.................... 45
145 Goodyear Lastikleri TAS............. 53
--------
98
--------
Transportation (0.0%):
422 Turk Hava Yollari AO (b)............ 121
--------
Utilities--Electric & Gas (0.0%):
89 Cukurova Elektrik AS................ 159
--------
Wholesale Distribution (0.0%):
193 Migros Turk TAS..................... 136
--------
Total Turkey........................ 4,043
--------
UNITED KINGDOM (8.0%):
Aerospace & Military Technology (0.2%):
22 British Aerospace PLC............... 488
43 Rolls-Royce PLC..................... 165
35 Smiths Industries PLC............... 444
--------
1,097
--------
Airlines (0.2%):
65 British Airways PLC................. 735
--------
Appliances & Household Products (0.1%):
14 EMI Group PLC....................... 244
--------
Auto Parts (0.0%):
56 LucasVarity PLC..................... 195
--------
Banking (1.3%):
160 Abbey National PLC.................. 2,189
75 Barclays PLC........................ 1,478
21 HSBC Holdings PLC................... 646
49 HSBC Holdings PLC (Hong Kong
Dollars).......................... 1,446
26 Royal Bank of Scotland Group PLC.... 242
--------
6,001
--------
Beverages & Tobacco (0.2%):
55 Guinness PLC........................ 537
50 Scottish & Newcastle PLC............ 540
--------
1,077
--------
Broadcasting/Cable (0.1%):
53 British Sky Broadcasting Group
PLC............................... 385
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED KINGDOM, CONTINUED:
Building Products (0.1%):
30 Marley PLC.......................... $ 62
10 Meyer International PLC............. 72
50 Rugby Group PLC..................... 100
159 Tarmac PLC.......................... 330
--------
564
--------
Chemicals (0.1%):
33 Imperial Chemical Industries PLC.... 459
--------
Conglomerates (0.2%):
92 B.A.T. Industries PLC............... 824
--------
Construction (0.1%):
74 Taylor Woodrow PLC.................. 216
26 Wilson Connolly Holdings PLC........ 69
--------
285
--------
Diversified (0.0%):
54 Lonrho PLC.......................... 114
--------
Electrical & Electronic (0.3%):
50 Bowthorpe PLC....................... 273
57 Electrocomponents PLC............... 428
100 General Electric Co., PLC........... 598
--------
1,299
--------
Energy (0.5%):
173 British Petroleum Co., PLC.......... 2,152
20 Energy Group PLC.................... 214
--------
2,366
--------
Engineering (0.0%):
25 Barratt Developments PLC............ 101
56 Costain Group PLC (b)............... 39
--------
140
--------
Financial Services (0.4%):
169 Lloyds TSB Group PLC................ 1,732
37 St. James's Place Capital PLC....... 80
--------
1,812
--------
Food & Household Products (0.2%):
42 Cadbury Schweppes PLC............... 377
25 Unilever PLC........................ 722
--------
1,099
--------
Food Products & Services (0.1%):
66 J Sainsbury PLC..................... 401
--------
Health & Personal Care (0.6%):
98 Glaxo Wellcome PLC.................. 2,020
27 Zeneca PLC.......................... 876
--------
2,896
--------
</TABLE>
Continued
68
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- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED KINGDOM, CONTINUED:
Industrial Holding Companies (0.3%):
28 BICC Group PLC...................... $ 83
109 BTR PLC............................. 372
94 Grand Metropolitan PLC.............. 912
36 Hanson PLC.......................... 180
--------
1,547
--------
Insurance (0.3%):
56 Commercial Union PLC................ 592
43 Prudential Corp. PLC................ 419
34 Royal & Sun Alliance Insurance Group
PLC............................... 250
--------
1,261
--------
Leisure (0.2%):
58 Granada Group PLC................... 760
29 Rank Group PLC...................... 181
--------
941
--------
Machinery & Equipment (0.1%):
20 GKN PLC............................. 344
--------
Merchandising (0.1%):
43 Safeway PLC......................... 248
--------
Metals & Mining (0.1%):
72 English China Clays PLC............. 246
--------
Metals (Non-ferrous) (0.2%):
43 RTZ Corp., PLC, Registered.......... 740
--------
Metals (Steel) (0.0%):
89 British Steel PLC................... 220
--------
Miscellaneous Materials & Commodities (0.0%):
61 Harrison & Crossfield PLC........... 113
51 Pilkington PLC...................... 116
--------
229
--------
Oil & Gas Exploration, Production & Services (0.0%):
36 LASMO PLC........................... 155
--------
Paper Products (0.0%):
41 Rexam PLC........................... 173
--------
Pharmaceuticals (0.3%):
72 SmithKline Beecham PLC.............. 1,332
--------
Printing & Publishing (0.1%):
52 Reuters Holdings PLC................ 548
--------
Real Estate (0.2%):
19 British Land Co., PLC............... 176
49 Land Securities PLC................. 686
--------
862
--------
Retail Stores/Catalog (0.6%):
46 Boots Co., PLC...................... 533
41 Great Universal Stores PLC.......... 415
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED KINGDOM, CONTINUED:
Retail Stores/Catalog, continued:
90 Marks & Spencer PLC................. $ 744
23 Next PLC............................ 256
117 Tesco PLC........................... 720
25 Thorn PLC........................... 71
--------
2,739
--------
Road & Railroad (0.0%):
23 Peninsular & Oriental Steam
Navigation Co..................... 229
--------
Telecommunications (0.6%):
196 British Telecommunications PLC...... 1,453
84 Cable & Wireless PLC................ 769
127 Vodaphone Group PLC................. 616
--------
2,838
--------
Textile Products (0.0%):
24 Courtaulds Textiles PLC............. 124
--------
Utilities--Electric & Gas (0.2%):
108 British Gas PLC..................... 398
110 Centrica PLC........................ 134
35 National Power PLC.................. 308
--------
840
--------
Total United Kingdom................ 37,609
--------
UNITED STATES (1.9%):
Aluminum (0.0%):
16 Indian Aluminum Company Ltd. GDR
(b)............................... 55
--------
Automotive (0.1%):
14 Mahindra & Mahindra Ltd. GDR (b).... 202
16 Tata Engineering & Locomotive Co.,
Ltd. GDR (b)...................... 252
--------
454
--------
Beverages & Tobacco (0.1%):
7 Compania Cervezas Unidas SA ADR..... 147
7 Embotelladora Andina SA ADR......... 143
3 Vina Concho y Toro SA ADR........... 93
--------
383
--------
Building Products (0.0%):
19 Gujarat Ambuja Cements Ltd. GDR..... 182
--------
Chemicals (0.1%):
10 Indian Petrochemicals Corp., Ltd.
GDR............................... 116
41 Indo Gulf Fertilizers and Chemicals
Corp., Ltd. GDR (b)............... 43
6 Quimica Y Minera Chile SA ADR....... 424
7 United Phosphorus Ltd. GDR (b)...... 48
--------
631
--------
</TABLE>
Continued
69
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- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED STATES, CONTINUED:
Diversified (0.1%):
13 Grasim Industries Ltd. GDR (b)...... $ 176
19 ITC Ltd. GDR (b).................... 305
2 U.S. Industries, Inc. (b)........... 58
--------
539
--------
Forest Products (0.0%):
12 Maderas Y Sinteticos Anonima SA
ADR............................... 198
--------
Hotels & Lodging (0.1%):
6 East India Hotels Ltd. GDR.......... 90
8 Indian Hotels Co., Ltd. GDR (b)..... 185
--------
275
--------
Manufacturing-Capital Goods (0.1%):
5 Ashok Leyland Ltd. GDR.............. 32
27 India Cements Ltd. GDR.............. 80
14 Larsen & Toubro Ltd. GDR (b)........ 230
--------
342
--------
Metals & Mining (0.0%):
8 Madeco SA ADR....................... 187
--------
Metals (Steel) (0.0%):
20 Steel Authority of India Ltd. GDR
(b)............................... 176
--------
Packaging (0.0%):
9 Cristalerias de Chile ADR........... 203
--------
Pharmaceuticals (0.1%):
5 Laboratorio Chile ADR............... 134
9 Ranbaxy Laboratories Ltd. GDR....... 211
--------
345
--------
Textile Products (0.2%):
22 Arvind Mills Ltd. GDR............... 111
7 Bombay Dye & Manufacturing Co. GDR
(b)............................... 22
1 Century Textile & Industries Ltd.
GDR (b)........................... 66
14 Indian Rayon & Industries Ltd. GDR
(b)............................... 173
8 Raymond Ltd. GDR.................... 33
29 Reliance Industries Ltd. GDR (b).... 676
--------
1,081
--------
Transportation (0.1%):
7 Bajaj Auto Ltd. GDR................. 241
--------
Transportation--Shipping (0.0%):
21 Great Eastern Shipping Co. GDR
(b)............................... 132
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED STATES, CONTINUED:
Utilities--Electric & Gas (0.9%):
12 Chilectra SA ADR.................... $ 335
12 Chilgener SA ADR.................... 333
30 Empresa Nacional Electricidad ADR... 2,490
12 Enersis SA ADR...................... 421
--------
3,579
--------
Total United States................. 9,003
--------
Total Common Stocks 458,017
--------
PREFERRED STOCKS (1.7%):
AUSTRALIA (0.2%):
223 News Corp. Ltd...................... 873
--------
BRAZIL (0.6%):
Banking (0.0%):
14,403 Banco Bradesco SA................... 144
131 Banco Itau SA....................... 75
--------
219
--------
Beverages & Tobacco (0.0%):
91 Companhia Cervejaria Brahma......... 70
--------
Electric Utility (0.0%):
1,504 Cia Energetica de Sao Paolo (b)..... 101
2,673 Companhia Energetica de Minas
Gerais............................ 134
--------
235
--------
Forest Products (0.0%):
90 Sadia-Concordia SA.................. 96
--------
Oil & Gas Exploration, Production & Services (0.2%):
1,919 Petroleo Brasileiro SA.............. 526
--------
Steel (0.0%):
7 Companhia Vale do Rio Doce.......... 149
--------
Telecommunications (0.4%):
7,869 Telecomunicacoes Brasileiras SA..... 1,195
351 Telecomunicacoes de Sao Paolo SA.... 114
--------
1,309
--------
Total Brazil........................ 2,604
--------
GERMANY (0.7%):
Automotive (0.2%):
3 Volkswagen AG....................... 1,488
--------
Business Services (0.3%):
6 SAP AG.............................. 1,269
--------
Textile Products (0.0%):
0 Escada AG........................... 48
--------
Utilities--Electric & Gas (0.2%):
28 RWE AG.............................. 981
--------
Total Germany....................... 3,786
--------
</TABLE>
Continued
70
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
PREFERRED STOCKS, CONTINUED:
GREECE (0.1%):
Telecommunications (0.1%):
6 Intracom SA......................... $ 255
--------
ITALY (0.1%):
Automotive (0.1%):
168 Fiat SpA............................ 311
--------
Total Preferred Stocks 7,829
--------
RIGHTS (0.0%):
KOREA (0.0%):
2 Samsung Electronics Co. (d)......... 0
--------
SWEDEN (0.0%):
4 Skanska AB, Series B (d)............ 0
--------
Total Rights.............................. 0
--------
U.S. TREASURY OBLIGATIONS (0.0%):
U.S. Treasury Bills (0.0%):
20 7/10/97 (c)......................... 20
25 8/21/97 (c)......................... 25
40 8/28/97 (c)......................... 40
90 9/25/97 (c)......................... 88
--------
Total U.S. Treasury Obligations 173
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
WARRANTS (0.0%):
France (0.0%):
17 Compagnie Generale des Eaux......... $ 10
--------
Total Warrants 10
--------
REPURCHASE AGREEMENTS (2.0%):
United States (2.0%):
9,399 State Street Bank, 5.00%, 7/1/97
(Collateralized by $9,410 U.S.
Treasury Notes, 6.25%, 3/31/99,
market value--$9,593)............. 9,399
--------
Total Repurchase Agreements 9,399
--------
Total (Cost--$384,664) (a) $475,428
========
</TABLE>
Continued
71
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
- ------------
Percentages indicated are based on net assets of $472,544.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $2,915. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $112,520
Unrealized depreciation.................................................. (24,671)
--------
Net unrealized appreciation.............................................. $ 87,849
========
</TABLE>
(b) Non-income producing securities.
(c) Serves as collateral for future contracts.
<TABLE>
<CAPTION>
CURRENT
OPENING MARKET
NUMBER OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- ---------- ------------------------- --------- -------
<C> <S> <C> <C>
19 Long Eurotop 100 Index
Future, 9/19/97 $ 3,921 $4,018
34 Long Nikkei 225 Index
Future, 9/11/97 3,944 3,502
$ 7,865 $7,520
======== =======
</TABLE>
(d) Amounts less than 1,000.
ADR American Depository Receipt
GDR Global Depository Receipt
<TABLE>
<CAPTION>
UNREALIZED
DELIVERY CONTRACT CONTRACT CONTRACT MARKET APPRECIATION/
CURRENCY DATE PRICE AMOUNT VALUE VALUE (DEPRECIATION)
-------- -------- --------- -------- -------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Long Contracts:
European Currency Unit.............. 9/19/97 $ 0.8798 $ 2,910 $3,308 $3,290 $ (18)
Japanese Yen........................ 9/11/97 111.0300 433,800 3,907 3,825 (82)
------ ------
Total Long Contracts................ $7,215 $7,115 $(100)
======= ====== ======
</TABLE>
See notes to financial statements.
72
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
ASSET ALLOCATION INCOME EQUITY EQUITY INDEX VALUE GROWTH LARGE COMPANY
FUND FUND FUND FUND VALUE FUND
---------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value.................... $168,007 $ 796,415 $713,983 $481,169 $ 664,073
Repurchase agreements, at cost........... 2,640 9,787 31,896 7,683 46,324
-------- --------- -------- -------- ---------
Total (cost $153,456; $449,883; $518,526;
$412,230; and $581,154;
respectively).......................... 170,647 806,202 745,879 488,852 710,397
Cash..................................... -- 1 -- -- 1
Interest and dividends receivable........ 1,190 1,796 888 606 830
Receivable for capital shares issued..... 320 460 1,112 31 39
Receivable from brokers for investments
sold................................... 1,196 1,012 1,488 946 --
Prepaid expenses and other assets........ 7 15 14 1 9
-------- --------- -------- -------- --------
TOTAL ASSETS............................. 173,360 809,486 749,381 490,436 711,276
-------- --------- -------- -------- --------
LIABILITIES:
Dividends payable........................ 427 696 368 248 355
Payable for capital shares redeemed...... 25 60 93 54 1
Payable to brokers for investments
purchased.............................. 2,482 511 485 974 --
Net payable for variation margin on
futures contracts...................... 3 -- 226 60 --
Accrued expenses and other payables:
Investment advisory fees............. 77 486 60 299 431
Administration fees.................. 11 111 22 67 99
12b-1 fees........................... 41 79 152 18 10
Other................................ 44 42 119 56 104
-------- --------- -------- -------- --------
TOTAL LIABILITIES........................ 3,110 1,985 1,525 1,776 1,000
-------- --------- -------- -------- --------
NET ASSETS:
Capital.................................. 139,176 395,370 502,010 380,040 565,003
Undistributed (distributions in excess
of) net investment income.............. 5 (5) -- 12 1
Accumulated undistributed net realized
gains from investment, options and
futures transactions................... 13,861 55,817 18,873 31,654 16,029
Net unrealized appreciation
(depreciation) from investments and
futures................................ 17,208 356,319 226,973 76,954 129,243
-------- --------- -------- -------- --------
NET ASSETS............................... $170,250 $ 807,501 $747,856 $488,660 $ 710,276
======== ========= ======== ======== =========
NET ASSETS:
Fiduciary............................ $ 94,971 $ 649,007 $480,819 $430,837 $ 686,156
Class A.............................. 31,379 78,976 98,338 47,306 14,832
Class B.............................. 43,900 79,518 168,699 10,517 9,288
-------- --------- -------- -------- --------
Total................................ $170,250 $ 807,501 $747,856 $488,660 $ 710,276
======== ========= ======== ======== =========
OUTSTANDING UNITS OF BENEFICIAL INTEREST
(SHARES):
Fiduciary............................ 7,314 29,591 22,055 37,439 46,382
Class A.............................. 2,414 3,606 4,510 4,113 999
Class B.............................. 3,366 3,622 7,737 917 621
-------- --------- -------- -------- --------
Total................................ 13,094 36,819 34,302 42,469 48,002
======== ========= ======== ======== ========
Net Asset Value:
Fiduciary
Offering and redemption price per
share.............................. $ 12.98 $ 21.93 $ 21.80 $ 11.51 $ 14.79
======== ========= ======== ======== =========
Class A
Redemption price per share......... $ 13.00 $ 21.90 $ 21.81 $ 11.50 $ 14.85
======== ========= ======== ======== =========
Maximum sales charge............... 4.50% 4.50% 4.50% 4.50% 4.50%
======== ========= ======== ========= =========
Maximum offering price per share
(100%/(100%-maximum sales charge)
of net asset value adjusted to
nearest cent).................... $ 13.61 $ 22.93 $ 22.84 $ 12.04 $ 15.55
======== ========= ======== ======== =========
Class B
Offering price per share (a)....... $ 13.04 $ 21.95 $ 21.80 $ 11.47 $ 14.95
======== ========= ======== ======== =========
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
73
<PAGE> 392
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
GROWTH INTERNATIONAL
DISCIPLINED LARGE COMPANY OPPORTUNITIES GULF SOUTH EQUITY INDEX
VALUE FUND GROWTH FUND FUND GROWTH FUND FUND
---------- ------------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value......................... $579,119 $ 1,374,135 $ 667,590 $ 97,368 $466,029
Repurchase agreements, at cost................ 29,318 28,027 39,449 2,589 9,399
-------- ----------- -------- --------- --------
Total (cost $510,158; $953,962; $611,514;
$75,832; and $384,664; respectively)........ 608,437 1,402,162 707,039 99,957 475,428
Cash.......................................... 1 1 -- 1 1
Foreign currency, at value (cost $392)........ -- -- -- -- 391
Interest and dividends receivable............. 708 1,704 389 56 961
Receivable for capital shares issued.......... 28 668 117 5 93
Receivable from brokers for investments
sold........................................ 1,655 19,244 3,659 1,244 --
Tax reclaim receivable........................ -- -- -- -- 732
Prepaid expenses and other assets............. 10 21 21 5 4
-------- ---------- -------- -------- --------
TOTAL ASSETS.................................. 610,839 1,423,800 711,225 101,268 477,610
-------- ---------- -------- -------- --------
LIABILITIES:
Dividends payable............................. 517 297 -- -- 4,472
Payable for capital shares redeemed........... 39 67 17 59 6
Payable to brokers for investments
purchased................................... 2,993 21,081 5,891 1,665 --
Net payable for variation margin on futures
contracts................................... -- -- -- -- 49
Payable for forward foreign currency
contracts................................... -- -- -- -- 100
Accrued expenses and other payables:
Investment advisory fees.................. 370 841 427 59 209
Administration fees....................... 85 192 98 6 65
12b-1 fees................................ 22 131 39 7 11
Other..................................... 103 149 63 20 154
-------- ----------- -------- --------- --------
TOTAL LIABILITIES............................. 4,129 22,758 6,535 1,816 5,066
-------- ----------- -------- --------- --------
NET ASSETS:
Capital....................................... 464,962 843,217 584,715 70,806 380,858
Undistributed (distributions in excess of) net
investment income........................... 17 45 -- (176) (2,608)
Accumulated undistributed net realized gains
from investment, options, futures and
foreign currency transactions............... 43,452 109,580 24,450 4,697 3,571
Net unrealized appreciation (depreciation)
from investments, futures and translation of
assets and liabilities in foreign
currencies.................................. 98,279 448,200 95,525 24,125 90,723
-------- ----------- -------- --------- --------
NET ASSETS.................................... $606,710 $ 1,401,042 $ 704,690 $ 99,452 $472,544
======== =========== ========= ========= ========
NET ASSETS:
Fiduciary................................. $562,302 $ 1,142,864 $ 623,911 $ 78,318 $449,949
Class A................................... 23,909 125,910 43,370 17,299 12,562
Class B................................... 20,499 132,268 37,409 3,835 10,033
-------- ----------- -------- --------- --------
Total..................................... $606,710 $ 1,401,042 $ 704,690 $ 99,452 $472,544
======== =========== ========= ========= ========
OUTSTANDING UNITS OF BENEFICIAL INTEREST
(SHARES):
Fiduciary................................. 35,922 58,802 32,061 7,159 26,634
Class A................................... 1,525 6,322 2,239 1,581 743
Class B................................... 1,310 6,744 1,988 354 610
-------- ----------- -------- --------- --------
Total..................................... 38,757 71,868 36,288 9,094 27,987
======== =========== ========= ========= ========
Net Asset Value:
Fiduciary--
offering and redemption price per
share................................... $ 15.65 $ 19.44 $ 19.46 $ 10.94 $ 16.89
======== =========== ========= ========= ========
Class A
Redemption price per share.............. $ 15.68 $ 19.92 $ 19.37 $ 10.94 $ 16.92
======== =========== ========= ========= ========
Maximum sales charge.................... 4.50% 4.50% 4.50% 4.50% 4.50%
======== =========== ========= ========= ========
Maximum offering price per share
(100%/(100%--maximum sales charge) of
net asset value adjusted to nearest
cent)................................. $ 16.42 $ 20.86 $ 20.28 $ 11.46 $ 17.72
======== =========== ========= ========= ========
Class B
Offering price per share (a)............ $ 15.64 $ 19.61 $ 18.82 $ 10.84 $ 16.44
======== =========== ========= ========= ========
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
74
<PAGE> 393
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
ASSET ALLOCATION INCOME EQUITY EQUITY INDEX VALUE GROWTH LARGE COMPANY
FUND FUND FUND FUND VALUE FUND
---------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income..................... $ 4,334 $ 2,052 $ 1,218 $ 943 $ 1,683
Dividend income..................... 1,169 13,965 10,484 5,561 17,030
Income from securities lending...... 35 105 103 77 183
-------- --------- -------- -------- ---------
TOTAL INCOME........................ 5,538 16,122 11,805 6,581 18,896
-------- --------- -------- -------- ---------
EXPENSES:
Investment advisory fees............ 827 4,104 1,642 2,379 4,726
Administration fees................. 211 917 905 531 1,056
12b-1 fees (Class A)................ 81 198 203 138 42
12b-1 fees (Class B)................ 283 484 902 70 60
Custodian and accounting fees....... 77 60 221 83 94
Legal and audit fees................ 5 22 21 14 22
Trustees' fees and expenses......... 1 7 5 4 9
Transfer agent fees................. 93 248 311 139 68
Registration and filing fees........ 45 95 92 27 108
Printing costs...................... 19 78 81 48 90
Other............................... 5 15 19 6 6
-------- --------- -------- -------- ---------
Total expenses before waivers....... 1,647 6,228 4,402 3,439 6,281
Less waivers........................ (282) (56) (1,727) (109) (12)
-------- --------- -------- -------- ---------
NET EXPENSES........................ 1,365 6,172 2,675 3,330 6,269
-------- --------- -------- -------- ---------
Net Investment Income............... 4,173 9,950 9,130 3,251 12,627
-------- --------- -------- -------- ---------
REALIZED/UNREALIZED GAINS FROM
INVESTMENTS, OPTIONS AND FUTURES:
Net realized gains from investments,
options and futures
transactions...................... 15,867 63,053 20,871 42,586 17,493
Net change in unrealized
appreciation (depreciation) from
investments, options
and futures....................... 4,463 89,271 140,765 51,518 126,134
-------- --------- -------- -------- ---------
Net realized/unrealized gains from
investments, options and
futures........................... 20,330 152,324 161,636 94,104 143,627
-------- --------- -------- -------- ---------
Change in net assets resulting from
operations........................ $ 24,503 $ 162,274 $170,766 $ 97,355 $ 156,254
======== ========= ======== ======== =========
</TABLE>
See notes to financial statements.
75
<PAGE> 394
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
GROWTH INTERNATIONAL
DISCIPLINED LARGE COMPANY OPPORTUNITIES GULF SOUTH EQUITY INDEX
VALUE FUND GROWTH FUND FUND GROWTH FUND FUND
---------- ------------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.......................... $ 431 $ 1,314 $ 1,507 $ 237 $ 416
Dividend income.......................... 13,343 16,518 11,811 546 8,560
Income from securities lending........... 153 191 668 69 --
Foreign tax withholding.................. -- -- -- -- (960)
-------- --------- -------- ------- --------
Total Income............................. 13,927 18,023 13,986 852 8,016
-------- --------- -------- ------- --------
EXPENSES:
Investment advisory fees................. 4,129 7,948 4,511 730 2,202
Administration fees...................... 923 1,776 1,008 163 662
12b-1 fees (Class A)..................... 77 332 113 61 38
12b-1 fees (Class B)..................... 180 866 226 32 74
Custodian and accounting fees............ 86 92 154 58 323
Legal and audit fees..................... 26 43 31 5 16
Organization costs....................... -- 1 -- -- 3
Trustees' fees and expenses.............. 8 13 8 2 3
Transfer agent fees...................... 140 492 172 104 76
Registration and filing fees............. 46 118 72 28 62
Printing costs........................... 81 154 87 15 56
Other.................................. 4 26 7 2 27
-------- --------- -------- ------- --------
Total expenses before waivers............ 5,700 11,861 6,389 1,200 3,542
Less waivers............................. (22) (95) (32) (117) (11)
-------- --------- -------- ------- --------
NET EXPENSES............................. 5,678 11,766 6,357 1,083 3,531
-------- --------- -------- ------- --------
Net Investment Income (Loss)............. 8,249 6,257 7,629 (231) 4,485
-------- --------- -------- ------- --------
REALIZED/UNREALIZED GAINS FROM
INVESTMENTS, FUTURES AND FOREIGN
CURRENCIES:
Net realized gains from investments,
options, futures and foreign currency
transactions........................... 59,778 130,961 35,797 10,486 5,054
Net change in unrealized appreciation
(depreciation) from investments,
options, futures and translation of
assets and liabilities in foreign
currencies............................. 36,525 186,164 87,369 1,985 51,395
-------- --------- -------- ------- --------
Net realized/unrealized gains from
investments, futures and foreign
currencies............................. 96,303 317,125 123,166 12,471 56,449
-------- --------- -------- ------- --------
Change in net assets resulting
from operations........................ $104,552 $ 323,382 $ 130,795 $12,240 $ 60,934
======== ========= ========= ======= ========
</TABLE>
See notes to financial statements.
76
<PAGE> 395
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
ASSET ALLOCATION FUND INCOME EQUITY FUND EQUITY INDEX FUND
-------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............. $ 4,173 $ 2,090 $ 9,950 $ 6,029 $ 9,130 $ 6,199
Net realized gains from
investment, options and futures
transactions.................... 15,867 4,144 63,053 8,723 20,871 10,186
Net change in unrealized
appreciation (depreciation) from
investments, options and
futures......................... 4,463 1,631 89,271 35,127 140,765 47,556
--------- --------- --------- --------- --------- ---------
Change in net assets resulting from
operations.......................... 24,503 7,865 162,274 49,879 170,766 63,941
--------- --------- --------- --------- --------- ---------
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment income........ (2,678) (1,520) (8,549) (5,321) (7,178) (5,782)
In excess of net investment
income.......................... (11) -- (14) (25) -- (161)
From net realized gains from
investment transactions......... (2,959) (640) (10,510) (7,457) (3,288) (8,186)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income........ (764) (343) (948) (528) (899) (269)
In excess of net investment
income.......................... (3) -- (2) (2) -- (7)
From net realized gains from
investment transactions......... (974) (143) (1,743) (850) (420) (359)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income........ (731) (216) (453) (180) (780) (149)
In excess of net investment
income.......................... (3) -- (1) (1) -- (4)
From net realized gains from
investment transactions......... (1,129) (99) (1,424) (356) (629) (256)
--------- --------- --------- --------- --------- ---------
Change in net assets from shareholder
distributions....................... (9,252) (2,961) (23,644) (14,720) (13,194) (15,173)
--------- --------- --------- --------- --------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued....... 74,038 50,091 113,454 267,682 372,043 199,001
Proceeds from shares issued in
connection with acquisition..... -- -- -- 136,786 -- --
Proceeds from shares issued in
connection with conversion...... 37,254 -- 283,942 -- -- --
Dividends reinvested.............. 6,840 2,534 11,938 6,734 6,593 11,149
Cost of shares redeemed........... (49,880) (16,204) (135,743) (239,261) (180,134) (106,442)
--------- --------- --------- --------- --------- ---------
Change in net assets from share
transactions........................ 68,252 36,421 273,591 171,941 198,502 103,708
--------- --------- --------- --------- --------- ---------
Change in net assets.................. 83,503 41,325 412,221 207,100 356,074 152,476
NET ASSETS:
Beginning of period............... 86,747 45,422 395,280 188,180 391,782 239,306
--------- --------- --------- --------- --------- ---------
End of period..................... $ 170,250 $ 86,747 $ 807,501 $ 395,280 $ 747,856 $ 391,782
========= ========= ========= ========= ========= =========
SHARE TRANSACTIONS:
Issued............................ 6,114 4,377 6,001 13,308 20,262 12,652
Issued in connection with
acquisition..................... -- -- -- 7,895 -- --
Issued in connection with
conversion...................... 3,076 -- 14,913 -- -- --
Reinvested........................ 573 221 656 414 360 721
Redeemed.......................... (4,071) (1,428) (7,141) (11,666) (9,830) (6,924)
--------- --------- --------- --------- --------- ---------
Change in shares...................... 5,692 3,170 14,429 9,951 10,792 6,449
========= ========= ========= ========= ========= =========
Undistributed (distributions in excess
of) net investment income included
in net assets:
End of period..................... $ 5 $ 19 $ (5) $ 13 $ -- $ (405)
========= ========= ========= ========= ========= =========
</TABLE>
See notes to financial statements.
77
<PAGE> 396
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
VALUE GROWTH FUND
-------------------------------------------- LARGE COMPANY VALUE FUND
SEVEN MONTHS --------------------------
YEAR ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, NOVEMBER 30, JUNE 30, JUNE 30,
1997 1996(a) 1995(a) 1997 1996
----------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income..................... $ 3,251 $ 1,254 $ 2,459 $ 12,627 $ 12,313
Net realized gains from investment,
options and futures transactions........ 42,586 50,010 17,559 17,493 66,494
Net change in unrealized appreciation
(depreciation) from investments, options
and futures............................. 51,518 (28,550) 30,874 126,134 (17,058)
--------- --------- -------- -------- ---------
Change in net assets resulting from
operations.................................. 97,355 22,714 50,892 156,254 61,749
--------- --------- -------- -------- ---------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS (B):
From net investment income................ (2,906) (569) -- (12,228) (12,140)
In excess of net investment income........ -- (5) -- -- (119)
From net realized gains from investment
transactions............................ (36,353) -- -- (47,388) (46,275)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income................ (316) (680) (2,449) (209) (142)
In excess of net investment income........ -- (5) -- -- (1)
From net realized gains from investment
transactions............................ (5,893) (34,705) (5,515) (904) (631)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income................ (16) (5) (6) (69) (32)
In excess of net investment income........ -- -- (3) -- --
From net realized gains from investment
transactions............................ (992) (557) (19) (410) (183)
--------- --------- -------- -------- ---------
Change in net assets from shareholder
distributions............................... (46,476) (36,526) (7,992) (61,208) (59,523)
--------- --------- -------- -------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............... 236,686 68,807 24,259 165,729 285,428
Proceeds from shares issued in connection
with conversion......................... -- -- -- 63,222 --
Dividends reinvested...................... 39,472 27,533 1,480 26,644 32,290
Cost of shares redeemed................... (70,246) (71,560) (21,348) (238,407) (91,619)
--------- --------- -------- -------- ---------
Change in net assets from share
transactions................................ 205,912 24,780 4,391 17,188 226,099
----------- ------------- ------------ ----------- -----------
Change in net assets.......................... 256,791 10,968 47,291 112,234 228,325
NET ASSETS:
Beginning of period....................... 231,869 220,901 173,610 598,042 369,717
--------- --------- -------- -------- ---------
End of period............................. $ 488,660 $ 231,869 $220,901 $ 710,276 $ 598,042
========= ========= ======== ========= =========
SHARE TRANSACTIONS:
Issued.................................... 22,826 1,402 1,628 12,629 22,448
Issued in restatement of net asset value
(c)..................................... -- 7,808 -- -- --
Issued in connection with conversion...... -- -- -- 4,655 --
Reinvested................................ 4,071 1,782 106 2,051 2,670
Redeemed.................................. (6,738) (1,668) (1,398) (17,923) (7,260)
--------- --------- -------- -------- ---------
Change in shares.............................. 20,159 9,324 336 1,412 17,858
========= ========= ======== ========= =========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of period............................. $ 12 $ (12) $ (2) $ 1 $ (114)
========= ========= ======== ========= =========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Value Growth Fund
became the Value Growth Fund. Changes in net assets for the periods prior to
March 25, 1996 represent the Paragon Value Growth Fund.
(b) Fiduciary Shares of the Value Growth Fund commenced offering on March 26,
1996 upon conversion of certain Class A Shares to Fiduciary Shares.
(c) Pursuant to its reorganization as a fund of The One Group, the Value Growth
Fund issued additional shares at the close of business March 25, 1996 as a
result of restatement of the net asset values of Class A Shares from $15.26
to $10.00 and Class B Shares from $15.21 to $10.00.
See notes to financial statements.
78
<PAGE> 397
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
DISCIPLINED VALUE FUND LARGE COMPANY GROWTH FUND GROWTH OPPORTUNITIES FUND
-------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............ $ 8,249 $ 10,841 $ 6,257 $ 8,466 $ 7,629 $ 5,803
Net realized gains from
investment, options and futures
transactions................... 59,778 60,286 130,961 29,317 35,797 150,392
Net change in unrealized
appreciation (depreciation)
from investments, options and
futures........................ 36,525 25,630 186,164 85,542 87,369 (49,094)
--------- --------- ---------- --------- --------- --------
Change in net assets resulting from
operations......................... 104,552 96,757 323,382 123,325 130,795 107,101
--------- --------- ---------- --------- --------- --------
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment income....... (7,822) (10,409) (5,746) (7,921) (7,053) (5,538)
In excess of net investment
income......................... -- (84) -- (70) (669) (34)
From net realized gains from
investment transactions........ (53,221) (27,544) (37,414) (7,625) (83,581) (78,544)
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS:
From net investment income....... (274) (302) (403) (478) (361) (215)
In excess of net investment
income......................... -- (2) -- (4) (34) (1)
From net realized gains from
investment transactions........ (2,285) (920) (4,265) (558) (4,572) (2,747)
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS:
From net investment income....... (89) (131) (23) (67) (215) (51)
In excess of net investment
income......................... -- (1) -- (1) (20) --
From net realized gains from
investment transactions........ (1,855) (708) (3,785) (253) (3,102) (896)
--------- --------- ---------- --------- --------- --------
Change in net assets from shareholder
distributions...................... (65,546) (40,101) (51,636) (16,977) (99,607) (88,026)
--------- --------- ---------- --------- --------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued...... 107,311 146,331 230,983 303,743 291,882 285,336
Proceeds from shares issued in
connection with acquisition.... -- -- -- 36,982 -- --
Proceeds from shares issued in
connection with conversion..... 48,296 -- 289,603 -- -- --
Dividends reinvested............. 32,360 21,701 31,237 9,536 56,517 46,859
Cost of shares redeemed.......... (179,880) (138,383) (299,888) (145,189) (248,384) (205,266)
--------- --------- ---------- --------- --------- --------
Change in net assets from share
transactions....................... 8,087 29,649 251,935 205,072 100,015 126,929
--------- --------- ---------- --------- --------- --------
Change in net assets................. 47,093 86,305 523,681 311,420 131,203 146,004
NET ASSETS:
Beginning of period.............. 559,617 473,312 877,361 565,941 573,487 427,483
--------- --------- ---------- --------- --------- --------
End of period.................... $ 606,710 $ 559,617 $1,401,042 $ 877,361 $ 704,690 $ 573,487
========= ========= ========== ========= ========= =========
SHARE TRANSACTIONS:
Issued........................... 7,390 10,399 14,003 21,224 16,132 15,225
Issued in connection with
acquisition.................... -- -- -- 2,673 -- --
Issued in connection with
conversion..................... 3,333 -- 17,279 -- -- --
Reinvested....................... 2,299 1,573 1,936 684 3,283 2,828
Redeemed......................... (12,355) (9,741) (18,015) (9,886) (13,633) (10,779)
--------- --------- ---------- --------- --------- --------
Change in shares..................... 667 2,231 15,203 14,695 5,782 7,274
========= ========= ========== ========= ========= =========
Undistributed (distributions in
excess of) net investment income
included in net assets:
End of period.................... $ 17 $ (45) $ 45 $ (85) $ 0 $ (47)
========= ========= ========== ========= ========= =========
</TABLE>
See notes to financial statements.
79
<PAGE> 398
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERNATIONAL EQUITY INDEX
GULF SOUTH GROWTH FUND FUND
-------------------------------------------- --------------------------
YEAR ENDED SEVEN MONTHS YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, NOVEMBER 30, JUNE 30, JUNE 30,
1997 1996(a) 1995(a) 1997 1996
----------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss)............... $ (231) $ (162) $ (329) $ 4,485 $ 2,940
Net realized gains from investment,
options, futures and foreign currency
transactions............................. 10,486 20,607 2,336 5,054 1,467
Net change in unrealized appreciation
(depreciation) from investments, options,
futures and translation of assets and
liabilities in foreign currencies........ 1,985 (8,026) 17,774 51,395 26,748
--------- --------- -------- -------- ---------
Change in net assets resulting from
operations................................... 12,240 12,419 19,781 60,934 31,155
--------- --------- -------- -------- ---------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS (B):
From net investment income................. -- -- (4,346) (2,825)
In excess of net investment income......... -- -- (3,417) (429)
From net realized gains from investment
transactions............................. (8,358) (237) (3,811) (2,147)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income................. -- -- -- (92) (72)
In excess of net investment income......... -- -- -- (73) (11)
From net realized gains from investment
transactions............................. (1,835) (17,443) (1,410) (111) (55)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income................. -- -- -- (47) (43)
In excess of net investment income......... -- -- -- (37) (7)
From net realized gains from investment
transactions............................. (302) (393) (8) (72) (33)
--------- --------- -------- -------- ---------
Change in net assets from shareholder
distributions................................ (10,495) (18,073) (1,418) (12,006) (5,622)
--------- --------- -------- -------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................ 14,236 29,495 13,775 191,629 163,944
Dividends reinvested....................... 9,973 14,226 328 2,834 2,501
Cost of shares redeemed.................... (30,774) (31,076) (12,956) (135,282) (54,557)
--------- --------- -------- -------- ---------
Change in net assets from share transactions... (6,565) 12,645 1,147 59,181 111,888
--------- --------- -------- -------- ---------
Change in net assets........................... (4,820) 6,991 19,510 108,109 137,421
NET ASSETS:
Beginning of period........................ 104,272 97,281 77,771 364,435 227,014
--------- --------- -------- -------- ---------
End of period.............................. $ 99,452 $ 104,272 $ 97,281 $ 472,544 $ 364,435
========= ========= ======== ========= =========
SHARE TRANSACTIONS:
Issued..................................... 1,433 620 842 12,777 11,286
Issued in restatement of net asset value
(c)...................................... -- 3,633 -- -- --
Reinvested................................. 1,042 902 22 189 175
Redeemed................................... (3,085) (838) (768) (9,008) (3,742)
--------- --------- -------- -------- ---------
Change in shares............................... (610) 4,317 96 3,958 7,719
========= ========= ======== ========= =========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of period.............................. $ (176) $ -- $ -- $ (2,608) $ 1,395
========= ========= ======== ========= =========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Gulf South Growth
Fund became the Gulf South Growth Fund. Capital and share transactions for
the periods prior to March 25, 1996 represent the Paragon Gulf South Growth
Fund.
(b) Fiduciary Shares of the Gulf South Growth Fund commenced offering on March
26, 1996 upon conversion of certain Class A Shares to Fiduciary Shares.
(c) Pursuant to its reorganization as a fund of The One Group, the Gulf South
Growth Fund issued additional shares at the close of business March 25, 1996
as a result of restatement of the net asset values of Class A Shares from
$15.70 to $10.00 and Class B Shares from $15.48 to $10.00.
See notes to financial statements.
80
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- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Asset Allocation Fund,
the Income Equity Fund, the Equity Index Fund, the Value Growth Fund, the
Large Company Value Fund, the Disciplined Value Fund, the Large Company
Growth Fund, the Growth Opportunities Fund, the Gulf South Growth Fund and
the International Equity Index Fund (individually a "Fund", collectively the
"Funds") only. Subsequent to June 30, 1997, the investment objective of the
Gulf South Growth Fund was changed to permit investments in companies
headquartered or doing business outside of the Southeastern region of the
United States, and to focus the Fund's investments to a greater extent on
investments in the equity securities of small capitalization and emerging
growth companies. As a result, the name of the Fund was changed to the One
Group Small Capitalization Fund. The Funds are each offered in Fiduciary
Class, Class A and Class B Shares. Class A Shares are subject to initial
sales charges, imposed at the time of purchase, in accordance with the Funds'
prospectuses. Certain redemptions of Class B Shares are subject to contingent
deferred sales charges in accordance with the Funds' prospectuses. Each Fund
is a diversified mutual fund except the Gulf South Growth Fund which is
non-diversified.
The Trust entered into an Agreement and Plan of Reorganization (the
"Agreement") with the Paragon Portfolio ("Paragon"), a Massachusetts business
trust. Pursuant to the Agreement, all of the assets and liabilities of each
Paragon Fund transferred to a Fund of The One Group in exchange for shares of
the corresponding Fund of The One Group. Subsequent to the reorganization,
the fiscal period end changed from November 30 to June 30 for the Value
Growth Fund and the Gulf South Growth Fund. Therefore, the prior period
statement of changes in net assets and financial highlights for those Funds
present the results for the seven months ended June 30, 1996.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Asset Allocation Fund To provide total return while preserving capital.
Income Equity Fund Current income through regular payments of dividends with
the secondary goal of achieving capital appreciation by
investing primarily in equity securities.
Equity Index Fund Investment results that correspond to the aggregate price
and dividend performance of the securities in the
Standard & Poor's 500 Composite Stock Price Index.
Value Growth Fund Long-term capital growth and growth of income while, as a
secondary objective, providing a moderate level of
current income.
Large Company Value Fund Capital appreciation with the incidental goal of achieving
current income by investing primarily in equity
securities.
Disciplined Value Fund Capital appreciation with the secondary goal of achieving
current income by investing primarily in equity
securities.
Large Company Growth Fund Long-term capital appreciation and growth of income by
investing primarily in equity securities.
Growth Opportunities Fund Growth of capital and, secondarily, current income, by
investing primarily in equity securities.
</TABLE>
Continued
81
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- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Gulf South Growth Fund Long-term capital growth by investing in a portfolio of
equity securities of small-capitalization, emerging
growth and medium- capitalization companies which are
either headquartered in or whose primary market is in the
southeastern region of the United States.
International Equity Index Fund To provide investment results that correspond to the
aggregate price and dividend performance of the
securities in the Gross Domestic Product Weighted Morgan
Stanley Capital International Europe, Australia and Far
East Index.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Listed securities are valued at the last sales price on the principal
exchange where such securities are traded. Unlisted securities or listed
securities for which last sales prices are not available are valued at
the mean of the latest bid and asked price 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 approximates market
value. Futures contracts are valued at the settlement price established
each day by the board of trade or exchange on which they are traded.
Options traded on an exchange are valued using the last sale price or, in
the absence of a sale, the last offering price. Options traded
over-the-counter are valued using dealer-supplied valuations. Investments
for which there are no such quotations or valuations are carried at fair
value as determined by the Banc One Investment Advisors Corporation (the
"Advisor") under the direction of the Board of Trustees.
FOREIGN CURRENCY TRANSLATION
Investment valuations, other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars
based upon current exchange rates. Purchases and sales of foreign
investments and income and expenses are converted into U.S. dollars based
upon exchange rates prevailing on the respective dates of such
transactions. That portion of realized gains or losses and unrealized
appreciation or depreciation from investments due to fluctuations in
foreign currency exchange rates is not separately disclosed. Such
fluctuations are included with the net realized and unrealized gain or
loss from investments.
FORWARD FOREIGN CURRENCY CONTRACTS
Forward foreign currency contracts are valued at the daily exchange rate
of the underlying currency. Purchases and sales of forward foreign
currency contracts having the same settlement date and broker are
presented net on the Statement of Assets and Liabilities. The forward
foreign currency exchange contracts are adjusted by the daily exchange
rate of the underlying currency and any gains or losses are recorded for
financial statement purposes as unrealized appreciation or depreciation
until the contract settlement date. Gains or
Continued
82
<PAGE> 401
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
losses from the purchase or sale of forward foreign currency contracts having
the same settlement date and broker are recorded as realized on the date of
offset; otherwise gains or losses are recorded as realized on settlement
date.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that the
investment advisor has determined are creditworthy. Each repurchase agreement
is recorded at cost. The Fund requires that the securities purchased in a
repurchase agreement transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
counterparty default. The seller, under the repurchase agreement, is required
to maintain the value of the securities held at not less than the repurchase
price, including accrued interest. Repurchase agreements are considered to be
loans under the 1940 Act.
WRITTEN OPTIONS
The Funds may write covered call or put options for which premiums received
are recorded as liabilities and are subsequently adjusted to the current
value of the options written. Premiums received from writing options which
expire are treated as realized gains. Premiums received from writing options,
which are either exercised or closed, are offset against the proceeds
received or amount paid on the transaction to determine realized gains or
losses.
FUTURES CONTRACTS
The Funds may enter into futures contracts for the delayed delivery of
securities at a fixed price at some future date or for the change in the
value of a specified financial index over a predetermined time period. Cash
or securities are deposited with brokers in order to maintain a position.
Subsequent payments made or received by the Fund based on the daily change in
the market value of the position are recorded as unrealized appreciation or
depreciation until the contract is closed out, at which time the appreciation
or depreciation is realized.
INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked either
directly or inversely to changes in foreign currencies, interest rates,
commodities, indices or other reference instruments. Indexed securities may
be more volatile than the referenced instrument itself, but any loss is
limited to the amount of the original investment.
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities
in which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn dividends and interest on securities lent while
simultaneously seeking to earn interest on the investment of collateral.
Collateral is marked to market daily to provide a level of collateral at
least equal to the market value of securities lent. There may be risks of
delay in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially. However, loans will
be made only to borrowers deemed by the Advisor to be of good standing and
creditworthy under guidelines established by the Board of Trustees and when,
in the judgment of the Advisor, the consideration which can be earned
currently from such securities loans justifies the attendant risk. Loans are
subject to termination by the
Continued
83
<PAGE> 402
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
Funds or the borrower at any time, and are, therefore, not considered to be
illiquid investments. As of June 30, 1997, the following Funds had securities
with the following market values on loan (amounts in thousands):
<TABLE>
<CAPTION>
MARKET VALUE
OF LOANED
SECURITIES
-------------
<S> <C>
Asset Allocation Fund......................................... $ 27,021
Income Equity Fund............................................ 36,562
Equity Index Fund............................................. 68,647
Value Growth Fund............................................. 50,079
Large Company Value Fund...................................... 67,650
Disciplined Value Fund........................................ 87,543
Large Company Growth Fund..................................... 86,715
Growth Opportunities Fund..................................... 157,149
Gulf South Growth Fund........................................ 12,436
</TABLE>
The loaned securities were fully collateralized by U.S. Government
securities as of June 30, 1997.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net
realized gains or losses from sales of securities are determined on the
specific identification cost method. Interest income and expenses are
recognized on the accrual basis. Dividends are recorded on the
ex-dividend date. Interest income, including any discount or premium, is
accrued as earned using the effective interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one Fund of
the Trust are allocated among the respective Funds. Each class of shares
bears its pro-rata portion of expenses attributable to its series, except
that each class separately bears expenses related specifically to that
class, such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for expiring capital loss
carryforwards, foreign currency transactions, and deferrals of certain
losses. Permanent book and tax basis differences have been reclassified
among the components of net assets.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies as defined in applicable sections of the Internal
Revenue Code, and to make distributions from net investment income and
from net realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes. Withholding taxes on foreign
dividends have been paid or provided for in accordance with the
applicable country's tax rules and rates.
Continued
84
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- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more. The Trust is registered to offer forty series
and five classes of shares: Fiduciary, Class A, Class B, Class C and Service.
Currently, the Trust consists of thirty three active funds and, not all funds
can offer all classes of shares. As of June 30, 1997, there were no
shareholders in the Class C or the Service Class of the Funds. Shareholders
are entitled to one vote for each full share held and will vote in the
aggregate and not by class or series, except as otherwise expressly required
by law or when the Board of Trustees has determined that the matter to be
voted on affects only the interest of shareholders of a particular class or
series. The following is a summary of transactions in Fund shares for the
periods ended June 30, 1997 and June 30, 1996:
Continued
85
<PAGE> 404
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
ASSET ALLOCATION FUND INCOME EQUITY FUND EQUITY INDEX FUND
-------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued........ $ 36,157 $ 20,364 $ 39,671 $ 74,805 $ 193,036 $ 110,800
Proceeds from shares issued in
connection with acquisition...... -- -- -- 128,593 -- --
Proceeds from shares issued in
connection with conversion....... 37,254 -- 283,942 -- -- --
Dividends reinvested............... 3,380 1,810 7,467 5,003 3,889 10,203
Cost of shares redeemed............ (41,096) (13,065) (115,841) (94,484) (148,567) (79,496)
---------- --------- --------- --------- --------- ---------
Change in net assets from
Fiduciary share transactions..... $ 35,695 $ 9,109 $ 215,239 $ 113,917 $ 48,358 $ 41,507
========== ========= ========= ========= ========= =========
CLASS A SHARES:
Proceeds from shares issued........ $ 14,748 $ 14,197 $ 33,483 $ 168,343 $ 72,287 $ 52,581
Proceeds from shares issued in
connection with acquisition...... -- -- -- 6,780 -- --
Dividends reinvested............... 1,663 453 2,597 1,244 1,279 565
Cost of shares redeemed............ (5,587) (2,268) (15,299) (143,907) (25,085) (26,205)
---------- --------- --------- --------- --------- ---------
Change in net assets from
Class A share transactions....... $ 10,824 $ 12,382 $ 20,781 $ 32,460 $ 48,481 $ 26,941
========== ========= ========= ========= ========= =========
CLASS B SHARES:
Proceeds from shares issued........ $ 23,133 $ 15,530 $ 40,300 $ 24,534 $ 106,720 $ 35,620
Proceeds from shares issued in
connection with acquisition...... -- -- -- 1,413 -- --
Dividends reinvested............... 1,797 271 1,874 487 1,425 381
Cost of shares redeemed............ (3,197) (871) (4,603) (870) (6,482) (741)
---------- --------- --------- --------- --------- ---------
Change in net assets from
Class B share transactions....... $ 21,733 $ 14,930 $ 37,571 $ 25,564 $ 101,663 $ 35,260
========== ========= ========= ========= ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued............................. 3,003 1,787 2,121 2,462 10,607 7,069
Issued in connection with
acquisition...................... -- -- -- 7,422 -- --
Issued in connection with
conversion....................... 3,076 -- 14,913 -- -- --
Reinvested......................... 284 159 412 316 215 660
Redeemed........................... (3,348) (1,156) (6,085) (3,267) (8,036) (5,207)
---------- --------- --------- --------- --------- ---------
Change in Fiduciary Shares......... 3,015 790 11,361 6,933 2,786 2,522
========== ========= ========= ========= ========= =========
CLASS A SHARES:
Issued............................. 1,212 1,241 1,768 9,480 3,962 3,351
Issued in connection with
acquisition...................... -- -- -- 392 -- --
Reinvested......................... 139 38 142 72 69 36
Redeemed........................... (460) (198) (814) (8,347) (1,452) (1,670)
---------- --------- --------- --------- --------- ---------
Change in Class A Shares........... 891 1,081 1,096 1,597 2,579 1,717
========== ========= ========= ========= ========= =========
CLASS B SHARES:
Issued............................. 1,899 1,349 2,112 1,366 5,693 2,232
Issued in connection with
acquisition...................... -- -- -- 81 -- --
Reinvested......................... 150 24 102 26 76 25
Redeemed........................... (263) (74) (242) (52) (342) (47)
---------- --------- --------- --------- --------- ---------
Change in Class B Shares........... 1,786 1,299 1,972 1,421 5,427 2,210
========== ========= ========= ========= ========= =========
</TABLE>
Continued
86
<PAGE> 405
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
VALUE GROWTH FUND LARGE COMPANY VALUE FUND
-------------------------------------------- --------------------------
YEAR ENDED SEVEN MONTHS YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, NOVEMBER 30, JUNE 30, JUNE 30,
1997 1996(a) 1995(a) 1997 1996
----------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued................ $ 222,240 $ 51,451 $ 150,998 $ 271,886
Proceeds from shares issued in conversion
from Class A Shares...................... -- 186,991(b) -- --
Proceeds from shares issued in connection
with conversion.......................... -- -- 63,222 --
Dividends reinvested....................... 32,485 12 25,070 31,312
Cost of shares redeemed.................... (59,895) (54,571) (229,727) (86,151)
--------- --------- ---------- ---------
Change in net assets from Fiduciary share
transactions............................. $ 194,830 $ 183,883 $ 9,563 $ 217,047
========= ========= ========== =========
CLASS A SHARES:
Proceeds from shares issued................ $ 9,761 $ 15,771 $ 21,981 $ 10,438 $ 10,239
Dividends reinvested....................... 5,980 26,959 1,452 1,100 760
Cost of shares redeemed.................... (9,421) (16,784) (21,210) (8,010) (5,175)
Cost of shares redeemed in conversion to
Fiduciary Shares......................... -- (186,991)(b) -- -- --
--------- --------- -------- --------- ---------
Change in net assets from Class A share
transactions............................. $ 6,320 $(161,045) $ 2,223 $ 3,528 $ 5,824
========= ========= ======== ========= =========
CLASS B SHARES:
Proceeds from shares issued................ $ 4,685 $ 1,585 $ 2,278 $ 4,293 $ 3,303
Dividends reinvested....................... 1,007 562 28 474 218
Cost of shares redeemed.................... (930) (205) (138) (670) (293)
--------- --------- -------- --------- ---------
Change in net assets from Class B share
transactions............................. $ 4,762 $ 1,942 $ 2,168 $ 4,097 $ 3,228
========= ========= ======== ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued..................................... 21,444 254 11,519 21,371
Issued in conversion from Class A Shares... -- 18,699(b) -- --
Issued in connection with conversion....... -- -- 4,655 --
Reinvested................................. 3,352 1 1,931 2,593
Redeemed................................... (5,755) (556) (17,266) (6,817)
--------- --------- --------- ---------
Change in Fiduciary Shares................. 19,041 18,398 839 17,147
========= ========= ========= =========
CLASS A SHARES:
Issued..................................... 929 1,026 1,479 793 815
Issued in restatement of net asset
value(c)................................. -- 7,672 -- -- --
Reinvested................................. 615 1,745 104 84 61
Redeemed................................... (893) (1,096) (1,389) (607) (417)
Redeemed in conversion to Fiduciary
Shares................................... -- (18,699)(b) -- -- --
--------- --------- -------- --------- ---------
Change in Class A Shares................... 651 (9,352) 194 270 459
========= ========= ======== ========= =========
CLASS B SHARES:
Issued..................................... 453 122 149 317 262
Issued in restatement of net asset
value(c)................................. -- 136 -- -- --
Reinvested................................. 104 36 2 36 16
Redeemed................................... (90) (16) (9) (50) (26)
--------- --------- -------- --------- ---------
Change in Class B Shares................... 467 278 142 303 252
========= ========= ======== ========= =========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Value Growth Fund
became the Value Growth Fund. Capital and share transactions for the periods
prior to March 26, 1996 represent the Paragon Value Growth Fund.
(b) Fiduciary Shares of the Value Growth Fund commenced offering on March 26,
1996 upon conversion of certain Class A Shares to Fiduciary Shares.
(c) Pursuant to its reorganization as a fund of The One Group, the Value Growth
Fund issued additional shares at the close of business March 25, 1996 as a
result of restatement of the net asset values of Class A Shares from $15.26
to $10.00 and Class B Shares from $15.21 to $10.00.
Continued
87
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
DISCIPLINED VALUE FUND LARGE COMPANY GROWTH FUND GROWTH OPPORTUNITIES FUND
-------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued..... $ 95,887 $ 131,316 $ 134,662 $ 209,649 $ 216,371 $ 167,309
Proceeds from shares issued in
connection with acquisition... -- -- -- 33,161 -- --
Proceeds from shares issued in
connection with conversion.... 48,296 -- 289,603 -- -- --
Dividends reinvested............ 27,911 19,700 22,758 8,256 48,075 43,247
Cost of shares redeemed......... (168,332) (130,536) (274,724) (132,702) (199,916) (109,584)
--------- --------- --------- --------- --------- ---------
Change in net assets from
Fiduciary share
transactions................ $ 3,762 $ 20,480 $ 172,299 $ 118,364 $ 64,530 $ 100,972
========= ========= ========= ========= ========= =========
CLASS A SHARES:
Proceeds from shares issued..... $ 8,230 $ 10,777 $ 39,340 $ 46,490 $ 54,262 $ 108,378
Proceeds from shares issued in
connection with acquisition... -- -- -- 3,423 -- --
Dividends reinvested............ 2,515 1,180 4,698 904 5,065 2,718
Cost of shares redeemed......... (9,255) (6,449) (17,325) (10,113) (46,273) (95,119)
--------- --------- --------- --------- --------- ---------
Change in net assets from
Class A share transactions.... $ 1,490 $ 5,508 $ 26,713 $ 40,704 $ 13,054 $ 15,977
========= ========= ========= ========= ========= =========
CLASS B SHARES:
Proceeds from shares issued..... $ 3,194 $ 4,238 $ 56,981 $ 47,604 $ 21,249 $ 9,649
Proceeds from shares issued in
connection with acquisition... -- -- -- 398 -- --
Dividends reinvested............ 1,934 821 3,781 376 3,377 894
Cost of shares redeemed......... (2,293) (1,398) (7,839) (2,374) (2,195) (563)
--------- --------- --------- --------- --------- ---------
Change in net assets from
Class B share transactions.... $ 2,835 $ 3,661 $ 52,923 $ 46,004 $ 22,431 $ 9,980
========= ========= ========= ========= ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.......................... 6,612 9,341 8,322 14,892 11,966 8,947
Issued in connection with
acquisition................... -- -- -- 2,403 -- --
Issued in connection with
conversion.................... 3,333 -- 17,279 -- -- --
Reinvested...................... 1,984 1,427 1,418 594 2,790 2,608
Redeemed........................ (11,571) (9,186) (16,537) (9,049) (11,005) (5,714)
--------- --------- --------- --------- --------- ---------
Change in Fiduciary Shares...... 358 1,582 10,482 8,840 3,751 5,841
========= ========= ========= ========= ========= =========
CLASS A SHARES:
Issued.......................... 559 760 2,308 3,131 2,954 5,756
Issued in connection with
acquisition................... -- -- -- 242 -- --
Reinvested...................... 178 86 285 63 293 165
Redeemed........................ (628) (456) (1,016) (674) (2,503) (5,035)
--------- --------- --------- --------- --------- ---------
Change in Class A Shares........ 109 390 1,577 2,762 744 886
========= ========= ========= ========= ========= =========
CLASS B SHARES:
Issued.......................... 219 298 3,373 3,201 1,212 522
Issued in connection with
acquisition................... -- -- -- 28 -- --
Reinvested...................... 137 60 233 27 200 55
Cost of shares redeemed......... (156) (99) (462) (163) (125) (30)
--------- --------- --------- --------- --------- ---------
Change in Class B Shares........ 200 259 3,144 3,093 1,287 547
========= ========= ========= ========= ========= =========
</TABLE>
Continued
88
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERNATIONAL EQUITY INDEX
GULF SOUTH GROWTH FUND FUND
-------------------------------------------- --------------------------
YEAR ENDED SEVEN MONTHS YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, NOVEMBER 30, JUNE 30, JUNE 30,
1997 1996(a) 1995(a) 1997 1996
----------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............... $ 9,250 $ 20,747 $ 182,120 $ 154,310
Proceeds from shares issued in conversion
from Class A Shares..................... -- 80,504(b) -- --
Dividends reinvested...................... 7,857 12 2,570 2,284
Cost of shares redeemed................... (23,477) (23,690) (129,185) (51,662)
--------- --------- --------- ---------
Change in net assets from Fiduciary share
transactions............................ $ (6,370) $ 77,573 $ 55,505 $ 104,932
========= ========= ========= =========
CLASS A SHARES:
Proceeds from shares issued............... $ 3,550 $ 8,112 $ 12,266 $ 5,122 $ 7,069
Dividends reinvested...................... 1,821 13,830 321 167 135
Cost of shares redeemed................... (6,707) (7,224) (12,837) (4,769) (2,083)
Cost of shares redeemed in conversion to
Fiduciary Shares........................ -- (80,504)(b) -- -- --
--------- --------- -------- --------- ---------
Change in net assets from
Class A share transactions.............. $ (1,336) $ (65,786) $ (250) $ 520 $ 5,121
========= ========= ======== ========= =========
CLASS B SHARES:
Proceeds from shares issued............... $ 1,436 $ 636 $ 1,509 $ 4,387 $ 2,565
Dividends reinvested...................... 295 384 8 97 82
Cost of shares redeemed................... (590) (162) (119) (1,328) (812)
--------- --------- -------- --------- ---------
Change in net assets from
Class B share transactions.............. $ 1,141 $ 858 $ 1,398 $ 3,156 $ 1,835
========= ========= ======== ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................... 933 66 12,143 10,623
Issued in conversion from Class A
Shares.................................. -- 8,050(b) -- --
Reinvested................................ 821 1 171 160
Redeemed.................................. (2,352) (360) (8,601) (3,542)
--------- --------- --------- ---------
Change in Fiduciary Shares................ (598) 7,757 3,713 7,241
========= ========= ========= =========
CLASS A SHARES:
Issued.................................... 354 509 750 337 484
Issued in restatement of net asset value
(c)..................................... -- 3,555 -- -- --
Reinvested................................ 190 876 21 11 10
Redeemed.................................. (673) (466) (761) (317) (143)
Redeemed in conversion to Fiduciary
Shares.................................. -- (8,050)(b) -- -- --
--------- --------- -------- --------- ---------
Change in Class A Shares.................. (129) (3,576) 10 31 351
========= ========= ======== ========= =========
CLASS B SHARES:
Issued.................................... 146 45 92 297 179
Issued in restatement of net asset
value(c)................................ -- 78 -- -- --
Reinvested................................ 31 25 1 7 5
Redeemed.................................. (60) (12) (7) (90) (57)
--------- --------- -------- --------- ---------
Change in Class B Shares.................. 117 136 86 214 127
========= ========= ======== ========= =========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Gulf South Growth
Fund became the Gulf South Growth Fund. Capital and share transactions for
the periods prior to March 26, 1996 represent the Paragon Gulf South Growth
Fund.
(b) Fiduciary Shares of the Gulf South Growth Fund commenced offering on March
26, 1996 upon conversion of certain Class A Shares to Fiduciary Shares.
(c) Pursuant to its reorganization as a fund of The One Group, the Gulf South
Growth Fund issued additional shares at the close of business March 26, 1996
as a result of restatement of the net asset values of Class A Shares from
$15.70 to $10.00 and Class B Shares from $15.48 to $10.00.
Continued
89
<PAGE> 408
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor are parties to an investment advisory agreement
under which the Advisor is entitled to a fee, computed daily and paid
monthly, at the annual rate of 0.74% of the average net assets of the Income
Equity Fund, the Value Growth Fund, the Large Company Value Fund, the
Disciplined Value Fund, the Large Company Growth Fund, the Growth
Opportunities Fund, and the Gulf South Growth Fund; 0.65% of the average
daily net assets of the Asset Allocation Fund; 0.55% of the average daily net
assets of the International Equity Index Fund; and 0.30% of the average daily
net assets of the Equity Index Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administrative agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly, at an annual rate of 0.20% on
the first $1.5 billion of Trust net assets (excluding the Investor Growth
Fund, the Investor Growth & Income Fund, the Investor Conservative Fund, and
the Investor Balanced Fund (the "Investor Funds") and the Treasury Only Money
Market Fund and the Government Money Market Fund (the "Institutional Money
Market Funds")); 0.18% on the next $0.5 billion of Trust net assets
(excluding the Investor Funds and the Institutional Money Market Funds); and
0.16% of Trust net assets (excluding the the Investor Funds and the
Institutional Money Market Funds) over $2 billion. The Advisor also serves as
Sub-Administrator to each Fund of the Trust, pursuant to an agreement between
the Administrator and the Advisor. Pursuant to this agreement, the Advisor
performs many of the Administrator's duties, for which the Advisor receives a
fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A and Class B Shares are subject to distribution and
shareholder services plans (the "Plans") pursuant to Rule 12b-1 under the
1940 Act. As provided in the Plans, the Trust will pay the Distributor a fee
of 0.35% of the average daily net assets of Class A Shares of each of the
Funds and 1.00% of the average daily net assets of the Class B Shares of each
of the Funds. Currently, the Distributor has voluntarily agreed to limit
payments under the Plans to 0.25% of average daily net assets of the Class A
Shares of each Fund. Up to 0.25% of the fees payable under the Plans may be
used as compensation for shareholder services by the Distributor and/or
financial institutions and intermediaries. Fees paid under the Plans may be
applied by the Distributor toward (i) compensation for its services in
connection with distribution assistance or provision of shareholder services;
or (ii) payments to financial institutions and intermediaries such as banks
(including affiliates of the Adviser), brokers, dealers and other
institutions, including the Distributor's affiliates and subsidiaries as
compensation for services or reimbursement of expenses incurred in connection
with distribution assistance or provision of shareholder services. Fiduciary
Class Shares of each Fund are offered without distribution fees. For the year
ended June 30, 1997, the Distributor received $14,356,900 from commissions
earned on sales of Class A Shares and redemptions of Class B Shares, of
which, the Distributor re-allowed $14,210,374 to affiliated broker-dealers of
the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
90
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- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees. For the year ended June 30, 1997, fees in the
following amounts were waived (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT 12b-1 FEES
ADVISORY FEES ADMINISTRATION WAIVED
WAIVED FEES WAIVED CLASS A
------------- --------------- ----------
<S> <C> <C> <C>
Asset Allocation Fund.................................. $ 143 $ 116 $ 23
Income Equity Fund..................................... -- -- 56
Equity Index Fund...................................... 1,094 575 58
Value Growth Fund...................................... 69 -- 40
Large Company Value Fund............................... -- -- 12
Disciplined Value Fund................................. -- -- 22
Large Company Growth Fund.............................. -- -- 95
Growth Opportunities Fund.............................. -- -- 32
Gulf South Growth Fund................................. 30 70 17
International Equity Index Fund........................ -- -- 11
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the year ended
June 30, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES OTHER SECURITIES
--------------------- -------------------------
PURCHASES SALES PURCHASES SALES
--------- ------- ---------- ----------
<S> <C> <C> <C> <C>
Asset Allocation Fund.......................... $34,825 $12,126 $ 129,077 $ 86,545
Income Equity Fund............................. 282,166 154,124
Equity Index Fund.............................. 208,337 30,475
Value Growth Fund.............................. 520,425 351,633
Large Company Value Fund....................... 467,040 509,396
Disciplined Value Fund......................... 510,514 579,311
Large Company Growth Fund...................... 691,114 603,321
Growth Opportunities Fund...................... 1,780,054 1,764,169
Gulf South Growth Fund......................... 87,315 104,922
International Equity Index Fund................ 88,988 37,767
</TABLE>
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as written options, futures, indexed
securities and sales of forward foreign currency contracts involves risk in
excess of the amounts reflected in the Statement of Assets and Liabilities.
The face or contract amounts reflect the extent of the involvement the Funds
have in the particular class of instrument. Risks associated with these
instruments include an imperfect correlation between the movements in the
price of the instruments and the price of the underlying securities and
interest rates, an illiquid secondary market for the instruments or inability
of counterparties to perform under the terms of the contract, and changes in
the value of currency relative to the U.S. dollar. The Funds enter into these
contracts primarily as a means to hedge against adverse fluctuations in the
value of securities.
Continued
91
<PAGE> 410
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
The following is a summary of written option activity for the year ended June
30, 1997 by the Large Company Value Fund and Growth Opportunities Fund
(amounts in thousands):
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES
LARGE COMPANY VALUE FUND FUND
------------------------ ------------------------
SHARES SHARES
SUBJECT SUBJECT
TO CONTRACT PREMIUMS TO CONTRACT PREMIUMS
----------- -------- ----------- --------
<S> <C> <C> <C> <C>
COVERED CALL OPTIONS
Balance at beginning of period...... 590 $ 1,290 -- $ --
Options written..................... 1,093 3,168 360 7,986
Options closed...................... (910) (2,377) (360) (7,986)
Options expired..................... (289) (324) -- --
Options exercised................... (484) (1,757) -- --
-------- ------- -------- -------
Options outstanding at end of
period........................... -- $ -- -- $
======== ======= ======== =======
PUT OPTIONS
Balance at beginning of period...... 90 $ 116 -- $ --
Options written..................... 125 249 -- --
Options expired..................... (85) (149) -- --
Options exercised................... (130) (216) -- --
-------- ------- -------- -------
Options outstanding at end of
period........................... -- $ -- -- $ --
======== ======= ======== =======
</TABLE>
7. CONCENTRATION OF CREDIT RISK:
The Gulf South Growth Fund has a relatively large concentration of securities
invested in companies domiciled in the southeastern region of the United
States. The Fund may be more susceptible to political, social and economic
events adversely affecting the southeastern region of the United States than
funds not so concentrated.
The International Equity Index Fund has a relatively large concentration of
securities invested in companies domiciled in Japan. The Fund may be more
susceptible to the political, social and economic events adversely affecting
the Japanese companies than funds not so concentrated.
8. FEDERAL TAX INFORMATION (UNAUDITED):
The accompanying table below details distributions from long-term capital
gains for the following funds for the fiscal year ended June 30, 1997
(amounts in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT
----------------------------------------------------------------- -------
<S> <C>
Asset Allocation Fund............................................ $ 3,509
Income Equity Fund............................................... 13,420
Equity Index Fund................................................ 3,193
Value Growth Fund................................................ 34,274
Large Company Value Fund......................................... 3,737
Disciplined Value Fund........................................... 32,722
Large Company Growth Fund........................................ 45,464
Growth Opportunities Fund........................................ 11,171
Gulf South Growth Fund........................................... 7,091
International Equity Index Fund.................................. 2,598
</TABLE>
Continued
92
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- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
Currency losses incurred after October 31 within the Fund's fiscal year may
be deferred and treated as occurring on the first day of the following fiscal
year. The following deferred losses will be treated as arising on the first
day of the fiscal year ending June 30, 1998 (amount in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT
------------------------------------------------------------------ ------
<S> <C>
International Equity Index Fund................................... $514
</TABLE>
ELIGIBLE DISTRIBUTIONS:
The Trust designates the following percentage of distributions eligible for
the dividends received deductions for corporations.
<TABLE>
<CAPTION>
FUND PERCENTAGE
---------------------------------------------------------------- ----------
<S> <C>
Asset Allocation Fund........................................... 11.10%
Income Equity Fund.............................................. 98.92%
Equity Index Fund............................................... 83.28%
Value Growth Fund............................................... 20.88%
Large Company Value Fund........................................ 24.86%
Disciplined Value Fund.......................................... 70.64%
Large Company Growth Fund....................................... 100.00%
Growth Opportunities Fund....................................... 6.33%
Gulf South Growth Fund.......................................... 5.88%
International Equity Index Fund................................. 0.00%
</TABLE>
9. REORGANIZATIONS:
The Trust entered an Agreement and Plan of Reorganization ("Reorganization")
with Paragon pursuant to which all of the assets and liabilities of each
Paragon Fund transferred to a Fund of The One Group in exchange for shares of
the corresponding Fund of The One Group. The Paragon Value Equity Income Fund
transferred its assets and liabilities to the Income Equity Fund. The Paragon
Value Growth Fund and the Paragon Gulf South Growth Fund transferred its
assets and liabilities to the Value Growth Fund and Gulf South Growth Fund,
respectively. The Reorganization, which qualified as a tax-free exchange for
Federal income tax purposes, was completed on March 25, 1996 following
approval by shareholders of Paragon at a special shareholder meeting. The
following is a summary of shares outstanding, net assets, net asset value per
share and unrealized appreciation immediately before and after the
Reorganization (amounts in thousands except net asset values):
<TABLE>
<CAPTION>
BEFORE REORGANIZATION AFTER
------------------------------- REORGANIZATION
PARAGON VALUE -------------
EQUITY INCOME INCOME EQUITY INCOME EQUITY
FUND FUND FUND
------------- ------------- -------------
<S> <C> <C> <C>
Shares................................... 8,993 13,779 21,674
Net assets............................... $ 136,786 $ 238,679 $ 375,465
Net asset value:
Fiduciary.............................. $ 17.33 $ 17.33
Class A................................ $ 15.21 $ 17.30 $ 17.30
Class B................................ $ 15.20 $ 17.33 $ 17.33
Unrealized appreciation.................. $ 41,324 $ 71,670 $ 112,994
</TABLE>
Continued
93
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- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
------------------------------- -------------
PARAGON VALUE VALUE GROWTH VALUE GROWTH
GROWTH FUND FUND FUND
------------- ------------- -------------
<S> <C> <C> <C>
Shares................................... 14,849 -- 22,657
Net assets............................... $226,567 -- $226,567
Net asset value:
Fiduciary.............................. $ 10.00
Class A................................ $ 15.26 $ 10.00*
Class B................................ $ 15.21 $ 10.00*
Unrealized appreciation.................. $ 48,859 -- $ 48,859
</TABLE>
<TABLE>
<CAPTION>
BEFORE REORGANIZATION AFTER
------------------------------- REORGANIZATION
PARAGON GULF -------------
SOUTH GROWTH GULF SOUTH GULF SOUTH
FUND GROWTH FUND GROWTH FUND
------------- ------------- -------------
<S> <C> <C> <C>
Shares................................... 6,379 -- 10,012
Net assets............................... $100,116 -- $100,116
Net asset value:
Fiduciary.............................. $ 10.00
Class A................................ $ 15.70 $ 10.00**
Class B................................ $ 15.48 $ 10.00**
Unrealized appreciation.................. $ 19,678 -- $ 19,678
</TABLE>
* Pursuant to its reorganization as a Fund of the One Group, the Fund issued
additional shares at the close of business March 25, 1996 as a result of
the restatement of the net asset values of Class A Shares from $15.26 to
$10.00 and Class B Shares from $15.21 to $10.00.
** Pursuant to its reorganization as a Fund of the One Group, the Fund issued
additional shares at the close of business March 25, 1996 as a result of
the restatement of the net asset values of Class A Shares from $15.70 to
$10.00 and Class B Shares from $15.48 to $10.00.
On May 22, 1995, the Board of Trustees approved a Plan of Reorganization
pursuant to which the Blue Chip Equity Fund would be merged with and into the
Large Company Growth Fund. On September 1, 1995, the Blue Chip Equity Fund
transferred all of its assets and liabilities to the Large Company Growth
Fund in exchange for shares of the Large Company Growth Fund. The
reorganization, which qualified as a tax-free exchange for Federal income tax
purposes, was approved by the shareholders of the Blue Chip Equity Fund, at a
shareholders' meeting on August 28, 1995. The following is a summary of
shares outstanding, net assets, net asset value per share and unrealized
appreciation immediately before and after the reorganization (amounts in
thousands except net asset values):
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
------------------------------- -------------
BLUE CHIP LARGE COMPANY LARGE COMPANY
EQUITY FUND GROWTH FUND GROWTH FUND
------------- ------------- -------------
<S> <C> <C> <C>
Shares................................... 2,777 44,457 47,130
Net assets............................... $36,983 $ 614,499 $ 651,482
Net asset value:
Fiduciary.............................. $ 13.32 $ 13.80 $ 13.80
Class A................................ $ 13.30 $ 14.17 $ 14.17
Class B................................ $ 13.37 $ 13.96 $ 13.96
Unrealized appreciation.................. $ 7,227 $ 86,413 $ 93,640
</TABLE>
Continued
94
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- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
10. CONVERSION OF COMMON TRUST FUNDS:
On January 20, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following
is a summary of shares issued, net assets converted, net asset value per
share issued and unrealized appreciation of assets acquired as of the
conversion date (amounts in thousands except net asset value per share
amounts):
<TABLE>
<CAPTION>
NET ASSET VALUE
SHARES NET ASSETS PER SHARE UNREALIZED
ISSUED CONVERTED ISSUED APPRECIATION
------ ---------- --------------- ------------
<S> <C> <C> <C> <C>
Asset Allocation Fund............. 3,076 $ 37,254 $ 12.11 $ 8,361
Income Equity Fund................ 14,913 $283,942 $ 19.04 $150,438
Large Company Value Fund.......... 4,655 $ 63,222 $ 13.58 $ 7,315
Disciplined Value Fund............ 3,333 $ 48,296 $ 14.49 $ 7,763
Large Company Growth Fund......... 17,279 $289,603 $ 16.76 $102,448
</TABLE>
Continued
95
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
----------------------------------------------------
FIDUCIARY SHARES
----------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................ $ 11.71 $ 10.73 $ 9.64 $ 10.06 $ 10.00
------- ------- ------- ------- -------
Investment Activities
Net investment income...................................... 0.43 0.41 0.38 0.29 0.07
Net realized and unrealized gains (losses) from
investments.............................................. 1.81 1.16 1.12 (0.38) 0.06
------- ------- ------- ------- -------
Total from Investment Activities......................... 2.24 1.57 1.50 (0.09) 0.13
------- ------- ------- ------- -------
Distributions
From net investment income................................. (0.43) (0.41) (0.37) (0.29) (0.07)
From net realized gains.................................... (0.54) (0.18) (0.04) (0.04) --
------- ------- ------- ------- -------
Total Distributions...................................... (0.97) (0.59) (0.41) (0.33) (0.07)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 12.98 $ 11.71 $ 10.73 $ 9.64 $ 10.06
======= ======= ======= ======= =======
Total Return................................................. 20.16% 14.87% 16.06% (1.01)% 5.45% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $94,971 $50,323 $37,658 $42,751 $30,441
Ratio of expenses to average net assets.................... 0.80% 0.94% 1.06% 1.06% 0.90% (b)
Ratio of net investment income to average net assets....... 3.55% 3.58% 3.72% 2.91% 3.03% (b)
Ratio of expenses to average net assets*................... 1.00% 1.19% 1.31% 1.33% 1.34% (b)
Ratio of net investment income to average net assets*...... 3.35% 3.33% 3.47% 2.64% 2.59% (b)
Portfolio turnover(c)...................................... 80.96% 73.38% 115.36% 56.55% 4.05%
Average commission rate paid(d)............................ $0.0497 $0.0616
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Fiduciary Shares commenced offering on April 5, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
96
<PAGE> 415
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
--------------------------------------------------------
CLASS A SHARES
--------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 11.72 $ 10.74 $ 9.65 $ 10.06 $10.00
------- ------- ------- ------- -------
Investment Activities
Net investment income.................................... 0.39 0.37 0.35 0.27 0.05
Net realized and unrealized gains (losses) from
investments............................................ 1.83 1.16 1.13 (0.38) 0.07
------- ------- ------- ------- -------
Total from Investment Activities....................... 2.22 1.53 1.48 (0.11) 0.12
------- ------- ------- ------- -------
Distributions
From net investment income............................... (0.40) (0.37) (0.34) (0.26) (0.06)
In excess of net investment income....................... -- -- (0.01) -- --
From net realized gains.................................. (0.54) (0.18) (0.04) (0.04) --
------- ------- ------- ------- -------
Total Distributions.................................... (0.94) (0.55) (0.39) (0.30) (0.06)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............................. $ 13.00 $ 11.72 $ 10.74 $ 9.65 $10.06
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)....................... 19.85% 14.48% 15.76% (1.19)% 5.23%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $31,379 $17,849 $ 4,745 $ 1,691 $ 571
Ratio of expenses to average net assets.................. 1.05% 1.19% 1.31% 1.33% 1.15%(b)
Ratio of net investment income to average net assets..... 3.30% 3.33% 3.57% 2.68% 2.84%(b)
Ratio of expenses to average net assets*................. 1.34% 1.54% 1.66% 1.67% 1.62%(b)
Ratio of net investment income to average net assets*.... 3.01% 2.98% 3.22% 2.34% 237%(b)
Portfolio turnover(c).................................... 80.96% 73.38% 115.36% 56.55% 4.05%
Average commission rate paid(d).......................... $0.0497 $0.0616
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on April 2, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
97
<PAGE> 416
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
-------------------------------------------
CLASS B SHARES
-------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------
1997 1996 1995 1994(a)
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................. $ 11.76 $ 10.76 $ 9.67 $ 10.37
------- ------- ------- -------
Investment Activities
Net investment income.............................................. 0.30 0.28 0.27 0.08
Net realized and unrealized gains (losses) from investments........ 1.83 1.18 1.14 (0.70)
------- ------- ------- -------
Total from Investment Activities................................. 2.13 1.46 1.41 (0.62)
Distributions
From net investment income......................................... (0.31) (0.28) (0.27) (0.08)
In excess of net investment income................................. -- -- (0.01) --
From net realized gains............................................ (0.54) (0.18) (0.04) --
------- ------- ------- -------
Total Distributions.............................................. (0.85) (0.46) (0.32) (0.08)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD....................................... $ 13.04 $ 11.76 $ 10.76 $ 9.67
======= ======= ======= =======
Total Return (Excludes Sales Charge)................................. 18.90% 13.79% 14.90% (5.98)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................. $43,900 $18,575 $ 3,019 $ 1,862
Ratio of expenses to average net assets............................ 1.81% 1.94% 2.07% 2.40%(c)
Ratio of net investment income to average net assets............... 2.54% 2.58% 2.77% 1.99%(c)
Ratio of expenses to average net assets*........................... 2.01% 2.19% 2.31% 2.40%(c)
Ratio of net investment income to average net assets*.............. 2.34% 2.33% 2.52% 1.99%(c)
Portfolio turnover(d).............................................. 80.96% 73.38% 115.36% 56.55%
Average commission rate paid(e).................................... $0.0497 $0.0616
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
98
<PAGE> 417
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
--------------------------------------------------------
FIDUCIARY SHARES
--------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................... $ 17.65 $ 15.13 $ 13.22 $ 13.21 $ 12.24
-------- -------- -------- -------- --------
Investment Activities
Net investment income................................ 0.36 0.40 0.40 0.39 0.43
Net realized and unrealized gains from investments... 4.89 3.22 2.28 0.01 0.97
-------- -------- -------- -------- --------
Total from Investment Activities................... 5.25 3.62 2.68 0.40 1.40
-------- -------- -------- -------- --------
Distributions
From net investment income........................... (0.36) (0.40) (0.40) (0.39) (0.43)
From net realized gains.............................. (0.61) (0.70) (0.37) -- --
-------- -------- -------- -------- --------
Total Distributions................................ (0.97) (1.10) (0.77) (0.39) (0.43)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD......................... $ 21.93 $ 17.65 $ 15.13 $ 13.22 $ 13.21
======== ======== ======== ======== ========
Total Return........................................... 30.90% 24.53% 21.04% 3.27% 11.56%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................... $649,007 $321,827 $170,919 $198,787 $153,144
Ratio of expenses to average net assets.............. 1.00% 0.98% 1.01% 0.98% 0.90%
Ratio of net investment income to average net
assets............................................. 1.91% 2.44% 2.85% 3.18% 3.37%
Ratio of expenses to average net assets*............. 1.00% 1.01% 1.01% 1.05% 1.07%
Ratio of net investment income to average net
assets*............................................ 1.91% 2.41% 2.85% 3.11% 3.20%
Portfolio turnover(a)................................ 28.18% 14.92% 4.03% 22.69% 7.53%
Average commission rate paid(b)...................... $ 0.0681 $ 0.0673
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
99
<PAGE> 418
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
--------------------------------------------------
CLASS A SHARES
--------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......................... $ 17.64 $ 15.11 $ 13.20 $ 13.20 $12.23
------- ------- ------- ------- ------
Investment Activities
Net investment income...................................... 0.31 0.38 0.03 0.36 0.40
Net realized and unrealized gains from investments......... 4.87 3.20 2.29 -- 0.98
------- ------- ------- ------- ------
Total from Investment Activities......................... 5.18 3.58 2.32 0.36 1.38
------- ------- ------- ------- ------
Distributions
From net investment income................................. (0.31) (0.35) (0.03) (0.34) (0.41)
In excess of net investment income......................... -- -- (0.01) (0.02) --
From net realized gains.................................... (0.61) (0.70) (0.37) -- --
------- ------- ------- ------- ------
Total Distributions...................................... (0.92) (1.05) (0.41) (0.36) (0.41)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD............................... $ 21.90 $ 17.64 $ 15.11 $ 13.20 $13.20
======= ======= ======= ======= ======
Total Return (Excludes Sales Charge)......................... 30.39% 24.23% 20.79% 2.95% 11.38%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $78,976 $44,284 $13,793 $12,054 $9,513
Ratio of expenses to average net assets.................... 1.25% 1.23% 1.26% 1.23% 1.11%
Ratio of net investment income to average net assets....... 1.65% 2.19% 2.61% 3.01% 3.32%
Ratio of expenses to average net assets*................... 1.34% 1.36% 1.36% 1.40% 1.43%
Ratio of net investment income to average net assets*...... 1.56% 2.06% 2.51% 2.84% 3.00%
Portfolio turnover(a)...................................... 28.18% 14.92% 4.03% 22.69% 7.53%
Average commission rate paid(b)............................ $0.0681 $0.0673
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
100
<PAGE> 419
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
--------------------------------------
CLASS B SHARES
--------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------
1997 1996 1995 1994(a)
------- ------- ------ ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................................... $ 17.68 $ 15.14 $13.23 $13.83
------- ------- ------ ------
Investment Activities
Net investment income................................................. 0.17 0.24 0.26 0.11
Net realized and unrealized gains (losses) from investments........... 4.89 3.23 2.29 (0.60)
------- ------- ------ ------
Total from Investment Activities.................................... 5.06 3.47 2.55 (0.49)
------- ------- ------ ------
Distributions
From net investment income............................................ (0.18) (0.23) (0.25) (0.11)
In excess of net investment income.................................... -- -- (0.02) --
From net realized gains............................................... (0.61) (0.70) (0.37) --
------- ------- ------ ------
Total Distributions................................................. (0.79) (0.93) (0.64) (0.11)
------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD.......................................... $ 21.95 $ 17.68 $15.14 $13.23
======= ======= ====== ======
Total Return (Excludes Sales Charge).................................... 29.48% 23.41% 19.91% (3.37)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..................................... $79,518 $29,169 $3,468 $1,714
Ratio of expenses to average net assets............................... 2.00% 1.98% 2.01% 1.95%(c)
Ratio of net investment income to average net assets.................. 0.89% 1.44% 1.88% 2.70%(c)
Ratio of expenses to average net assets*.............................. 2.00% 2.01% 2.02% 1.95%(c)
Ratio of net investment income to average net assets*................. 0.89% 1.41% 1.87% 2.70%(c)
Portfolio turnover(d)................................................. 28.18% 14.92% 4.03% 22.69%
Average commission rate paid (e)...................................... $0.0681 $0.0673
</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 Shares commenced offering on January 14, 1994.
(b) Not Annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
101
<PAGE> 420
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
--------------------------------------------------------
FIDUCIARY SHARES
--------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 16.66 $ 14.03 $ 11.59 $ 11.92 $ 10.92
-------- -------- -------- -------- -------
Investment Activities
Net investment income.................................. 0.35 0.33 0.32 0.29 0.30
Net realized and unrealized gains (losses) from
investments.......................................... 5.27 3.16 2.59 (0.20) 1.13
-------- -------- -------- -------- -------
Total from Investment Activities..................... 5.62 3.49 2.91 0.09 1.43
-------- -------- -------- -------- -------
Distributions
From net investment income............................. (0.33) (0.33) (0.29) (0.29) (0.30)
In excess of net investment income..................... -- (0.01) (0.02) (0.04) --
From net realized gains................................ (0.15) (0.52) (0.16) (0.09) (0.13)
-------- -------- -------- -------- -------
Total Distributions.................................. (0.48) (0.86) (0.47) (0.42) (0.43)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD........................... $ 21.80 $ 16.66 $ 14.03 $ 11.59 $ 11.92
======== ======== ======== ======== =======
Total Return............................................. 34.30% 25.47% 25.79% 0.63% 13.04%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................... $480,819 $321,058 $234,895 $165,370 $96,446
Ratio of expenses to average net assets................ 0.30% 0.30% 0.33% 0.46% 0.50%
Ratio of net investment income to average net assets... 1.87% 2.18% 2.57% 2.44% 2.46%
Ratio of expenses to average net assets *.............. 0.61% 0.59% 0.66% 0.59% 0.87%
Ratio of net investment income to average net assets
*.................................................... 1.56% 1.89% 2.24% 2.31% 2.09%
Portfolio turnover(a).................................. 5.81% 9.08% 2.71% 11.81% 2.71%
Average commission rate paid(b)........................ $ 0.0449 $ 0.0490
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
102
<PAGE> 421
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
--------------------------------------------------------
CLASS A SHARES
--------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 16.67 $ 14.02 $ 11.59 $ 11.91 $ 10.92
-------- -------- -------- -------- -------
Investment Activities
Net investment income.................................. 0.29 0.27 0.29 0.28 0.30
Net realized and unrealized gains (losses) from
investments.......................................... 5.28 3.18 2.58 (0.20) 1.10
-------- -------- -------- -------- -------
Total from Investment Activities..................... 5.57 3.45 2.87 0.08 1.40
-------- -------- -------- -------- -------
Distributions
From net investment income............................. (0.28) (0.27) (0.28) (0.27) (0.28)
In excess of net investment income..................... -- (0.01) -- (0.04) --
From net realized gains................................ (0.15) (0.52) (0.16) (0.09) (0.13)
-------- -------- -------- -------- -------
Total Distributions.................................. (0.43) (0.80) (0.44) (0.40) (0.41)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD........................... $ 21.81 $ 16.67 $ 14.02 $ 11.59 $ 11.91
======== ======== ======== ======== =======
Total Return (Excludes Sales Charge)..................... 33.94% 25.16% 25.43% 0.56% 12.75%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................... $ 98,338 $ 32,186 $ 3,003 $ 1,416 $ 512
Ratio of expenses to average net assets................ 0.55% 0.55% 0.56% 0.62% 0.52%
Ratio of net investment income to average net assets... 1.59% 1.93% 2.38% 2.37% 2.51%
Ratio of expenses to average net assets *.............. 0.95% 0.94% 1.01% 0.94% 0.99%
Ratio of net investment income to average net assets
*.................................................... 1.19% 1.54% 1.94% 2.05% 2.04%
Portfolio turnover(a).................................. 5.81% 9.08% 2.71% 11.81% 2.71%
Average commission rate paid(b)........................ $ 0.0449 $ 0.0490
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
103
<PAGE> 422
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
--------------------------------------------
CLASS B SHARES
--------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------
1997 1996 1995 1994(a)
-------- -------- ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............................. $ 16.68 $ 14.05 $11.61 $12.39
-------- -------- ------ ------
Investment Activities
Net investment income........................................... 0.16 0.16 0.18 0.09
Net realized and unrealized gains (losses) from investments..... 5.27 3.16 2.61 (0.78)
-------- -------- ------ ------
Total from Investment Activities.............................. 5.43 3.32 2.79 (0.69)
-------- -------- ------ ------
Distributions
From net investment income...................................... (0.16) (0.16) (0.19) (0.09)
In excess of net investment income.............................. -- (0.01) -- --
From net realized gains......................................... (0.15) (0.52) (0.16) --
-------- -------- ------ ------
Total Distributions........................................... (0.31) (0.69) (0.35) (0.09)
-------- -------- ------ ------
NET ASSET VALUE, END OF PERIOD.................................... $ 21.80 $ 16.68 $14.05 $11.61
======== ======== ====== ======
Total Return (Excludes Sales Charge).............................. 32.93% 24.05% 24.58% (5.57)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................... $168,699 $ 38,538 $1,408 $ 248
Ratio of expenses to average net assets......................... 1.30% 1.30% 1.34% 1.10% (c)
Ratio of net investment income to average net assets............ 0.83% 1.18% 1.60% 2.08% (c)
Ratio of expenses to average net assets*........................ 1.61% 1.59% 1.67% 1.15% (c)
Ratio of net investment income to average net assets*........... 0.52% 0.89% 1.27% 2.03% (c)
Portfolio turnover(d)........................................... 5.81% 9.08% 2.71% 11.81%
Average commission rate paid(e)................................. $ 0.0449 $ 0.0490
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
104
<PAGE> 423
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE GROWTH FUND
------------------------
FIDUCIARY SHARES
------------------------
MARCH 26,
YEAR ENDED 1996 TO
JUNE 30, JUNE 30,
1997 1996(a)
---------- ---------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................................. $ 10.39 $ 10.00
--------- --------
Investment Activities
Net investment income.............................................................. 0.11 0.03
Net realized and unrealized gains from investments................................. 2.85 0.39
--------- --------
Total from Investment Activities................................................. 2.96 0.42
--------- --------
Distributions
From net investment income......................................................... (0.11) (0.03)
From net realized gains............................................................ (1.73) --
--------- --------
Total Distributions.............................................................. (1.84) (0.03)
--------- --------
NET ASSET VALUE, END OF PERIOD....................................................... $ 11.51 $ 10.39
========= ========
Total Return......................................................................... 31.97% 10.49% (b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................................. $430,837 $191,212
Ratio of expenses to average net assets............................................ 0.98% 0.95% (d)
Ratio of net investment income to average net assets............................... 1.06% 1.13% (d)
Ratio of expenses to average net assets*........................................... 1.00% 1.04% (d)
Ratio of net investment income to average net assets*.............................. 1.04% 1.04% (d)
Portfolio turnover(e).............................................................. 113.17% 65.21%
Average commission rate paid(f).................................................... $ 0.0532 $ 0.0373
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Represents total return for Class A Shares from December 1, 1995 through
March 25, 1996 plus total return for Fiduciary Shares for the period from
March 26, 1996 through June 30, 1996.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the year.
See notes to financial statements.
105
<PAGE> 424
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE GROWTH FUND
------------------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------------------
SEVEN
MONTHS
YEAR ENDED ENDED YEAR ENDED NOVEMBER 30,
JUNE 30, JUNE 30, --------------------------------------------
1997 1996(a) 1995 1994 1993 1992
---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............... $ 10.39 $ 11.15 $ 9.00 $ 10.02 $ 9.42 $ 7.80
-------- -------- -------- -------- -------- --------
Investment Activities
Net investment income............................ 0.09 0.94 0.12 0.13 0.11 0.11
Net realized and unrealized gains (losses) from
investments.................................... 2.83 0.08 2.44 (0.56) 0.83 1.75
-------- -------- -------- -------- -------- --------
Total from Investment Activities............... 2.92 1.02 2.56 (0.43) 0.94 1.86
-------- -------- -------- -------- -------- --------
Distributions
From net investment income....................... (0.08) (0.94) (0.12) (0.14) (0.12) (0.10)
In excess of net investment income............... -- (0.01) -- -- -- --
From net realized gains.......................... (1.73) (0.83) (0.29) (0.45) (0.22) (0.14)
-------- -------- -------- -------- -------- --------
Total Distributions............................ (1.81) (1.78) (0.41) (0.59) (0.34) (0.24)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD..................... $ 11.50 $ 10.39 $ 11.15 $ 9.00 $ 10.02 $ 9.42
======== ======== ======== ======== ======== ========
Total Return (Excludes Sales Charge)............... 31.53% 10.40%(b) 29.57% (4.32)% 10.13% 24.27%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................ $ 47,306 $ 35,984 $217,978 $173,198 $171,141 $133,614
Ratio of expenses to average net assets.......... 1.23% 0.97%(c) 0.95% 0.96% 0.96% 0.97%
Ratio of net investment income to average net
assets......................................... 0.83% 0.65%(c) 1.25% 1.34% 1.21% 1.25%
Ratio of expenses to average net assets*......... 1.34% 1.05%(c) 0.95% 0.96% 0.96% 0.97%
Ratio of net investment income to average net
assets*........................................ 0.72% 0.77%(c) 1.25% 1.34% 1.21% 1.25%
Portfolio turnover(d)............................ 113.17% 65.21% 77.00% 53.00% 66.00% 43.00%
Average commission rate paid(e).................. $ 0.0532 $ 0.0373
</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) Upon reorganizing as a fund of The One Group, the Paragon Value Growth Fund
became the Value Growth Fund. Financial highlights for the periods prior to
March 26, 1996 represent the Paragon Value Growth Fund. The per share data
for the periods prior to March 26, 1996 have been restated to reflect the
impact of restatement of net asset value from $15.26 to $10.00 effective
March 26, 1996.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
106
<PAGE> 425
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE GROWTH FUND
------------------------------------------------------
CLASS B SHARES
------------------------------------------------------
SEVEN
MONTHS
ENDED SEPTEMBER 9,
YEAR ENDED JUNE YEAR ENDED 1994 TO
JUNE 30, 30, NOVEMBER 30, NOVEMBER 30,
1997 1996(a) 1995 1994(b)
---------- ------- ------------ -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...................... $ 10.39 $ 11.16 $ 9.01 $ 9.85
-------- ------- ------ -------
Investment Activities
Net investment income................................... 0.01 0.91 0.05 0.02
Net realized and unrealized gains (losses) from
investments........................................... 2.82 0.07 2.46 (0.84)
-------- ------- ------ -------
Total from Investment Activities...................... 2.83 0.98 2.51 (0.82)
-------- ------- ------ -------
Distributions
From net investment income.............................. (0.02) (0.91) (0.07) (0.02)
In excess of net investment income...................... -- (0.01) -- --
From net realized gains................................. (1.73) (0.83) (0.29) --
-------- ------- ------ -------
Total Distributions................................... (1.75) (1.75) (0.36) (0.02)
-------- ------- ------ -------
NET ASSET VALUE, END OF PERIOD............................ $ 11.47 $ 10.39 $11.16 $ 9.01
======== ======= ====== =======
Total Return (Excludes Sales Charge)...................... 30.52% 9.86%(c) 28.74% (8.31)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $ 10,517 $ 4,673 $2,923 $ 412
Ratio of expenses to average net assets................. 1.98% 1.56%(d) 1.70% 1.71%(d)
Ratio of net investment income to average net assets.... 0.07% 0.13%(d) 0.38% 0.76%(d)
Ratio of expenses to average net assets*................ 2.00% 1.94%(d) 1.70% 1.71%(d)
Ratio of net investment income to average net assets*... 0.05% 0.05%(d) 0.38% 0.76%(d)
Portfolio turnover(e)................................... 113.17% 65.21% 77.00% 53.00%
Average commission rate paid(f)......................... $ 0.0532 $0.0373
</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) Upon reorganizing as a fund of The One Group, the Paragon Value Growth Fund
became the Value Growth Fund. Financial highlights for the periods prior to
March 26, 1996 represent the Paragon Value Growth Fund. The per share data
for the periods prior to March 26, 1996 have been restated to reflect the
impact of restatement of net asset value from $15.21 to $10.00 effective
March 26, 1996.
(b) Class B Shares commenced offering September 9, 1994.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the year.
See notes to financial statements.
107
<PAGE> 426
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND
------------------------------------------------------------
FIDUCIARY SHARES
------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 12.83 $ 12.87 $ 11.34 $ 11.64 $ 11.34
-------- -------- -------- -------- --------
Investment Activities
Net investment income.............................. 0.27 0.31 0.31 0.20 0.18
Net realized and unrealized gains (losses) from
investments...................................... 3.01 1.20 2.18 (0.01) 0.58
-------- -------- -------- -------- --------
Total from Investment Activities................. 3.28 1.51 2.49 0.19 0.76
-------- -------- -------- -------- --------
Distributions
From net investment income......................... (0.26) (0.31) (0.32) (0.19) (0.18)
From net realized gains............................ (1.06) (1.24) (0.64) (0.30) (0.28)
-------- -------- -------- -------- --------
Total Distributions.............................. (1.32) (1.55) (0.96) (0.49) (0.46)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD....................... $ 14.79 $ 12.83 $ 12.87 $ 11.34 $ 11.64
======== ======== ======== ======== ========
Total Return......................................... 27.10% 12.71% 23.42% (1.59)% 6.73%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $686,156 $584,527 $365,376 $169,127 $132,833
Ratio of expenses to average net assets............ 0.97% 0.97% 1.00% 0.95% 0.86%
Ratio of net investment income to average net
assets........................................... 1.99% 2.43% 2.74% 1.72% 1.62%
Ratio of expenses to average net assets*........... 0.97% 0.98% 1.01% 1.02% 1.12%
Ratio of net investment income to average net
assets*.......................................... 1.99% 2.42% 2.73% 1.65% 1.36%
Portfolio turnover(a).............................. 77.05% 186.84% 203.13% 111.72% 51.75%
Average commission rate paid(b).................... $ 0.0575 $ 0.0415
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
108
<PAGE> 427
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND
------------------------------------------------------
CLASS A SHARES
------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 12.87 $ 12.89 $ 11.34 $ 11.64 $11.33
------- ------- ------- ------- ------
Investment Activities
Net investment income..................................... 0.23 0.27 0.28 0.17 0.16
Net realized and unrealized gains (losses) from
investments............................................. 3.04 1.22 2.20 (0.01) 0.59
------- ------- ------- ------- ------
Total from Investment Activities........................ 3.27 1.49 2.48 0.16 0.75
------- ------- ------- ------- ------
Distributions
From net investment income................................ (0.23) (0.27) (0.27) (0.16) (0.16)
In excess of net investment income........................ -- -- (0.02) -- --
From net realized gains................................... (1.06) (1.24) (0.64) (0.30) (0.28)
------- ------- ------- ------- ------
Total Distributions..................................... (1.29) (1.51) (0.93) (0.46) (0.44)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 14.85 $ 12.87 $ 12.89 $ 11.34 $11.64
======= ======= ======= ======= ======
Total Return (Excludes Sales Charge)........................ 26.90% 12.40% 22.64% 1.35% 6.64%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $14,832 $ 9,380 $ 3,481 $ 698 $ 451
Ratio of expenses to average net assets................... 1.22% 1.22% 1.25% 1.20% 1.10%
Ratio of net investment income to average net assets...... 1.72% 2.18% 2.52% 1.57% 1.41%
Ratio of expenses to average net assets*.................. 1.31% 1.33% 1.37% 1.37% 1.50%
Ratio of net investment income to average net assets*..... 1.63% 2.07% 2.41% 1.40% 1.01%
Portfolio turnover(a)..................................... 77.05% 186.84% 203.13% 111.72% 51.75%
Average commission rate paid(b)........................... $0.0575 $0.0415
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
109
<PAGE> 428
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND
-------------------------------------------
CLASS B SHARES
-------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------
1997 1996 1995 1994(a)
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................ $ 12.98 $ 12.96 $ 11.41 $11.87
------- ------- ------- ------
Investment Activities
Net investment income............................................. 0.14 0.18 0.17 0.05
Net realized and unrealized gains (losses) from investments....... 3.04 1.26 2.19 (0.46)
------- ------- ------- ------
Total from Investment Activities................................ 3.18 1.44 2.36 (0.41)
------- ------- ------- ------
Distributions
From net investment income........................................ (0.15) (0.18) (0.17) (0.05)
From net realized gains........................................... (1.06) (1.24) (0.64) --
------- ------- ------- ------
Total Distributions............................................. (1.21) (1.42) (0.81) (0.05)
------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD...................................... $ 14.95 $ 12.98 $ 12.96 $11.41
======= ======= ======= ======
Total Return (Excludes Sales Charge)................................ 25.86% 11.95% 22.28% 3.48% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................. $ 9,288 $ 4,135 $ 861 $ 182
Ratio of expenses to average net assets........................... 1.97% 1.97% 2.00% 2.00% (c)
Ratio of net investment income to average net assets.............. 0.96% 1.43% 1.74% 1.06% (c)
Ratio of expenses to average net assets*.......................... 1.97% 1.98% 2.01% 2.00% (c)
Ratio of net investment income to average net assets*............. 0.96% 1.42% 1.72% 1.06% (c)
Portfolio turnover(d)............................................. 77.05% 186.84% 203.13% 111.72%
Average commission rate paid(e)................................... $0.0575 $0.0415
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
110
<PAGE> 429
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND
------------------------------------------------------------
FIDUCIARY SHARES
------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 14.69 $ 13.20 $ 11.90 $ 12.76 $ 11.49
-------- -------- -------- -------- --------
Investment Activities
Net investment income.............................. 0.22 0.29 0.28 0.26 0.28
Net realized and unrealized gains from
investments...................................... 2.57 2.27 1.57 0.29 1.27
-------- -------- -------- -------- --------
Total from Investment Activities................. 2.79 2.56 1.85 0.55 1.55
-------- -------- -------- -------- --------
Distributions
From net investment income......................... (0.22) (0.29) (0.27) (0.26) (0.28)
From net realized gains............................ (1.61) (0.78) (0.28) (1.15) --
-------- -------- -------- -------- --------
Total Distributions.............................. (1.83) (1.07) (0.55) (1.41) (0.28)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD....................... $ 15.65 $ 14.69 $ 13.20 $ 11.90 $ 12.76
======== ======== ======== ======== ========
Total Return......................................... 20.56% 20.10% 16.03% 4.04% 13.58%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $562,302 $522,474 $448,530 $418,238 $211,785
Ratio of expenses to average net assets............ 0.98% 0.99% 1.00% 0.93% 0.89%
Ratio of net investment income to average net
assets........................................... 1.52% 2.04% 2.21% 2.14% 2.30%
Ratio of expenses to average net assets*........... 0.98% 1.00% 1.10% 0.98% 1.08%
Ratio of net investment income to average net
assets*.......................................... 1.52% 2.03% 2.11% 2.09% 2.11%
Portfolio turnover(a).............................. 92.66% 90.55% 176.66% 56.33% 108.79%
Average commission rate paid(b).................... $ 0.0601 $ 0.0576
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
111
<PAGE> 430
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND
-------------------------------------------------------
CLASS A SHARES
-------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 14.72 $ 13.22 $ 11.91 $ 12.75 $ 11.49
------- ------- ------- ------- -------
Investment Activities
Net investment income.................................... 0.19 0.25 0.24 0.24 0.25
Net realized and unrealized gains from investments....... 2.57 2.28 1.59 0.30 1.26
------- ------- ------- ------- -------
Total from Investment Activities....................... 2.76 2.53 1.83 0.54 1.51
------- ------- ------- ------- -------
Distributions
From net investment income............................... (0.19) (0.25) (0.24) (0.23) (0.25)
From net realized gains.................................. (1.61) (0.78) (0.26) (1.10) --
In excess of net realized gains.......................... -- -- (0.02) (0.05) --
------- ------- ------- ------- -------
Total Distributions.................................... (1.80) (1.03) (0.52) (1.38) (0.25)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............................. $ 15.68 $ 14.72 $ 13.22 $ 11.91 $ 12.75
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)....................... 20.21% 19.80% 15.43% 3.95% 13.27%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $23,909 $20,838 $13,560 $10,448 $ 3,435
Ratio of expenses to average net assets.................. 1.23% 1.24% 1.26% 1.18% 1.12%
Ratio of net investment income to average net assets..... 1.26% 1.79% 1.99% 2.00% 2.06%
Ratio of expenses to average net assets*................. 1.31% 1.35% 1.36% 1.33% 1.46%
Ratio of net investment income to average net assets*.... 1.18% 1.68% 1.89% 1.85% 1.72%
Portfolio turnover(a).................................... 92.66% 90.55% 176.66% 56.33% 108.79%
Average commission rate paid(b).......................... $0.0601 $0.0576
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
112
<PAGE> 431
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND
-------------------------------------------
CLASS B
-------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------
1997 1996 1995 1994(a)
------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................ $ 14.69 $ 13.19 $ 11.90 $12.60
------- ------- ------- ------
Investment Activities
Net investment income............................................. 0.08 0.15 0.15 0.07
Net realized and unrealized gains (losses) from investments....... 2.55 2.27 1.58 (0.70)
------- ------- ------- ------
Total from Investment Activities................................ 2.63 2.42 1.73 (0.63)
------- ------- ------- ------
Distributions
From net investment income........................................ (0.07) (0.14) (0.15) (0.06)
In excess of net investment income................................ -- -- (0.01) (0.01)
From net realized gains........................................... (1.61) (0.78) (0.28) --
------- ------- ------- ------
Total Distributions............................................. (1.68) (0.92) (0.44) (0.07)
------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD...................................... $ 15.64 $ 14.69 $ 13.19 $11.90
======= ======= ======= ======
Total Return (Excludes Sales Charge)................................ 19.19% 18.93% 14.92% (5.00)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................. $20,499 $16,305 $11,222 $5,356
Ratio of expenses to average net assets........................... 1.98% 1.99% 2.00% 1.96% (c)
Ratio of net investment income to average net assets.............. 0.51% 1.04% 1.26% 1.80% (c)
Ratio of expenses to average net assets*.......................... 1.98% 2.00% 2.01% 1.96% (c)
Ratio of net investment income to average net assets*............. 0.51% 1.03% 1.25% 1.80% (c)
Portfolio turnover(d)............................................. 92.66% 90.55% 176.66% 56.33%
Average commission rate paid(e)................................... $0.0601 $0.0576
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
113
<PAGE> 432
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH FUND
-------------------------------------------------------------
FIDUCIARY SHARES
-------------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------------------
1997 1996 1995 1994 1993
---------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 15.44 $ 13.47 $ 11.32 $ 10.92 $ 9.85
---------- -------- -------- -------- -------
Investment Activities
Net investment income.............................. 0.12 0.18 0.20 0.20 0.23
Net realized and unrealized gains (losses) from
investments...................................... 4.79 2.14 3.04 0.67 1.12
---------- -------- -------- -------- -------
Total from Investment Activities................. 4.91 2.32 3.24 0.87 1.35
---------- -------- -------- -------- -------
Distributions
From net investment income......................... (0.11) (0.18) (0.20) (0.20) (0.23)
From net realized gains............................ (0.80) (0.17) (0.89) (0.27) (0.05)
---------- -------- -------- -------- -------
Total Distributions.............................. (0.91) (0.35) (1.09) (0.47) (0.28)
---------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD....................... $ 19.44 $ 15.44 $ 13.47 $ 11.32 $ 10.92
========== ======== ======== ======== =======
Total Return......................................... 33.11% 17.36% 21.85% 8.04% 13.92%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $1,142,864 $745,986 $531,595 $150,035 $41,317
Ratio of expenses to average net assets............ 0.99% 0.96% 1.00% 0.78% 0.39%
Ratio of net investment income to average net
assets........................................... 0.69% 1.20% 1.72% 1.87% 2.24%
Ratio of expenses to average net assets*........... 0.99% 0.99% 1.00% 1.13% 1.43%
Ratio of net investment income to average net
assets*.......................................... 0.69% 1.17% 1.72% 1.52% 1.21%
Portfolio turnover(a).............................. 57.17% 35.51% 14.22% 9.04% 10.61%
Average commission rate paid(b).................... $ 0.0681 $ 0.0647
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
114
<PAGE> 433
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH FUND
---------------------------------------------
CLASS A SHARES
---------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------
1997 1996 1995 1994(a)
-------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................... $ 15.83 $ 13.83 $ 11.62 $ 11.78
-------- ------- ------- -------
Investment Activities
Net investment income............................................ 0.08 0.14 0.17 0.04
Net realized and unrealized gains (losses) from investments...... 4.88 2.17 3.10 (0.16)
-------- ------- ------- -------
Total from Investment Activities............................... 4.96 2.31 3.27 (0.12)
-------- ------- ------- -------
Distributions
From net investment income....................................... (0.07) (0.14) (0.16) (0.04)
In excess of net investment income............................... -- -- (0.01) --
From net realized gains.......................................... (0.80) (0.17) (0.89) --
-------- ------- ------- -------
Total Distributions............................................ (0.87) (0.31) (1.06) (0.04)
-------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD..................................... 19.92 $ 15.83 $ 13.83 $ 11.62
======== ======= ======= =======
Total Return (Excludes Sales Charge)............................... 32.57% 16.85% 21.52% (1.02)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................ $125,910 $75,114 $27,428 $ 368
Ratio of expenses to average net assets.......................... 1.24% 1.21% 1.26% 1.25% (c)
Ratio of net investment income to average net assets............. 0.44% 0.95% 1.49% 1.78% (c)
Ratio of expenses to average net assets*......................... 1.32% 1.34% 1.36% 1.35% (c)
Ratio of net investment income to average net assets*............ 0.36% 0.82% 1.39% 1.68% (c)
Portfolio turnover(d)............................................ 57.17% 35.51% 14.22% 9.04%
Average commission rate paid(e).................................. $ 0.0681 $0.0647
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on January 1, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
115
<PAGE> 434
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH FUND
---------------------------------------------
CLASS B SHARES
---------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------
1997 1996 1995 1994(a)
-------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................ $ 15.63 $ 13.63 $ 11.47 $ 11.57
-------- ------- ------- -------
Investment Activities
Net investment income (loss)...................................... (0.04) 0.05 0.09 0.03
Net realized and unrealized gains (losses) from investments....... 4.82 2.17 3.06 (0.10)
-------- ------- ------- -------
Total from Investment Activities................................ 4.78 2.22 3.15 (0.07)
-------- ------- ------- -------
Distributions
From net investment income........................................ -- (0.05) (0.09) (0.03)
In excess of net investment income................................ -- -- (0.01) --
From net realized gains........................................... (0.80) (0.17) (0.89) --
-------- ------- ------- -------
Total Distributions............................................. (0.80) (0.22) (0.99) (0.03)
-------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD...................................... $ 19.61 $ 15.63 $ 13.63 $ 11.47
======== ======= ======= =======
Total Return (Excludes Sales Charge)................................ 31.74% 16.41% 20.65% (0.66)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................. $132,268 $56,261 $ 6,918 $ 334
Ratio of expenses to average net assets........................... 2.00% 1.96% 2.01% 1.99% (c)
Ratio of net investment income (loss) to average net assets....... (0.33)% 0.20% 0.74% 0.96% (c)
Ratio of expenses to average net assets*.......................... 2.00% 1.99% 2.01% 1.99% (c)
Ratio of net investment income (loss) to average net assets*...... (0.33)% 0.17% 0.74% 0.96% (c)
Portfolio turnover(d)............................................. 57.17% 35.51% 14.22% 9.04%
Average commission rate paid(e)................................... $ 0.0681 $0.0647
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
116
<PAGE> 435
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES FUND
------------------------------------------------------------
FIDUCIARY SHARES
------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 18.81 $ 18.40 $ 15.96 $ 16.96 $ 14.54
-------- -------- -------- -------- --------
Investment Activities
Net investment income.............................. 0.25 0.20 0.06 0.07 0.06
Net realized and unrealized gains (losses) from
investments...................................... 3.59 3.83 2.98 (0.05) 2.99
-------- -------- -------- -------- --------
Total from Investment Activities................. 3.84 4.03 3.04 0.02 3.05
-------- -------- -------- -------- --------
Distributions
From net investment income......................... (0.25) (0.20) (0.06) (0.07) (0.06)
In excess of net investment........................ (0.02) -- -- -- --
From net realized gains............................ (2.92) (3.42) (0.54) (0.95) (0.57)
-------- -------- -------- -------- --------
Total Distributions.............................. (3.19) (3.62) (0.60) (1.02) (0.63)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD....................... $ 19.46 $ 18.81 $ 18.40 $ 15.96 $ 16.96
======== ======== ======== ======== ========
Total Return......................................... 22.75% 24.63% 19.75% (0.16)% 21.36%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $623,911 $532,525 $413,518 $389,567 $232,898
Ratio of expenses to average net assets............ 0.99% 1.00% 0.98% 0.98% 0.89%
Ratio of net investment income to average net
assets........................................... 1.32% 1.15% 0.38% 0.42% 0.41%
Ratio of expenses to average net assets*........... 0.99% 1.01% 0.98% 1.03% 1.11%
Ratio of net investment income to average net
assets*.......................................... 1.32% 1.14% 0.38% 0.37% 0.19%
Portfolio turnover(a).............................. 301.35% 435.30% 132.63% 70.67% 64.64%
Average commission rate paid(b).................... $ 0.0386 $ 0.0451
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
117
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES FUND
-------------------------------------------------------
CLASS A SHARES
-------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 18.76 $ 18.36 $ 15.93 $ 16.96 $ 14.54
------- ------- ------- ------- -------
Investment Activities
Net investment income.................................... 0.21 0.17 0.02 0.04 0.03
Net realized and unrealized gains (losses) from
investments............................................ 3.58 3.80 2.98 (0.08) 3.00
------- ------- ------- ------- -------
Total from Investment Activities....................... 3.79 3.97 3.00 (0.04) 3.03
------- ------- ------- ------- -------
Distributions
From net investment income............................... (0.24) (0.15) (0.01) (0.03) (0.04)
In excess of net investment income....................... (0.02) -- (0.02) (0.01) --
From net realized gains.................................. (2.92) (3.42) (0.54) (0.95) (0.57)
------- ------- ------- ------- -------
Total Distributions.................................... (3.18) (3.57) (0.57) (0.99) (0.61)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............................. $ 19.37 $ 18.76 $ 18.36 $ 15.93 $ 16.96
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)....................... 22.52% 24.32% 19.50% (0.52)% 21.70%(a)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $43,370 $28,052 $11,178 $ 8,097 $ 5,757
Ratio of expenses to average net assets.................. 1.25% 1.25% 1.23% 1.22% 1.11%(a)
Ratio of net investment income to average net assets..... 0.92% 0.90% 0.12% 0.27% 0.25%(a)
Ratio of expenses to average net assets*................. 1.34% 1.36% 1.33% 1.38% 1.48%(a)
Ratio of net investment income (loss) to average net
assets*................................................ 0.83% 0.79% 0.02% 0.11% (0.12)%(a)
Portfolio turnover(b).................................... 301.35% 435.30% 132.63% 70.67% 64.64%
Average commission rate paid(c).......................... $0.0386 $0.0451
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(c) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
118
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- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES FUND
--------------------------------------------
CLASS B SHARES
--------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------
1997 1996 1995 1994(a)
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................. $ 18.43 $ 18.14 $ 15.85 $ 17.44
------- ------- ------- -------
Investment Activities
Net investment income (loss)....................................... 0.11 0.09 (0.07) (0.02)
Net realized and unrealized gains (losses) from investments........ 3.44 3.69 2.90 (1.56)
------- ------- ------- -------
Total from Investment Activities................................. 3.55 3.78 2.83 (1.58)
------- ------- ------- -------
Distributions
From net investment income......................................... (0.22) (0.07) -- (0.01)
In excess of net investment income................................. (0.02) -- -- --
From net realized gains............................................ (2.92) (3.42) (0.54) --
------- ------- ------- -------
Total Distributions.............................................. (3.16) (3.49) (0.54) (0.01)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD....................................... $ 18.82 $ 18.43 $ 18.14 $ 15.85
======= ======= ======= =======
Total Return (Excludes Sales Charge)................................. 21.73% 23.53% 18.47% (9.07)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................. $37,409 $12,910 $ 2,787 $ 1,131
Ratio of expenses to average net assets............................ 2.00% 2.00% 1.98% 2.12% (c)
Ratio of net investment income (loss) to average net assets........ 0.01% 0.15% (0.63)% (0.55)% (c)
Ratio of expenses to average net assets*........................... 2.00% 2.01% 1.98% 2.12% (c)
Ratio of net investment income (loss) to average net assets*....... 0.01% 0.14% (0.63)% (0.55)% (c)
Portfolio turnover(d).............................................. 301.35% 435.30% 132.63% 70.67%
Average commission rate paid(e).................................... $0.0386 $0.0451
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
119
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GULF SOUTH GROWTH FUND
------------------------
FIDUCIARY SHARES
------------------------
MARCH 26,
YEAR ENDED 1996 TO
JUNE 30, JUNE 30,
1997 1996(a)
----------- ---------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................................................. $ 10.75 $ 10.00
------- -------
Investment Activities
Net investment income (loss)........................................................ (0.02) --
Net realized and unrealized gains from investments.................................. 1.31 0.78
------- -------
Total from Investment Activities.................................................. 1.29 0.78
------- -------
Distributions
From net realized gains............................................................. (1.10) (0.03)
------- -------
Total Distributions............................................................... (1.10) (0.03)
------- -------
NET ASSET VALUE, END OF PERIOD........................................................ $ 10.94 $ 10.75
======= =======
Total Return.......................................................................... 13.44% 13.39%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $78,318 $83,371
Ratio of expenses to average net assets............................................. 1.02% 0.96%(d)
Ratio of net investment income (loss) to average net assets......................... (0.16)% (0.16)%(d)
Ratio of expenses to average net assets*............................................ 1.12% 1.05%(d)
Ratio of net investment income (loss) to average net assets*........................ (0.26)% (0.25)%(d)
Portfolio turnover(e)............................................................... 92.01% 59.57%
Average commission rate paid(f)..................................................... $0.0676 $0.0685
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Represents total return for Class A Shares from December 1, 1995 through
March 25, 1996 plus total return for Fiduciary Shares for the period from
March 26, 1996 through June 30, 1996.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the year.
See notes to financial statements.
120
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GULF SOUTH GROWTH FUND
---------------------------------------------------------------------
CLASS A SHARES
---------------------------------------------------------------------
SEVEN
MONTHS
YEAR ENDED ENDED YEAR ENDED NOVEMBER 30,
JUNE 30, JUNE 30, ----------------------------------------
1997 1996(a) 1995 1994 1993 1992
----------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $ 10.73 $ 11.50 $ 9.36 $ 10.11 $ 9.48 $ 7.38
--------- -------- ------- ------- ------- -------
Investment Activities
Net investment income (loss)............... (0.04) (0.07) (0.04) (0.04) (0.02) 0.01
Net realized and unrealized gains (losses)
from investments......................... 1.35 1.40 2.35 (0.63) 0.88 2.10
--------- -------- ------- ------- ------- -------
Total from Investment Activities......... 1.31 1.33 2.31 (0.67) 0.86 2.11
--------- -------- ------- ------- ------- -------
Distributions
From net investment income................. -- -- -- -- (0.01) (0.01)
From net realized gains.................... (1.10) (2.10) (0.17) (0.08) (0.22) --
--------- -------- ------- ------- ------- -------
Total Distributions...................... (1.10) (2.10) (0.17) (0.08) (0.23) (0.01)
--------- -------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............... $ 10.94 $ 10.73 $ 11.50 $ 9.36 $ 10.11 $ 9.48
========== ======== ======= ======= ======= =======
Total Return (Excludes Sales Charge)......... 13.52% 12.85%(b) 25.07% (6.66)% 9.10% 28.59%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......... $17,299 $ 18,356 $95,467 $77,540 $74,982 $55,719
Ratio of expenses to average net assets.... 1.27% 1.05%(c) 1.03% 1.00% 1.01% 1.00%
Ratio of net investment income (loss) to
average net assets....................... (0.41)% (0.33)%(c) (0.36)% (0.38)% (0.21)% 0.15%
Ratio of expenses to average net assets*... 1.45% 1.37%(c) 1.03% 1.00% 1.01% 1.00%
Ratio of net investment income (loss) to
average net assets*...................... (0.59)% (0.35)%(c) (0.36)% (0.30)% (0.21)% 0.15%
Portfolio turnover(d)...................... 92.01% 59.57% 65.00% 51.00% 59.00% 42.00%
Average commission rate paid(e)............ $0.0676 $ 0.0685
</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) Upon reorganizing as a fund of The One Group, the Paragon Gulf South Growth
Fund became the Gulf South Growth Fund. Financial highlights for the periods
prior to March 26, 1996 represent the Paragon Gulf South Growth Fund. The
per share data for the periods prior to March 26, 1996 have been restated to
reflect the impact of restatement of net asset value from $15.70 to $10.00
effective March 26, 1996.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
121
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GULF SOUTH GROWTH FUND
-------------------------------------------------------------
CLASS B SHARES
-------------------------------------------------------------
SEVEN
MONTHS SEPTEMBER 12,
YEAR ENDED ENDED YEAR ENDED 1994 TO
JUNE 30, JUNE 30, NOVEMBER 30, NOVEMBER 30,
1997 1996(a) 1995 1994(b)
----------- --------- ------------- --------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 10.72 $ 11.56 $ 9.47 $ 10.40
------- ------- ------- --------
Investment Activities
Net investment loss................................ (0.10) (0.06) (0.07) (0.01)
Net realized and unrealized gains (losses)
from investments................................. 1.32 1.35 2.33 (0.92)
------- ------- ------- --------
Total from Investment Activities................. 1.22 1.29 2.26 (0.93)
------- ------- ------- --------
Distributions
From net realized gains............................ (1.10) (2.13) (0.17) --
------- ------- ------- --------
Total Distributions.............................. (1.10) (2.13) (0.17) --
------- ------- ------- --------
NET ASSET VALUE, END OF PERIOD....................... $ 10.84 $ 10.72 $ 11.56 $ 9.47
======= ======= ======= ========
Total Return (Excludes Sales Charge)................. 12.74% 12.47%(c) 24.21% (9.08)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $ 3,835 $ 2,545 $ 1,814 $ 231
Ratio of expenses to average net assets............ 2.02% 1.87%(d) 1.78% 1.75%(d)
Ratio of net investment income (loss) to average
net assets....................................... (1.16)% (1.10)%(d) (1.16)% (0.90)%(d)
Ratio of expenses to average net assets*........... 2.12% 1.92%(d) 1.78% 1.75%(d)
Ratio of net investment income (loss) to average
net assets*...................................... (1.26)% (1.15)%(d) (1.16)% (0.90)%(d)
Portfolio turnover(e).............................. 92.01% 59.57% 65.00% 51.00%
Average commission rate paid(f).................... $0.0676 $0.0685
</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) Upon reorganizing as a fund of The One Group, the Paragon Gulf South Growth
Fund became the Gulf South Growth Fund. Financial highlights for the periods
prior to March 26, 1996 represent the Paragon Gulf South Growth Fund. The
per share data for the periods prior to March 26, 1996 have been restated to
reflect the impact of restatement of net asset value from $15.48 to $10.00
effective March 26, 1996.
(b) Class B Shares commenced offering September 12, 1994.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the year.
See notes to financial statements.
122
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THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX FUND
-----------------------------------------------------------
FIDUCIARY SHARES
-----------------------------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------------------------
1997 1996 1995 1994 1993(a)
-------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $ 15.17 $ 13.93 $ 13.46 $ 11.80 $10.00
-------- -------- -------- -------- ------
Investment Activities
Net investment income............................... 0.15 0.11 0.13 0.11 0.06
Net realized and unrealized gains from
investments....................................... 2.02 1.43 0.46 1.68 1.75
-------- -------- -------- -------- ------
Total from Investment Activities.................. 2.17 1.54 0.59 1.79 1.81
-------- -------- -------- -------- ------
Distributions
From net investment income.......................... (0.17) (0.16) (0.08) (0.11) (0.01)
In excess of net investment income.................. (0.13) (0.02) -- -- --
From net realized gains............................. (0.15) (0.12) (0.04) (0.01) --
In excess of net realized gains..................... -- -- -- (0.01) --
-------- -------- -------- -------- ------
Total Distributions............................... (0.45) (0.30) (0.12) (0.13) (0.01)
-------- -------- -------- -------- ------
NET ASSET VALUE, END OF PERIOD........................ $ 16.89 $ 15.17 $ 13.93 $ 13.46 $11.80
======== ======== ======== ======== ======
Total Return.......................................... 14.64% 11.22% 4.20% 15.44% 26.96% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................... $449,949 $347,790 $218,299 $145,640 $35,384
Ratio of expenses to average net assets............. 0.86% 0.97% 1.04% 1.02% 1.22% (b)
Ratio of net investment income to average net
assets............................................ 1.00% 1.04% 1.25% 1.27% 1.37% (b)
Ratio of expenses to average net assets*............ 0.86% 1.00% 1.04% 1.02% 2.34% (b)
Ratio of net investment income to average net
assets*........................................... 1.00% 1.01% 1.25% 1.27% 0.25% (b)
Portfolio turnover(c)............................... 9.61% 6.28% 4.67% 7.74% 3.10%
Average commission rate paid(d)..................... $ 0.0034 $ 0.0022
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Fiduciary Shares commenced offering on April 5, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
123
<PAGE> 442
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX FUND
------------------------------------------------------
CLASS A SHARES
------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 15.16 $ 13.92 $13.49 $11.80 $11.74
------- ------- ------ ------ -------
Investment Activities
Net investment income..................................... 0.11 0.14 0.12 0.09 0.02
Net realized and unrealized gains from investments........ 2.03 1.40 0.43 1.67 0.04
------- ------- ------ ------ -------
Total from Investment Activities........................ 2.14 1.54 0.55 1.76 0.06
------- ------- ------ ------ -------
Distributions
From net investment income................................ (0.13) (0.16) (0.08) (0.05) --
In excess of net investment income........................ (0.10) (0.02) -- -- --
From net realized gains................................... (0.15) (0.12) (0.04) (0.02) --
------- ------- ------ ------ -------
Total Distributions..................................... (0.38) (0.30) (0.12) (0.07) --
------- ------- ------ ------ -------
NET ASSET VALUE, END OF PERIOD.............................. $ 16.92 $ 15.16 $13.92 $13.49 $11.80
======= ======= ====== ====== =======
Total Return (Excludes Sales Charge)........................ 14.31% 11.20% 3.87% 15.18% 2.87%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $12,562 $10,789 $5,028 $2,395 $ 153
Ratio of expenses to average net assets................... 1.11% 1.22% 1.28% 1.26% 1.47%(b)
Ratio of net investment income to average net assets...... 0.73% 0.79% 1.09% 1.15% 2.10%(b)
Ratio of expenses to average net assets*.................. 1.19% 1.35% 1.38% 1.36% 2.35%(b)
Ratio of net investment income to average net assets*..... 0.65% 0.66% 0.99% 1.05% 1.22%(b)
Portfolio turnover(c)..................................... 9.61% 6.28% 4.67% 7.74% 3.10%
Average commission rate paid(d)........................... $0.0034 $0.0022
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on April 2, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
124
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- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX FUND
------------------------------------------
CLASS B SHARES
------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------
1997 1996 1995 1994(a)
------- ------- ------ ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................................. $ 14.79 $ 13.73 $13.40 $13.00
------- ------- ------ ------
Investment Activities
Net investment income............................................... 0.09 0.03 0.03 0.06
Net realized and unrealized gains from investments.................. 1.86 1.32 0.41 0.34
------- ------- ------ ------
Total from Investment Activities.................................. 1.95 1.35 0.44 0.40
------- ------- ------ ------
Distributions
From net investment income.......................................... (0.08) (0.15) (0.07) --
In excess of net investment income.................................. (0.07) (0.02) -- --
From net realized gains............................................. (0.15) (0.12) (0.04) --
------- ------- ------ ------
Total Distributions............................................... (0.30) (0.29) (0.11) --
------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD........................................ $ 16.44 $ 14.79 $13.73 $13.40
======= ======= ====== ======
Total Return (Excludes Sales Charge).................................. 13.37% 9.97% 3.17% 3.23% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................... $10,033 $ 5,856 $3,687 $1,872
Ratio of expenses to average net assets............................. 1.86% 1.97% 2.04% 2.00% (c)
Ratio of net investment income to average net assets................ 0.08% 0.04% 0.25% 1.37% (c)
Ratio of expenses to average net assets*............................ 1.86% 2.00% 2.04% 2.00% (c)
Ratio of net investment income to average net assets*............... 0.08% 0.01% 0.25% 1.37% (c)
Portfolio turnover(d)............................................... 9.61% 6.28% 4.67% 7.74%
Average commission rate paid(e)..................................... $0.0034 $0.0022
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
125
<PAGE> 444
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
Asset Allocation Fund, the Income Equity Fund, the Equity Index Fund, the Value
Growth Fund, the Large Company Value Fund, the Disciplined Value Fund, the Large
Company Growth Fund, the Growth Opportunities Fund, the Gulf South Growth Fund
and the International Equity Index Fund (ten series of The One Group Family of
Mutual Funds), including the schedules of portfolio investments, as of June 30,
1997, and the related statements of operations, statements of changes in net
assets and the financial highlights for each period presented except as noted in
the next paragraph. These financial statements and financial highlights are the
responsibility of The One Group Family of Mutual Funds' management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
The Large Company Growth Fund's financial highlights for the year ended June 30,
1993 were audited by other auditors, whose report dated August 25, 1993
expressed an unqualified opinion on the financial highlights. The Value Growth
Fund's statement of changes in net asset for the year ended November 30, 1995
and the financial highlights for each of the four years in the period ended
November 30, 1995 were audited by other auditors, whose report dated January 19,
1996 expressed an unqualified opinion on those financial statements and
financial highlights. The Gulf South Growth Fund's statement of changes in net
assets for the year ended November 30, 1995 and the financial highlights for
each of the four years in the period ended November 30, 1995 were audited by
other auditors, whose report dated January 19, 1996 expressed an unqualified
opinion on those financial statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above, except as noted in the second paragraph present fairly, in all material
respects, the financial position of the Asset Allocation Fund, the Income Equity
Fund, the Equity Index Fund, the Value Growth Fund, the Large Company Value
Fund, the Disciplined Value Fund, the Large Company Growth Fund, the Growth
Opportunities Fund, the Gulf South Growth Fund and the International Equity
Index Fund as of June 30, 1997, the results of their operations, the changes in
their net assets and the financial highlights for the periods indicated herein,
in conformity with generally accepted accounting principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
126
<PAGE> 445
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ultra Short-Term Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (6.7%):
$ 4,053 NAL, Series 96-4, 6.90%,
12/15/00(b)...................... $ 4,030
810 Case Equipment Loan Trust, Series
1996-B, A2, 6.25%,
9/15/03.......................... 814
5,000 MBNA Master Credit Card Trust,
Series 1997-E, Class B, 6.10%,
9/15/04*......................... 4,984
--------
Total Asset Backed Securities 9,828
--------
COMMERCIAL PAPER (7.3%):
5,600 Columbus Southern Power, 5.80%,
7/14/97.......................... 5,588
5,100 Comdisco, 5.85%, 7/23/97........... 5,082
--------
Total Commercial Paper 10,670
--------
CORPORATE BONDS (0.7%):
Yankee & Eurodollar (0.7%):
1,000 United Mexican States, 7.88%,
8/6/01*.......................... 1,001
--------
Total Corporate Bonds 1,001
--------
OTHER MORTGAGE BACKED SECURITIES (12.1%):
983 BHN, Series 1997-1, Class A1,
7.14%, 3/25/11*.................. 984
1,570 Chemical Mortgage Acceptance Corp.,
1988-2, Class A, 7.52%,
5/25/18*......................... 1,615
3,263 Glendale Federal Bank, Series
1990-1, Class A, 7.33%,
10/25/29*........................ 3,335
3,241 Morgan Stanley Capital Issue,
Series 97-C1, Class A2, 6.08%,
8/15/06*......................... 3,239
2,000 Nomura Mortgage Capital Corp.,
Series 1990-1 H, 7.00%,
6/17/20.......................... 2,010
1,000 Prudential Home Mortgage
Securities, Series 1992-45, Class
A4, 6.50%, 1/25/00............... 1,002
461 Ryland Mortgage Securities Corp.,
Series 1991-7, Class A1, 6.84%,
6/25/21*......................... 461
1,752 Sears Mortgage Securities Corp.
Services, Series 1992-18, Class
A3, 7.69%, 9/25/22*.............. 1,787
2,000 Structured Asset Securities Corp.,
Series 1996-C1, Class C, 5.97%,
11/15/26, 144A................... 2,000
1,284 Structured Asset Securities Corp.,
Series 97-1, 6.76%, 2/25/27*..... 1,298
--------
Total Other Mortgage Backed Securities 17,731
--------
U.S. GOVERNMENT AGENCY MORTGAGES (72.9%):
Federal Home Loan Mortgage Corp. (14.1%):
2,820 6.00%, 10/1/00, Gold Pool
#G50424.......................... 2,791
1,050 7.50%, 7/15/16, CMO, Series 1106,
Class E.......................... 1,069
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal Home Loan Mortgage Corp., continued:
$ 2,589 7.87%, 5/1/18, Pool #840160, 1 Year
CMT ARM(b)*...................... $ 2,710
572 6.74%, 12/1/21, Pool #645083, 1
Year CMT ARM*.................... 580
4,894 6.20%, 12/15/23, Series 1637 LG,
CMO*............................. 4,811
3,142 9.00%, 9/1/25, Gold #C00387........ 3,333
5,406 6.45%, 6/1/26, Pool #785586, 1 Year
CMT ARM(b)*...................... 5,366
--------
20,660
--------
Federal National Mortgage Assoc. (45.1%):
725 7.00%, 3/25/98, Series 1993-112 EA,
CMO.............................. 725
399 6.50%, 11/1/03, Pool #44174........ 399
1,119 6.63%, 3/1/17, Pool #47109, 1 Year
CMT ARM*......................... 1,137
1,843 7.30%, 5/1/18, Pool #075505,
6 Month T-Bill ARM*.............. 1,900
554 6.74%, 6/1/18, Pool #70793, 6 Month
T-Bill ARM....................... 573
2,491 7.50%, 1/1/20, Pool #90031, 1 Year
CMT ARM*......................... 2,588
1,828 6.25%, 1/25/20, Series 1993-102G,
CMO.............................. 1,797
6,486 7.55%, 7/1/20, Pool #133558, 1 Year
CMT ARM*(b)...................... 6,736
3,198 7.31%, 12/1/20, Pool #116590, 1
Year CMT ARM*.................... 3,308
3,457 6.51%, 12/25/20, Series 1990-145,
Class A, CMO(b).................. 3,460
1,857 7.31%, 4/1/21, Pool #70983, 1 Year
CMT ARM*......................... 1,928
1,424 9.00%, 8/1/21, Pool #348983........ 1,487
1,197 7.95%, 11/1/21, Pool #124510, 1
Year CMT ARM*.................... 1,258
472 8.00%, 11/1/22, Pool #193013, 1
Year CMT ARM*.................... 489
3,159 7.14%, 3/1/23, Pool #202670,
6 Month CD ARM*.................. 3,298
1,876 7.61%, 11/1/23, Pool #241828,
6 Month CD ARM*.................. 1,977
651 8.50%, 7/1/24, Pool #342036........ 676
1,563 8.50%, 10/1/24, Pool #345876....... 1,623
1,812 9.00%, 4/1/25, Pool #370122........ 1,894
3,567 6.22%, 7/1/25, Pool #326092, 1 Year
CMT ARM*......................... 3,683
2,087 9.00%, 8/1/25, Pool #361354........ 2,181
3,273 5.73% 11/1/26, Pool #363030, 1 Year
CMT ARM*......................... 3,343
57 6.00%, 2/20/27, Pool #80045........ 57
</TABLE>
Continued
16
<PAGE> 446
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ultra Short-Term Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 4,761 6.32%, 3/18/27, Series 1997-7 FB,
CMO*............................. $ 4,777
4,810 7.24%, 7/1/27, Pool #70179, 1 Year
CMT ARM*......................... 4,984
4,828 6.01%, 3/15/27, Pool #67694, COFI
ARM*............................. 4,773
5,139 7.63%, 1/1/31, Pool #124945, 1 Year
CMT ARM*(b)...................... 5,390
--------
66,441
--------
Government National Mortgage Assoc. (13.7%):
2,461 9.00% 11/15/24, Pool #780029....... 2,641
3,263 6.50%, 7/20/26, Pool #8927, 1 Year
CMT ARM*......................... 3,341
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 5,000 6.50%, 1 Year CMT ARM, TBA......... $ 5,058
9,000 6.00%, 1 Year CMT ARM, TBA......... 9,011
--------
20,051
--------
Total U.S. Government Agency Mortgages 107,152
--------
REPURCHASE AGREEMENTS (11.8%):
17,390 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $17,802
various U.S. Government
Securities,
5.75%-6.00%, 6/30/99-10/31/00,
market value $17,738)............ 17,390
--------
Total Repurchase Agreements 17,390
--------
Total (Cost--$163,219) (a) $163,772
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $146,874.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $ 700
Unrealized depreciation.................................................. (147)
------
Net unrealized appreciation.............................................. $ 553
======
</TABLE>
(b) Serves as collateral for futures contracts.
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of market
rates. The rate reflected on the Schedule of Portfolio Investments is the rate
in effect at June 30, 1997.
At June 30, 1997, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
OPENING MARKET
# OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
--------- ---------------------------------- --------- -------
<C> <S> <C> <C>
SHORT CONTRACTS
35 U.S. 5 Year Note September, 1997 $ 3,704 $3,706
80 U.S. 2 Year Note September, 1997 16,458 16,481
--------- -------
$20,162 $20,187
======== =======
</TABLE>
ARM Adjustable Rate Mortgage
CD Certificate of Deposit
CMO Collateralized Mortgage Obligation
CMT Collateralized Mortgage Trust
COFI Cost of Funds Index
TBA To be announced
See notes to financial statements.
17
<PAGE> 447
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Limited Volatility Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (17.6%):
$ 3,749 Bay View Auto Trust, Series 97-RA1,
Class A1, 6.29%, 12/15/01........ $ 3,751
9,171 Case Equipment Loan Trust, 96-A,
Class A2, 5.50%, 2/15/03......... 9,109
1,262 CIT Group Securitization Corp.,
Series 1995-1, Class A1, 7.70%,
8/15/20.......................... 1,276
4,986 Consumer Portfolio Services, Series
1997-2 A, 6.65%,
10/15/02......................... 5,003
4,332 Countrywide Asset-Backed
Certificate, 6.53%, 2/25/14...... 4,331
6,938 DVI Equipment Receivables Trust,
Series 1997-A, Class A, 6.45%,
1/15/04.......................... 6,944
2,887 EQCC Home Equity Loan Trust,
1996-3, Class A3, 6.20%,
7/15/05.......................... 2,892
7,889 Fifth Third Auto Grantor Trust,
1996-A, Class A, 6.20%,
9/15/01.......................... 7,916
6,490 Fifth Third Auto Grantor Trust,
1996-B, Class A, 6.45% 3/15/02... 6,535
5,000 Ford Motor Credit Auto Loan Master,
1995-1, Class A, 6.50%,
8/15/02.......................... 4,997
6,500 Metris Mastertrust, 7.11%,
10/1/05.......................... 6,547
4,053 NAL, Series 96-4, 6.90%,
12/15/00......................... 4,030
7,000 National Premier Funding, Series
1995-6, 7.00%, 6/1/99............ 7,024
5,225 Navistar Financial Corp Owner
Trust, 1996-B, Class A2, 5.93%,
11/20/99......................... 5,234
14,280 Newcourt Receivables Trust, 1996-3,
Class A, 6.24%, 12/20/04......... 14,254
11,375 Olympic Automobile Receivables
Trust, 1996-D, Class A2, 5.75%,
4/15/00.......................... 11,365
1,810 Union Federal Savings Bank Trust,
Series 1993-C, 4.88%, 2/15/00.... 1,797
969 Union Federal Savings Bank Trust,
Series 1994 A A, 5.08%,
5/15/00.......................... 964
--------
Total Asset Backed Securities 103,969
--------
CORPORATE BONDS (12.5%):
Banking (0.8%):
5,000 Shinhan Bank, 7.25%, 6/26/02,
144A............................. 4,971
--------
Banking, Finance & Insurance (8.5%):
3,000 Avco Financial Services, 7.25%,
7/15/99.......................... 3,056
7,000 Ford Motor Credit Corp., 8.38%,
1/15/00.......................... 7,306
7,000 Goldman Sachs Group, 7.80%,
7/15/02, 144A.................... 7,280
10,000 Greenwich Capital, 7.04%, 12/13/99,
Private Placement................ 9,983
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Banking, Finance & Insurance, continued:
$ 4,500 Lehman Brothers Holdings, Inc.,
8.88%, 11/1/98................... $ 4,651
5,000 Lehman Brothers, Inc., 7.63%,
8/1/98........................... 5,076
3,000 Lehman Brothers, Inc., 10.00%,
5/15/99.......................... 3,184
4,000 Lehman Brothers, Inc., 9.88%,
10/15/00......................... 4,355
5,000 Visa International, 6.72%, 2/4/02,
144A............................. 4,970
--------
49,861
--------
Industrial Goods & Services (3.2%):
2,000 Columbia Pictures Entertainment,
Inc., 9.88%, 2/1/98.............. 2,036
5,000 General Motors Corp., 9.63%,
12/1/00.......................... 5,450
1,000 IBM, 6.38%, 11/1/97................ 1,002
5,000 Sears Robuck Co., 6.69%, 8/13/01... 4,981
5,000 SK Telecom, 7.75%, 4/29/04......... 5,088
--------
18,557
--------
Total Corporate Bonds 73,389
--------
OTHER MORTGAGE BACKED SECURITIES (2.6%):
5,150 Evans Withycombe Finance Trust,
Series 1, Class A1, 7.98%,
8/1/01........................... 5,364
5,000 Nomura Mortgage Capital Corp.,
Series 90-1, Class H, 7.00%,
6/17/20.......................... 5,025
4,745 Prudential Home Mortgage
Securities, Series 93-17, Class
A1, 6.50%,
5/25/00.......................... 4,693
--------
Total Other Mortgage Backed Securities 15,082
--------
U.S. GOVERNMENT AGENCY MORTGAGES (37.6%):
Federal Home Loan Mortgage Corp. (16.4%):
2,043 6.50%, 1/1/01, Pool #M8038......... 2,019
10,090 6.50%, 5/1/02, Pool #G50444........ 10,056
386 9.00%, 12/1/05, Pool #G00005....... 402
377 9.00%, 1/1/06, Pool #G00012........ 392
739 8.00%, 10/1/06, Pool #G00052....... 760
2,354 7.00%, 3/1/07, Pool #G34594........ 2,352
2,885 7.50%, 4/1/07, Pool #G00084........ 2,930
2,139 7.00%, 4/1/07, Pool #G00087........ 2,137
3,511 7.50%, 11/1/07, Pool #E00165....... 3,564
5,166 8.50%, 2/1/08, Gold Pool #10133.... 5,344
2,292 7.00%, 12/1/08, Pool #E20065....... 2,299
2,736 8.00%, 1/1/10, Pool #G00355........ 2,814
8,058 8.00%, 2/1/10, Pool #G10328........ 8,290
10,028 7.00%, 10/1/10, Gold Pool
#E61709.......................... 10,075
13,727 7.00%, 5/1/11, Pool #E20241........ 13,732
10,000 5.25%, 9/15/15, REMIC/CMO, Series
1638, Class BC................... 9,904
</TABLE>
Continued
18
<PAGE> 448
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Limited Volatility Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal Home Loan Mortgage Corp., continued:
$13,209 8.25%, 12/15/16, REMIC/CMO, Series
1770, Class PD................... $ 13,604
1,524 7.25%, 4/15/18, Series 1254 F,
CMO.............................. 1,523
4,834 6.68%, 10/1/26, Pool #785652....... 4,907
--------
97,104
--------
Federal National Mortgage Assoc. (12.7%):
10,000 5.64%, 2/20/01, Callable 2/20/98
@100............................. 9,737
15,659 7.00%, 7/17/05, Series 97-26 Gd.... 15,801
228 9.00%, 9/1/05, Pool #50340......... 238
22,178 6.60%, 10/18/05, 97-26 B........... 22,053
235 9.00%, 11/1/05, Pool #50361........ 245
258 8.50%, 4/1/06, Pool #116875........ 267
7,593 7.00%, 6/1/10, Pool #315928........ 7,621
6,639 6.50%, 9/1/10, Pool #325479........ 6,535
5,228 6.50%, 10/1/10, Pool #250377....... 5,146
3,310 7.00%, 11/1/10, Pool #250387....... 3,323
4,044 7.50%, 2/1/11, Pool #303755........ 4,105
173 6.00%, 9/25/18, REMIC/CMO, Series
1989-94, Class E................. 172
--------
75,243
--------
Government National Mortgage Assoc. (3.6%):
4 8.00%, 2/15/02, Pool #192917....... 4
22 8.00%, 3/15/02, Pool #209172....... 23
5 9.00%, 6/15/02, Pool #229311....... 5
79 9.00%, 10/15/02, Pool #229569...... 83
16 8.00%, 6/15/05, Pool #28827........ 16
12 9.00%, 9/15/05, Pool #292569....... 13
69 9.00%, 10/15/05, Pool #292589...... 72
16 8.00%, 5/15/06, Pool #303851....... 17
7 8.00%, 7/15/06, Pool #307231....... 7
46 8.00%, 8/15/06, Pool #311166....... 48
41 8.00%, 9/15/06, Pool #311301....... 42
338 8.00%, 10/15/06, Pool #316915...... 349
436 8.00%, 11/15/06, Pool #312210...... 450
154 8.00%, 11/15/06, Pool #316671...... 159
94 8.00%, 11/15/06, Pool #315078...... 97
44 8.00%, 11/15/06, Pool #311131...... 46
296 8.00%, 11/15/06, Pool #313528...... 305
207 8.00%, 12/15/06, Pool #311384...... 214
170 8.00%, 1/15/07, Pool #317663....... 175
362 8.00%, 2/15/07, Pool #316086....... 374
76 8.00%, 3/15/07, Pool #178684....... 79
200 8.00%, 3/15/07, Pool #318825....... 207
180 8.00%, 4/15/07, Pool #316441....... 186
13,068 6.00%, 11/20/25, Pool #8746 ARM*... 13,363
4,516 7.00%, 1/20/26, Pool #8790......... 4,621
--------
20,955
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
U.S. Government Agencies (4.9%):
$ 4,000 Student Loan Marketing Association,
6.34%, 8/12/99, Callable 8/12/97
@100............................. $ 3,997
4,000 Student Loan Marketing Association,
6.29%, 10/20/99.................. 3,995
20,000 Tennessee Valley Authority, 8.38%,
10/1/99 (b)...................... 20,875
--------
28,867
--------
Total U.S. Government Agency Mortgages 222,169
--------
U.S. GOVERNMENT AGENCY SECURITIES (14.2%):
Federal Farm Credit Bank (0.3%):
1,735 5.31%, 5/26/98..................... 1,728
--------
Federal Home Loan Bank (6.4%):
4,000 6.60%, 4/13/99..................... 4,033
17,000 5.58%, 2/23/01 (b)................. 16,514
10,000 7.78%, 10/19/01.................... 10,468
6,672 7.02%, 10/1/26, Pool #785674 ARM*.. 6,801
--------
37,816
--------
Federal National Mortgage Assoc. (7.5%):
3,000 8.20%, 3/10/98..................... 3,047
2,000 5.30%, 3/11/98..................... 1,995
3,600 6.90%, 3/27/98..................... 3,629
4,000 5.35%, 4/1/98...................... 3,988
22,000 5.72%, 3/8/01 (b).................. 21,471
10,000 6.16%, 3/29/01..................... 9,894
--------
44,024
--------
Total U.S. Government Agency Securities 83,568
--------
U.S. TREASURY OBLIGATIONS (13.1%):
U.S. Treasury Notes (3.5%):
5,000 7.75%, 1/31/00 (b)................. 5,183
3,500 8.50%, 2/15/00..................... 3,690
1,000 8.88%, 5/15/00 (b)................. 1,069
3,000 6.25%, 5/31/00 (b)................. 3,002
2,500 6.13%, 9/30/00..................... 2,490
5,000 6.63%, 6/30/01 (b)................. 5,049
--------
20,483
--------
U.S. Treasury Strips (9.6%):
7,000 2/15/99............................ 6,360
10,000 2/15/00 (b)........................ 8,520
25,000 11/15/01 (b)....................... 18,988
15,000 11/15/01 (b)....................... 11,413
18,000 11/15/04........................... 11,184
--------
56,465
--------
Total U.S. Treasury Obligations 76,948
--------
</TABLE>
Continued
19
<PAGE> 449
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Limited Volatility Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
YANKEE & EURODOLLAR (0.9%):
$ 5,000 Peoples Republic of China, 7.38%,
7/3/01........................... $ 5,088
--------
Total Yankee & Eurodollar 5,088
--------
REPURCHASE AGREEMENTS (1.0%):
5,742 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $5,885
U.S. Treasury Notes, 5.75%,
10/31/00, market value $5,857)... 5,742
--------
Total Repurchase Agreements 5,742
--------
Total (Cost--$581,508) (a) $585,955
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $588,954.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $5,275
Unrealized depreciation.................................................. (828)
------
Net unrealized appreciation.............................................. $4,447
======
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of market
rates. The rate reflected on the Schedule of Portfolio Investments is the rate
in effect at June 30, 1997.
<TABLE>
<S> <C>
ARM Adjustable Rate Mortgage
CMO Collateralized Mortgage Obligation
REMIC Real Estate Mortgage Investment Conduit
</TABLE>
See notes to financial statements.
20
<PAGE> 450
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (8.4%):
$ 2,081 Advanta Mortgage Loan Trust, Series
1994-4, Class A1, 8.55%,
11/25/12......................... $ 2,105
3,636 Aircraft Lease Portfolio
Securitization Ltd., Series 94-1,
Class A2, 7.15%, 9/15/04......... 3,683
1,968 BHN, Series 1997-1, Class A2,
7.92%, 7/25/09................... 1,984
2,887 EQCC Home Equity Loan Trust,
1996-3, Class A3, 6.20%,
7/15/05.......................... 2,892
6,000 EQCC Home Equity Loan Trust, Series
1996-4, Class A6, 6.88%,
7/15/14.......................... 5,980
4,000 Ford Motor Credit Auto Loan Master,
1995-1, Class A, 6.50%,
8/15/02.......................... 3,998
4,000 NAL 97-2, Class A, 7.75%,
12/15/02......................... 3,996
6,080 NAL, Series 96-4, 6.90%,
12/15/00......................... 6,045
4,000 Team Fleet Financing Corp., Series
97-1, Class A, 7.35%, 5/15/03.... 4,058
1,115 UCFC Home Equity Loan, Series
1994-A, Class A2, 5.53%,
5/10/09.......................... 1,113
3,741 Union Acceptance Corp., Series
1995-D, 6.03%, 1/7/03............ 3,738
801 Union Federal Savings Bank Trust,
6.43%, 7/10/00................... 803
6,000 World Financial Network Credit
Card, Series 96-1, Class A,
6.70%, 2/15/04................... 6,033
--------
Total Asset Backed Securities 46,428
--------
COMMERCIAL PAPER (1.8%):
Banking, Finance & Insurance (1.8%):
10,000 Nissan Capital America, 5.81%,
7/21/97.......................... 9,966
--------
Total Commercial Paper 9,966
--------
CORPORATE BONDS (17.7%):
Banking, Finance & Insurance (8.1%):
5,000 Bankers' Trust, 7.25%, 1/15/03..... 5,063
3,000 First Hawaiian, Inc., 6.25%,
8/15/00.......................... 2,963
1,000 Ford Motor Credit Corp., 6.63%,
6/30/03.......................... 990
10,000 Goldman Sachs Group, 6.38%,
6/15/00.......................... 9,923
5,000 Greenwich Capital, 7.04%, 12/13/99,
Private Placement................ 4,991
5,000 Lehman Brothers Holdings, 8.88%,
3/1/02........................... 5,363
3,000 Lehman Brothers Holdings, Inc.,
7.25%, 4/15/03................... 3,019
3,000 Lehman Brothers, Inc., 9.88%,
10/15/00......................... 3,266
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
$ 4,000 Liberty Mutual Insurance, 8.20%,
5/4/07........................... $ 4,235
5,000 Metropolitan Life, 7.70%,
11/1/15.......................... 4,975
--------
44,788
--------
Industrial Goods & Services (2.7%):
2,000 Dayton Hudson Corp., 7.50%,
3/1/99........................... 2,038
5,000 Excel Paralubes Funding, 7.13%,
11/1/11.......................... 4,974
2,419 Kern River Fund, 6.42%,
3/31/01 (b)...................... 2,390
2,000 Limited, Inc., 8.88%, 8/15/99...... 2,085
600 Lockheed Martin Corp., 9.38%,
10/15/99......................... 638
2,500 Union Oil Co., 7.24%, 4/1/99....... 2,541
--------
14,666
--------
Real Estate (1.3%):
2,000 Colonial Realty Properties, 7.50%,
7/15/01.......................... 2,018
5,000 Meditrust, 7.60%, 7/15/01.......... 5,050
--------
7,068
--------
Utilities (0.5%):
3,000 D.R. Investments, 7.10%, 5/15/02... 3,023
--------
Yankee & Eurodollar (5.1%):
2,000 Dao Heng Bank, 7.75%, 1/24/07,
144A............................. 2,005
2,000 Hanson Overseas, 6.75%, 9/15/05.... 1,958
5,000 Kingdom of Thailand, 7.75%,
4/15/07 (b)...................... 5,113
500 Nippon Telephone & Telegraph,
9.50%, 7/27/98................... 518
4,000 Peoples Republic of China, 6.63%,
1/15/03 (b)...................... 3,920
3,000 Ras Laffan Gas, 7.63%, 9/15/06,
144A............................. 3,056
5,000 Samsung Electronics, 8.50%,
11/1/02.......................... 5,275
6,000 United Mexican States, 7.88%,
8/6/01*.......................... 6,006
--------
27,851
--------
Total Corporate Bonds 97,396
--------
OTHER MORTGAGE BACKED SECURITIES (5.5%):
4,000 Equitable, Series 174, Class A1,
7.24%, 5/15/06, Private
Placement........................ 4,076
3,413 Independent National Mortgage
Corp., Series 1995-S, Class A1,
7.10%, 1/15/26................... 3,416
2,000 J.P. Morgan & Co., Inc., Series
1997, Class C4, 7.47%,
12/26/28......................... 2,043
</TABLE>
Continued
21
<PAGE> 451
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
OTHER MORTGAGE BACKED SECURITIES, CONTINUED:
$ 6,000 Kidder Peabody Acceptance Corp.,
Series 1994-C2, Class A, 7.18%,
10/1/05.......................... $ 6,096
2,000 Merrill Lynch Mortgage, Series
1996-C2, Class B, 6.96%,
11/21/28......................... 1,976
58 Morgan Stanley Mortgage Trust,
Series Y, Class 3, 8.95%,
3/1/16........................... 59
4,000 Mortgage Capital Funding Inc.,
Series 1996-MC2, Class A3, 7.08%,
9/20/06.......................... 3,986
3,601 Prudential Home Mortgage
Securities, 6.50%, 5/25/00....... 3,561
5,250 Wells Fargo Capital Markets, Series
96-1, Class A1, 6.56%,
12/29/05......................... 5,171
--------
Total Other Mortgage Backed Securities 30,384
--------
U.S. GOVERNMENT AGENCY MORTGAGES (35.5%):
Federal Home Loan Mortgage Corp. (12.0%):
2,000 7.00%, 6/15/06, Series #1457-PH,
CMO.............................. 1,977
62 8.00%, 4/1/07, Pool #160022........ 64
1,016 7.50%, 8/1/08, Gold Pool #G10117... 1,032
9,063 6.00%, 12/15/08, Series 1624,
CMO.............................. 8,233
2,141 8.50%, 1/1/10, Gold Pool #E00356... 2,215
4,390 8.50%, 1/1/10, Gold Pool #G10305... 4,541
248 7.00%, 8/1/10, Gold Pool #E20187... 249
3,877 7.00%, 9/1/10, Gold Pool #E00393... 3,889
3,695 7.50%, 7/1/11, Gold Pool #E20253... 3,752
305 7.25%, 4/15/18, Series 1254 F,
CMO.............................. 305
8,000 8.00%, 2/15/20, Gold Series
#1770-PE, CMO.................... 8,253
3,000 6.00%, 4/15/20, Series #1534-F,
CMO.............................. 2,918
690 8.00%, 7/1/20, Gold Pool #A01047... 714
3,000 6.50%, 10/15/21, Series #1590-GA,
CMO.............................. 2,937
32 7.00%, 4/1/22, Pool #D17544........ 32
2,987 8.00%, 8/1/24, Pool #G00245........ 3,068
2,872 8.00%, 11/1/24, Gold Pool
#C00376.......................... 2,950
4,270 7.50%, 8/1/25, Gold Pool #C00414... 4,294
3,803 7.00%, 4/1/26, Pool #C00452........ 3,739
4,184 6.98%, 7/1/26, Pool #785618........ 4,171
7,038 7.50%, 1/15/27, Series 1927, CMO... 7,046
--------
66,379
--------
Federal National Mortgage Assoc. (8.3%):
13 6.50%, 12/1/02, Pool #6345......... 13
1,849 8.00%, 9/25/04, Series 1991-155G... 1,890
2,000 6.75%, 12/25/04, Series 1993-6C,
CMO.............................. 2,003
767 7.00%, 1/1/07, Pool #145771........ 765
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 424 7.50%, 11/1/09, Pool #158.......... $ 428
2,863 7.00%, 6/1/10, Pool #312903........ 2,874
4,710 6.50%, 12/1/10, Pool #322598....... 4,623
1,866 6.50%, 4/1/11, Pool #337903........ 1,832
270 7.50%, 5/1/14, Pool #57930......... 274
156 7.00%, 4/1/17, Pool #44696......... 155
680 7.95%, 8/25/19, Series 1990-14,
CMO.............................. 691
117 8.00%, 3/1/21, Pool #70825......... 121
3,331 7.50%, 11/1/22, Pool #189190....... 3,351
2,303 8.00%, 5/1/24, Pool #250066........ 2,363
4,683 8.50%, 7/1/24, Pool #250103........ 4,876
2,872 7.50%, 10/1/24, Pool #303031....... 2,889
1,140 8.50%, 5/1/25, Pool #308499........ 1,186
893 7.50%, 5/1/25, Pool #311810........ 897
337 7.50%, 5/1/25, Pool #293928........ 338
1,679 8.50%, 6/1/25, Pool #315277........ 1,746
3,568 7.00%, 7/1/25, Pool #312931........ 3,506
3,574 7.00%, 7/1/25, Pool #290387........ 3,512
5,412 7.13%, 6/1/26, Pool #341503........ 5,473
--------
45,806
--------
Government National Mortgage Assoc. (15.2%):
2 10.50%, 2/15/98, Pool #59539....... 2
4 10.50%, 7/15/98, Pool #069629...... 4
8 11.00%, 9/15/98, Pool #101670...... 8
1 10.50%, 9/15/98, Pool #103573...... 1
9 11.00%, 6/15/99, Pool #110948...... 9
6 11.00%, 3/15/00, Pool #123750...... 6
7 10.00%, 12/15/00, Pool #136214..... 7
59 10.00%, 1/15/01, Pool #145167...... 63
58 10.00%, 1/15/01, Pool #145328...... 61
19 9.00%, 6/15/01, Pool #166985....... 20
6 9.00%, 6/15/01, Pool #161443....... 6
2 9.00%, 6/15/01, Pool #164431....... 2
6 8.50%, 6/15/01, Pool #162447....... 6
56 8.50%, 6/15/01, Pool #137056....... 58
14 9.00%, 7/15/01, Pool #155822....... 15
52 9.00%, 8/15/01, Pool #173460....... 55
68 8.50%, 8/15/01, Pool #164207....... 71
8 9.00%, 9/15/01, Pool #177121....... 8
5 9.00%, 10/15/01, Pool #177634...... 5
82 9.00%, 10/15/01, Pool #179852...... 85
8 9.00%, 10/15/01, Pool #185596...... 9
11 9.00%, 11/15/01, Pool #174365...... 12
101 9.00%, 11/15/01, Pool #191819...... 106
4 8.50%, 11/15/01, Pool #183462...... 4
53 8.50%, 12/15/01, Pool #199182...... 55
49 8.50%, 12/15/01, Pool #199837...... 51
13 8.50%, 12/15/01, Pool #182959...... 13
13 9.00%, 1/15/02, Pool #205001....... 14
76 8.00%, 3/15/02, Pool #205933....... 78
</TABLE>
Continued
22
<PAGE> 452
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 57 8.00%, 3/15/02, Pool #210065....... $ 59
60 8.50%, 5/15/02, Pool #213776....... 62
70 8.00%, 5/15/02, Pool #180296....... 72
38 8.00%, 5/15/02, Pool #203042....... 39
46 9.00%, 8/15/02, Pool #232424....... 48
74 9.00%, 10/15/02, Pool #246307...... 78
12 9.00%, 11/15/02, Pool #235553...... 12
8 9.00%, 6/15/03, Pool #247863....... 9
48 8.50%, 9/15/04, Pool #274390....... 49
100 9.00%, 10/15/04, Pool #281655...... 105
69 9.00%, 10/15/04, Pool #229506...... 72
64 8.50%, 10/15/04, Pool #277469...... 66
101 8.50%, 11/15/04, Pool #253471...... 105
89 9.00%, 5/15/05, Pool #288771....... 94
34 9.00%, 6/15/05, Pool #283904....... 35
126 9.00%, 8/15/05, Pool #297031....... 132
68 9.50%, 10/15/05, Pool #291846...... 72
15 9.00%, 10/15/05, Pool #292589...... 16
52 9.00%, 11/15/05, Pool #299161...... 54
87 9.00%, 11/15/05, Pool #292610...... 91
72 9.00%, 12/15/05, Pool #299569...... 76
93 8.50%, 4/15/06, Pool #307487....... 97
31 8.00%, 10/15/06, Pool #11503....... 32
90 8.00%, 1/15/07, Pool #14709........ 93
28 7.50%, 4/15/07, Pool #16991........ 28
270 7.50%, 5/15/07, Pool #329528....... 276
78 7.50%, 7/15/07, Pool #17316........ 79
22 9.00%, 1/15/09, Pool #26076........ 24
129 9.00%, 4/15/09, Pool #30352........ 138
99 8.00%, 5/15/09, Pool #385676....... 103
4,777 6.50%, 7/15/09, Pool #780316....... 4,739
25 8.00%, 8/15/09, Pool #372143....... 26
39 9.50%, 10/15/09, Pool #36582....... 42
624 8.00%, 10/15/09, Pool #380639...... 644
12 11.00%, 2/15/10, Pool #38993....... 14
1,527 7.50%, 2/15/12, Pool# 393363....... 1,556
1,473 7.50%, 3/15/12, Pool #441145....... 1,500
1,953 7.50%, 3/15/12, Pool #399163....... 1,989
5 12.00%, 1/15/15, Pool #112920...... 6
78 9.00%, 8/15/16, Pool #164502....... 83
43 9.50%, 9/15/16, Pool #158201....... 47
20 9.00%, 9/15/16, Pool #175362....... 21
23 9.00%, 9/15/16, Pool #168987....... 25
57 9.00%, 9/15/16, Pool #179044....... 62
65 9.00%, 12/15/16, Pool #198652...... 69
60 9.50%, 1/15/17, Pool #185619....... 65
165 8.50%, 1/15/17, Pool #203625....... 174
39 9.00%, 3/15/17, Pool #180330....... 42
9 8.50%, 3/15/17, Pool #196700....... 10
214 8.50%, 5/15/17, Pool #217536....... 226
10 8.50%, 6/15/17, Pool #188545....... 11
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 2,815 8.50%, 11/15/17, Pool #780086...... $ 2,936
195 9.00%, 7/15/18, Pool #226769....... 209
10 9.50%, 9/15/18, Pool #258627....... 11
42 9.50%, 12/15/18, Pool #229531...... 46
56 9.50%, 10/15/19, Pool #279630...... 61
77 9.00%, 11/15/19, Pool #279649...... 83
138 9.50%, 2/15/20, Pool #281655....... 150
49 9.00%, 2/15/20, Pool #286315....... 53
68 9.50%, 9/15/20, Pool #292918....... 74
71 9.00%, 7/15/21, Pool #311256....... 75
217 8.00%, 4/15/22, Pool #325461....... 223
266 8.00%, 5/15/22, Pool #317346....... 273
112 8.00%, 5/15/22, Pool #320675....... 115
16 8.00%, 5/15/22, Pool #317358....... 17
2,976 8.00%, 7/15/22, Pool #426612....... 3,047
433 8.00%, 7/15/22, Pool #183670....... 445
515 7.50%, 8/15/22, Pool #333881....... 519
1,794 7.00%, 8/15/23, Pool #352108....... 1,771
7,117 7.00%, 9/15/23, Pool #363030....... 7,026
2,516 7.00%, 11/15/23, Pool #352022...... 2,485
11,932 7.00%, 2/15/24, Pool #371281....... 11,783
3,924 9.00% 11/15/24, Pool #780029....... 4,211
1,942 7.50%, 1/15/26, Pool #416874....... 1,952
2,226 7.00%, 1/15/26, Pool #421081....... 2,192
2,592 7.00%, 1/15/26, Pool #420653....... 2,551
1,949 7.50%, 3/15/26, Pool #422292....... 1,959
2,886 7.50%, 4/15/26, Pool #426059....... 2,899
2,893 8.00%, 7/15/26, Pool #428509....... 2,962
2,966 7.50%, 11/15/26, Pool #442119...... 2,978
10,000 7.50%, 30 Year, TBA................ 10,016
6,054 7.50%, 5/20/27, Pool #2432......... 6,046
--------
83,569
--------
Total U.S. Government Agency Mortgages 195,754
--------
U.S. TREASURY OBLIGATIONS (29.5%):
U.S. Treasury Bonds (7.3%):
3,000 10.75%, 5/15/03.................... 3,623
7,000 8.75%, 11/15/08.................... 7,767
4,000 7.50%, 11/15/16.................... 4,276
3,000 8.75%, 5/15/17 (b)................. 3,610
16,000 8.13%, 8/15/19 (b)................. 18,264
3,000 6.25%, 8/15/23 (b)................. 2,779
--------
40,319
--------
U.S. Treasury Inflation Protected Bonds (2.1%):
12,133 3.38%, 1/15/07 (b)................. 11,845
--------
U.S. Treasury Notes (19.6%):
7,000 7.25%, 2/15/98 (b)................. 7,065
5,000 5.13%, 4/30/98 (b)................. 4,976
5,000 8.25%, 7/15/98 (b)................. 5,120
4,000 4.75%, 8/31/98 (b)................. 3,950
2,500 7.13%, 10/15/98.................... 2,537
</TABLE>
Continued
23
<PAGE> 453
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Notes, continued:
$ 3,000 8.88%, 11/15/98.................... $ 3,113
1,500 6.88%, 8/31/99..................... 1,523
11,500 7.50%, 10/31/99 (b)................ 11,826
5,000 7.75%, 1/31/00(b).................. 5,182
3,000 7.13%, 2/29/00 (b)................. 3,066
5,000 7.75%, 2/15/01 (b)................. 5,229
2,000 7.50%, 11/15/01 (b)................ 2,085
10,000 5.75%, 8/15/03 (b)................. 9,660
11,000 7.25%, 5/15/04 (b)................. 11,475
4,000 7.88%, 11/15/04 (b)................ 4,315
9,000 6.50%, 5/15/05 (b)................. 8,983
12,000 5.88%, 11/15/05 (b)................ 11,483
6,000 8.00%, 8/15/99 (b)................. 6,221
--------
107,809
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Strips (0.5%):
$ 4,000 2/15/04............................ $ 2,622
--------
Total U.S. Treasury Obligations 162,595
--------
REPURCHASE AGREEMENTS (2.8%):
15,554 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $15,942
U.S. Treasury Note, 5.75%,
10/31/00, market value
$15,866)......................... 15,554
--------
Total Repurchase Agreements 15,554
--------
Total (Cost--$555,733) (a) $558,077
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $551,338.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $ 6,175
Unrealized depreciation.................................................. (3,831)
-------
Net unrealized appreciation.............................................. $ 2,344
=======
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of market
rates. The rate reflected on the Schedule of Portfolio Investments is the rate
in effect at June 30, 1997.
<TABLE>
<S> <C>
CMO Collateralized Mortgage Obligation
TBA To be announced
</TABLE>
See notes to financial statements.
24
<PAGE> 454
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<S> <C> <C>
U.S. GOVERNMENT AGENCY MORTGAGES (79.1%):
Federal Home Loan Mortgage Corp. (30.4%):
$ 8,953 6.00%, 4/15/01, Gold Balloon,
Pool #G50347..................... $ 8,793
7,180 8.00%, 11/1/24, Gold Pool
#C00376.......................... 7,375
5,649 7.50%, 4/1/09, Gold Pool #E00315... 5,767
16,500 6.50%, 9/15/09, Series 1838 G,
CMO.............................. 15,958
4,683 8.50%, 1/1/10, Gold Pool #G10305... 4,844
10,000 6.50%, 15 Year, Gold............... 9,794
20,000 6.50%, 7/1/12...................... 19,589
311 9.00%, 10/1/17, Gold Pool
#A00756.......................... 331
220 9.00%, 4/1/18, Gold Pool #A01143... 234
1,220 7.25%, 4/15/18, Series 1254 F,
CMO.............................. 1,218
22 9.00%, 8/1/20, Gold Pool #D38661... 24
64 9.00%, 10/1/20, Gold Pool
#A01134.......................... 68
73 9.00%, 1/1/21, Gold Pool #A00948... 77
59 9.00%, 4/1/21, Gold Pool #D04193... 63
113 9.00%, 6/1/21, Gold Pool #A01017... 121
119 9.00%, 7/1/21, Gold Pool #A01093... 127
68 9.00%, 9/1/21, Gold Pool #D32271... 73
118 9.00%, 11/1/21, Gold Pool
#D11866.......................... 126
53 9.00%, 11/1/21, Gold Pool
#C00078.......................... 56
117 9.00%, 11/1/21, Gold Pool
#D11191.......................... 125
217 9.00%, 5/1/22, Gold Pool #D19203... 231
76 9.00%, 5/1/22, Gold Pool #D19142... 81
10,000 5.50%, 9/15/22, Series 1367-K...... 8,437
4,375 7.00%, 4/15/23, Pool #348645....... 4,314
6,977 10.00%, 10/15/23, Series 1591 E,
CMO.............................. 7,769
17,851 5.00%, 11/15/23, Series 1686 PG,
CMO.............................. 16,701
4,909 8.50%, 5/1/24, Gold Pool #G00229... 5,158
4,487 8.50%, 7/1/24, Gold Pool #C00354... 4,680
7,646 7.50%, 9/1/24, Gold Pool #D56307... 7,703
2,981 7.50%, 5/1/25, Gold Pool #D59996... 2,999
7,461 8.00%, 11/1/24, Gold Pool
#C00376.......................... 7,652
5,411 7.50%, 6/1/25, Gold Pool #C80321... 5,444
4,270 7.50%, 8/1/25, Gold Pool #C00414... 4,294
4,268 7.50%, 8/1/25, Gold Pool #C80334... 4,290
4,602 7.00%, 8/1/25, Gold Pool #C00418... 4,530
4,227 8.00%, 9/1/25, Gold Pool #D63705... 4,331
4,548 7.00%, 9/1/25, Gold Pool #D63303... 4,476
8,844 7.50%, 10/1/25, Gold Pool
#C80349.......................... 8,888
9,429 6.50%, 2/1/26, Gold Pool #D68098... 9,051
9,574 6.50%, 3/1/26, Gold Pool #G00453... 9,191
12,528 7.00%, 4/1/26, Gold Pool #D69810... 12,313
11,532 7.00%, 4/1/26, Gold Pool #D69811... 11,334
4,964 6.50%, 6/1/26, Pool #250575........ 4,754
5,889 7.00%, 3/1/27, Pool #D78691........ 5,782
4,111 7.00%, 4/1/27, Pool #C00512........ 4,037
--------
233,203
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<S> <C> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc. (23.8%):
$10,338 6.00%, 3/1/01, Pool #50783......... $ 10,038
9,347 7.00%, 4/1/03, 7 Year Balloon...... 9,382
1,448 7.50%, 5/1/03, Pool #347175........ 1,471
2,976 7.50%, 7/1/03, Pool #250656........ 3,024
5,000 7.86%, 5/25/04, Callable 5/25/99
@100............................. 5,052
7,035 7.00%, 7/17/05, Series 97-26 Gd.... 7,099
4,196 7.00%, 4/1/08, Pool #211750........ 4,211
8,000 6.00%, 6/25/09, Series 1994-86 PJ,
CMO.............................. 7,472
3,999 7.00%, 7/1/10, Pool #250326........ 4,014
2,532 6.50%, 12/1/10, Pool #332301....... 2,486
14,223 6.00%, 3/1/11, Pool #340683........ 13,731
6,551 6.25%, 2/25/13, Series 1993-2 PC,
CMO.............................. 6,530
3,596 6.35%, 8/25/13, Series 1993-225B
VG, CMO.......................... 3,481
4,216 7.50%, 6/1/14, Pool #250081........ 4,241
3,457 7.50%, 7/1/14, Pool #250082........ 3,477
148 10.00%, 10/1/16, Pool #70110....... 163
8,015 10.00%, 9/1/17, Pool #303969....... 8,747
450 10.00%, 10/1/19, Pool #231675...... 493
10,000 7.00%, 5/25/20, Pool #1990-57...... 9,836
282 10.00%, 7/1/20, Pool #050318....... 309
5,584 6.50%, 5/25/21, Series 1992-205 K,
CMO.............................. 5,410
5,000 7.00%, 9/25/21, Series G92-64 K,
CMO.............................. 4,984
637 10.00%, 11/1/21, Pool #208374...... 698
716 10.00%, 11/1/21, Pool #208372...... 785
5,000 6.55%, 12/25/21, Pool #1993-137 PH,
CMO.............................. 4,872
10,785 6.50%, 2/17/23, Series #G94-12 C,
CMO.............................. 10,079
5,000 6.50%, 5/25/23, Series 1994-110 H,
CMO.............................. 4,825
9,094 6.35%, 12/25/23, Series 1994-43 PJ,
CMO.............................. 8,551
5,042 7.00%, 1/25/24, Series 1994-62 PJ,
CMO.............................. 4,802
8,439 7.00%, 2/1/24, Pool #190257........ 8,302
3,279 9.00%, 12/1/24, Pool #353898....... 3,460
4,274 7.50%, 5/1/25, Pool #300064........ 4,293
3,767 7.50%, 6/1/25, Pool #312684........ 3,783
4,064 7.50%, 6/1/25, Pool #312899........ 4,082
4,524 7.00%, 8/1/25, Pool #315500........ 4,445
964 7.50%, 9/1/25, Pool #324749........ 967
3,907 7.50%, 9/1/25, Pool #322899........ 3,921
--------
183,516
--------
</TABLE>
Continued
25
<PAGE> 455
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc. (24.9%):
$ 22 10.00%, 9/15/00, Pool #138814...... $ 23
9 10.00%, 12/15/00, Pool #136214..... 10
6 10.00%, 1/15/01, Pool #145144...... 6
50 8.50%, 6/15/01, Pool #166491....... 52
4 8.50%, 7/15/01, Pool #161997....... 4
53 9.50%, 9/15/01, Pool #180786....... 57
6 9.00%, 9/15/01, Pool #174330....... 7
74 9.00%, 9/15/01, Pool #166928....... 77
19 9.50%, 11/15/01, Pool #182995...... 20
85 8.50%, 11/15/01, Pool #179383...... 88
96 9.00%, 12/15/01, Pool #187723...... 101
49 8.50%, 12/15/01, Pool #199837...... 51
76 8.00%, 3/15/02, Pool #205933....... 78
218 6.50%, 10/15/23, Pool #345391...... 210
215 9.00%, 5/15/03, Pool #154134....... 225
138 9.00%, 6/15/05, Pool #283904....... 144
65 9.00%, 8/15/05, Pool #291836....... 68
56 9.00%, 9/15/05, Pool #292898....... 58
25 9.00%, 9/15/05, Pool #295227....... 26
65 8.00%, 7/15/06, Pool #11337........ 67
33 7.50%, 7/15/07, Pool #17316........ 34
74 8.00%, 8/15/07, Pool #18539........ 76
82 8.00%, 8/15/07, Pool #18677........ 85
302 7.50%, 12/15/07, Pool #338189...... 308
56 9.00%, 11/15/08, Pool #27932....... 60
97 9.00%, 4/15/09, Pool #30352........ 104
21 9.00%, 5/15/09, Pool #32214........ 23
8 9.50%, 7/15/09, Pool #34487........ 9
150 9.50%, 9/15/09, Pool #34878........ 163
41 9.50%, 10/15/09, Pool #36804....... 44
31 11.00%, 11/15/09, Pool #37615...... 35
1 12.00%, 4/15/15, Pool #125262...... 2
13 11.00%, 6/15/15, Pool #130125...... 14
81 9.00%, 5/15/16, Pool #149877....... 87
107 9.00%, 6/15/16, Pool #166130....... 115
13 9.50%, 7/15/16, Pool #166772....... 14
107 9.00%, 7/15/16, Pool #158921....... 115
76 9.50%, 8/15/16, Pool #177531....... 82
162 9.00%, 9/15/16, Pool #179044....... 174
23 9.50%, 1/15/17, Pool #185619....... 25
346 9.00%, 2/15/17, Pool #195058....... 372
260 9.00%, 6/15/17, Pool #219079....... 279
43 9.50%, 8/15/17, Pool #224015....... 47
79 9.50%, 8/15/17, Pool #218841....... 85
29 9.00%, 8/15/17, Pool #225825....... 31
104 9.00%, 6/15/18, Pool #238161....... 111
79 9.50%, 8/15/18, Pool #248390....... 86
20 9.00%, 10/15/18, Pool #253188...... 21
128 9.50%, 12/15/18, Pool #263400...... 139
3 9.00%, 10/15/19, Pool #267676...... 3
59 9.00%, 11/15/19, Pool #162768...... 64
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 69 9.00%, 1/15/20, Pool #283138....... $ 74
76 9.00%, 2/15/20, Pool #276157....... 82
124 9.00%, 3/15/20, Pool #285283....... 133
68 9.50%, 9/15/20, Pool #292918....... 74
86 9.50%, 12/15/20, Pool #291865...... 93
245 9.00%, 6/15/21, Pool #307120....... 262
15,886 9.00%, 8/15/21, Pool #306081....... 16,968
4,702 9.00%, 12/15/21, Pool #780284...... 4,987
37 7.50%, 2/15/22, Pool #324025....... 37
611 8.00%, 7/15/22, Pool #321560....... 628
820 7.50%, 8/15/22, Pool #337141....... 826
39 7.00%, 10/15/22, Pool #337175...... 38
214 7.00%, 11/15/22, Pool #323008...... 211
40 7.00%, 12/15/22, Pool #339969...... 39
237 7.00%, 1/15/23, Pool #346214....... 234
41 7.00%, 1/15/23, Pool #321675....... 40
394 7.00%, 1/15/23, Pool #342248....... 389
384 7.00%, 1/15/23, Pool #341536....... 379
479 7.00%, 1/15/23, Pool #332022....... 473
51 7.00%, 3/15/23, Pool #350110....... 51
788 7.00%, 5/15/23, Pool #346572....... 778
769 7.00%, 5/15/23, Pool #351041....... 760
63 7.00%, 5/15/23, Pool #338005....... 62
625 7.00%, 5/15/23, Pool #221604....... 617
325 6.50%, 5/15/23, Pool #343208....... 313
740 7.00%, 5/15/23, Pool #342348....... 731
843 7.00%, 7/15/23, Pool #362982....... 832
401 6.50%, 6/15/23, Pool #348677....... 387
97 6.50%, 6/15/23, Pool #346624....... 94
59 6.50%, 6/15/23, Pool #349788....... 57
59 6.50%, 6/15/23, Pool #358250....... 57
347 7.00%, 7/15/23, Pool #353569....... 342
844 7.00%, 7/15/23, Pool #346673....... 833
31 7.00%, 7/15/23, Pool #354538....... 31
25 7.00%, 7/15/23, Pool #350709....... 24
455 7.00%, 7/15/23, Pool #360889....... 449
262 7.00%, 7/15/23, Pool #325977....... 259
181 7.00%, 7/15/23, Pool #357782....... 179
479 7.00%, 7/15/23, Pool #358382....... 473
595 7.00%, 7/15/23, Pool #360697....... 587
269 6.50%, 7/15/23, Pool #322200....... 259
326 6.50%, 8/15/23, Pool #344505....... 314
633 6.50%, 8/15/23, Pool #356717....... 610
204 6.50%, 8/15/23, Pool #359027....... 197
153 6.50%, 8/15/23, Pool #360713....... 148
288 6.50%, 8/15/23, Pool #360738....... 277
448 6.50%, 8/15/23, Pool #353137....... 432
770 6.50%, 9/15/23, Pool #345375....... 742
50 6.50%, 9/15/23, Pool #339041....... 48
3,876 8.00%, 10/15/23, Pool #354681...... 3,983
396 6.00%, 10/15/23, Pool #345389...... 371
</TABLE>
Continued
26
<PAGE> 456
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 34 6.00%, 10/15/23, Pool #370006...... $ 32
458 6.00%, 10/15/23, Pool #364717...... 429
637 6.50%, 11/15/23, Pool #369356...... 614
20 6.50%, 11/15/23, Pool #370927...... 19
151 6.50%, 12/15/23, Pool #349944...... 145
977 6.50%, 12/15/23, Pool #349265...... 942
34 6.50%, 12/15/23, Pool #370289...... 33
640 6.50%, 12/15/23, Pool #369830...... 617
110 6.50%, 12/15/23, Pool #365740...... 106
730 6.50%, 1/15/24, Pool #379127....... 703
354 6.50%, 2/15/24, Pool #389200....... 341
1,187 6.50%, 2/15/24, Pool #362341....... 1,143
305 6.50%, 2/15/24, Pool #370338....... 294
22,156 6.50%, 2/15/24, Pool #354747....... 21,337
168 6.50%, 2/15/24, Pool #380818....... 161
348 6.50%, 2/15/24, Pool #371999....... 335
91 7.50%, 6/15/24, Pool #389827....... 91
607 7.50%, 6/15/24, Pool #388747....... 612
3,864 8.00%, 9/15/24, Pool #403212....... 3,971
425 8.00%, 9/15/24, Pool #393908....... 437
9,811 9.00% 11/15/24, Pool #780029....... 10,529
4,873 7.50%, 3/15/26, Pool #422308....... 4,897
6,915 8.00% 5/15/26, Pool #416233........ 7,079
12,252 8.00%, 5/15/26, Pool #422690....... 12,543
20,000 6.50%, 30 Year, TBA................ 19,144
9,708 8.00%, 7/15/26, Pool #423877....... 9,939
9,730 8.00%, 7/15/26, Pool #412644....... 9,961
14,773 8.00%, 12/20/26, G2 Pool #2344..... 15,054
9,999 7.50%, 6/30/26..................... 9,987
5,000 6.50%, 30 Year, TBA................ 5,058
10,000 6.00%, 30 Year, TBA................ 10,013
--------
192,009
--------
Total U.S. Government Agency Mortgages 608,728
--------
U.S. GOVERNMENT AGENCY SECURITIES (13.3%):
Federal Farm Credit Bank (0.7%):
5,000 6.88%, 5/1/00...................... 5,065
--------
Federal Home Loan Bank (1.6%):
2,000 9.25%, 11/25/98.................... 2,080
2,000 9.30%, 1/25/99..................... 2,094
3,000 8.60%, 6/25/99..................... 3,135
5,000 6.27%, 1/14/04 (b)................. 4,836
--------
12,145
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES, CONTINUED:
Federal Home Loan Mortgage Corp. (0.9%):
$ 2,000 6.44%, 1/28/00..................... $ 2,004
4,500 7.13%, 11/18/02.................... 4,614
--------
6,618
--------
Federal National Mortgage Assoc. (5.3%):
2,000 8.80%, 7/25/97..................... 2,005
4,000 8.70%, 6/10/99..................... 4,179
3,000 8.90%, 6/12/00..................... 3,195
3,000 6.20%, 11/12/03.................... 2,897
15,000 7.16%, 5/11/05..................... 15,340
10,000 5.88%, 2/2/06 (b).................. 9,430
5,000 6.67%, 2/6/06, Callable 2/6/98
@100............................. 4,888
--------
41,934
--------
Resolution Funding Corp. (1.6%):
50,000 Principal Strip, 7/15/20........... 9,909
15,000 Principal Strip, 4/15/28........... 1,847
5,000 Principal Strip, 4/15/30........... 537
--------
12,293
--------
Tennessee Valley Authority (3.2%):
25,000 6.24%, 7/15/45, Putable on 7/15/01
@ 100............................ 24,781
--------
Total U.S. Government Agency Securities 102,836
--------
U.S. TREASURY OBLIGATIONS (6.4%):
U.S. Treasury Bonds (3.9%):
15,000 8.13%, 8/15/19 (b)................. 17,123
15,000 6.00%, 2/15/26..................... 13,425
--------
30,548
--------
U.S. Treasury Notes (1.0%):
7,500 7.50%, 11/15/01.................... 7,818
--------
U.S. Treasury Strips (1.5%):
5,000 8/15/02 (b)........................ 3,623
50,000 2/15/25 (b)........................ 7,718
--------
11,341
--------
Total U.S. Treasury Obligations 49,707
--------
</TABLE>
Continued
27
<PAGE> 457
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
REPURCHASE AGREEMENTS (9.3%):
$71,674 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $79,388
various U.S. Government
Securities,
5.50%-9.00%, 1/1/00-6/20/27,
market value $73,724).......... $ 71,674
--------
Total Repurchase Agreements................... 71,674
--------
Total (Cost--$826,948) (a) $832,945
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $770,879.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $51. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $10,092
Unrealized depreciation.................................................. (4,146)
-------
Net unrealized appreciation.............................................. $ 5,946
=======
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
CMO Collateralized Mortgage Obligation
TBA To be announced
See notes to financial statements.
28
<PAGE> 458
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (9.0%):
$ 5,000 Advanta Mortgage Loan Trust, 97-2,
Class A4, 7.60%, 6/25/27......... $ 5,048
7,500 Advanta Mortgage Loan Trust, Series
1995-1, Class A5, 8.32%,
12/25/19......................... 7,778
5,817 Aircraft Lease Portfolio
Securitization Ltd., Series 94-1,
Class A2, 7.15%, 9/15/04......... 5,892
2,952 BHN, Series 1997-1, Class A2,
7.92%, 7/25/09................... 2,976
4,980 Federal Express, Series A-1, 7.85%,
6/1/24........................... 5,111
5,000 ML CBO 1996 PM1, 7.87%,
12/17/06......................... 4,871
3,427 NAL 96, Class A, 7.10%, 3/15/01,
Private Placement, 144A.......... 3,416
2,027 NAL, Series 96-4, 6.90%,
12/15/00......................... 2,015
11,262 Northwest Air, Series 2, Class A,
9.25%, 6/21/14................... 12,782
4,692 Northwest Air, Trust, Series B,
10.23%, 6/21/14.................. 5,255
5,701 Olympic Automobile Receivables
Trust, Series 1994-B, Class A2,
6.85%, 6/15/01................... 5,751
6,882 Olympic Automobile Receivables
Trust, Series 1995-B, Class A2,
7.35%, 10/15/01.................. 6,999
--------
Total Asset Backed Securities 67,894
--------
CORPORATE BONDS (53.1%):
Banking, Finance & Insurance (16.5%):
9,000 Associates Corp., 8.34%,
11/25/99......................... 9,371
6,000 Associates Corp., 8.15%, 8/1/09.... 6,503
2,000 Bank of Boston, Corp., 9.50%,
8/15/97.......................... 2,009
5,000 BankAmerica Corp., 9.50%, 4/1/01... 5,450
4,000 BCH Cayman Islands, 7.50%,
6/15/05.......................... 4,055
5,000 Bear Stearns Co., 9.13%, 4/15/98... 5,122
5,000 Bear Stearns Co., 8.25%, 2/1/02.... 5,269
5,000 First Chicago Capital Trust, 7.95%,
12/1/26.......................... 4,875
2,000 Fleet Financial Group, Inc., 8.13%,
7/1/04........................... 2,123
3,500 Ford Capital BV, 10.13%,
11/15/00......................... 3,863
1,500 Ford Motor Credit Corp., 6.38%,
10/6/00.......................... 1,493
3,000 General Motors Acceptance Corp.,
8.40%, 10/15/99.................. 3,128
8,000 General Motors Acceptance Corp.,
7.00%, 3/1/00.................... 8,090
10,000 Lehman Brothers Holdings, 8.88%,
3/1/02........................... 10,721
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Banking, Finance & Insurance, continued:
$ 5,000 Lehman Brothers Holdings, 8.80%,
3/1/15........................... $ 5,563
5,000 Lehman Brothers, Inc., 11.63%,
5/15/05.......................... 6,256
6,000 Massachusetts Mutual Life
Insurance, 7.50%, 3/1/24, 144A... 5,858
3,500 MEPC Finance, Inc., 7.50%,
5/1/03........................... 3,557
5,000 Money Store, Inc., 8.05% 4/15/02... 5,081
6,000 Morgan Stanley Group, Inc., 6.13%,
10/1/03.......................... 5,783
4,806 Oslo Seismic Service, 8.28%,
6/1/11, 144A..................... 5,065
5,000 Principal Mutual, 7.88%, 3/1/24.... 4,944
5,000 Security Pacific Corp., 11.00%,
3/1/01........................... 5,688
5,000 Western Banktrust REIT, 7.88%,
2/15/04.......................... 5,125
--------
124,992
--------
Financial Services (3.5%):
2,000 American Health Properties, 7.50%,
1/15/07.......................... 2,028
6,500 Corestates Capital, 8.00%,
12/15/26......................... 6,435
5,000 Cullen Frost Bank Capital Trust,
8.42%, 2/1/27.................... 5,050
3,000 International Lease Finance Corp.,
6.50%, 7/15/97................... 3,001
5,000 MIC Financial Trust, 8.38%,
2/1/27........................... 5,006
5,000 Sun Life, 8.53%, 5/6/27............ 5,056
--------
26,576
--------
Food Products & Services (0.3%):
2,500 RJR Nabisco Corp., 8.75%,
8/15/05.......................... 2,528
--------
Industrial Goods & Services (7.9%):
3,000 Boise Cascade Co., 9.45%,
11/1/09.......................... 3,424
4,000 Comcast Cable, 8.38%, 5/1/07,
144A............................. 4,240
3,000 Comdisco, Inc., 6.05%, 10/31/97.... 3,002
2,500 EES Coke Battery, 7.13%, 4/15/02,
144A............................. 2,518
5,000 Excel Paralubes Funding, 7.13%,
11/1/11.......................... 4,975
2,000 Freeport McMoran, Copper & Gold,
7.50%, 11/15/06.................. 1,995
5,000 General Motors Corp., 9.13%,
7/15/01.......................... 5,413
3,000 Golden State Petroleum, 8.04%,
2/1/19, 144A..................... 3,056
5,000 Hilton Hotels Corp., 7.95%,
4/15/07.......................... 5,131
5,000 Hyundai Semiconductor, 8.63%,
5/15/07.......................... 5,031
4,828 Newmont Mining Co., 8.91%,
1/5/09........................... 5,159
</TABLE>
Continued
29
<PAGE> 459
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Industrial Goods & Services, continued:
$ 2,500 Northrop Grumman, 7.00%, 3/1/06.... $ 2,447
9,000 Penske Truck Leasing, 8.25%,
11/1/99 (b)...................... 9,372
4,000 Tenneco, Inc., 8.20%, 11/15/99..... 4,150
--------
59,913
--------
Real Estate (4.9%):
2,000 Avalon Properties, 7.38%,
9/15/02.......................... 2,018
4,750 Meditrust, 7.77%, 8/16/02.......... 4,833
3,000 Meditrust, 7.82%, 9/10/26.......... 3,090
5,000 Security Capital Pacific Trust,
6.95%, 10/15/02.................. 4,969
2,500 Security Capital Pacific Trust,
7.15%, 10/15/03.................. 2,484
5,000 Spieker Properties, 6.65%,
12/15/00......................... 4,956
4,000 Spieker Properties, 8.00%,
7/19/05.......................... 4,095
8,000 Taubman Realty Group, 7.00%,
10/1/03.......................... 7,810
3,000 Wellsford Residential Property,
7.25%, 8/15/00................... 3,034
--------
37,289
--------
Utilities (2.2%):
7,000 NRG Energy Corp., 7.63%, 2/1/06.... 7,052
5,009 Salton Sea Funding Corp., 6.69%,
5/30/00.......................... 4,997
4,000 Termoemcali, 10.13%, 12/15/14,
144A............................. 4,340
--------
16,389
--------
Yankee & Eurodollar (17.8%):
9,000 Bangkok Bank Public Co. Ltd.,
7.25%, 9/15/05, 144A (b)......... 8,674
10,000 Bank Nagrara Indonesia, 7.63%,
2/5/07........................... 9,875
5,000 BCH Cayman Islands, 8.25%,
6/15/04.......................... 5,281
5,000 Celulosa Arauco, 6.75%, 12/15/03... 4,869
12,548 Centra Gas, 10.65%, 12/1/10,
144A............................. 13,127
5,000 China International Trust &
Investing, 9.00%, 10/15/06 (b)... 5,525
5,000 Citra Marga Finance, 7.25%,
2/20/02.......................... 4,881
5,000 Coca Cola Femsa, 8.95%, 11/1/06.... 5,013
4,000 Dao Heng Bank, 7.75%, 1/24/07,
Private Placement................ 4,010
9,000 Financiera Energy, 9.38%,
6/15/06.......................... 9,675
3,000 Guangdong Enterprises, 8.88%,
5/22/07.......................... 3,086
5,000 Guangdong International, 6.75%,
11/15/03......................... 4,850
6,000 Honam Oil Refinery Co., 7.13%,
10/15/05, 144A................... 5,925
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Yankee & Eurodollar, continued:
$ 2,500 Jasmine Submarine, 8.48%, 5/30/11,
Private Placement................ $ 2,509
2,000 Kansalis-Osake Pankki, 9.75%,
12/15/98......................... 2,098
6,000 Peoples Democratic Republic of
Poland, 3.75%, 10/27/14.......... 5,160
5,000 Peoples Republic of China, 7.75%,
7/5/06........................... 5,175
4,250 Ras Laffan Gas, 7.63%, 9/15/06,
144A............................. 4,330
2,500 Republic of Indonesia, 7.75%,
8/1/06........................... 2,509
5,000 Republic Of South Africa, 8.50%,
6/23/17.......................... 4,950
5,000 Scotland International Finance,
8.80%, 1/27/04, 144A............. 5,419
4,000 Scotland International Finance,
8.85%, 11/1/06, 144A............. 4,400
5,000 Tenaga Nasional Berhad, 7.88%,
6/15/04, 144A.................... 5,225
2,500 Total Access, 8.38% 11/4/06,
144A............................. 2,416
2,500 Yanacocha, 8.40%, 5/15/04.......... 2,538
2,889 Ypf Sociedad Anomima, 7.00%,
10/26/02......................... 2,893
--------
134,413
--------
Total Corporate Bonds 402,100
--------
OTHER MORTGAGED BACKED SECURITIES (0.7%):
5,000 Residential Funding Corp., Series
96-H52, Class A4, 7.55%,
9/25/12.......................... 5,048
--------
Total Other Mortgaged Backed Securities 5,048
--------
U.S. GOVERNMENT AGENCY MORTGAGES (20.6%):
Federal Home Loan Mortgage Corp. (11.3%):
5,000 7.13%, 7/21/99 (b)................. 5,093
18,000 0.00%, 8/15/02..................... 12,939
4,450 7.00%, 6/1/09, Pool #E00313........ 4,471
4,378 7.00%, 2/1/11, Gold Pool #E62602... 4,379
9,052 7.50%, 5/1/11, Pool #E00438........ 9,207
8,285 7.00%, 5/1/11, Gold Pool #E00434... 8,293
7,427 7.00%, 6/1/11, Gold Pool #E64220... 7,434
1,218 7.50%, 6/1/24, Pool #C80161........ 1,227
16,025 7.00%, 9/1/24, Pool #G00271........ 15,790
7,241 7.50%, 10/1/24, Pool #C80245....... 7,295
9,756 7.00%, 12/1/24..................... 9,613
--------
85,741
--------
Federal National Mortgage Assoc. (6.3%):
500 8.15%, 5/11/98..................... 510
9,347 7.00%, 4/1/03, 7 Year Balloon...... 9,382
500 6.53%, 4/10/03..................... 494
</TABLE>
Continued
30
<PAGE> 460
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc., continued
$21,656 8.00%, 12/1/09, Pool #250168....... $ 22,289
2,000 8.20%, 3/10/16..................... 2,206
12,650 7.50%, 9/1/25, Pool #324179........ 12,593
--------
47,474
--------
Government National Mortgage Assoc. (3.0%):
3,434 9.00% 11/15/24, Pool #780029....... 3,685
8,875 7.50%, 7/15/26, Pool #430999....... 8,914
9,900 7.50%, 6/30/26, TBA................ 9,888
--------
22,487
--------
Total U.S. Government Agency Mortgages 155,702
--------
U.S. GOVERNMENT AGENCY SECURITIES (2.2%):
Federal Home Loan Bank (1.3%):
10,000 7.10%, 3/16/98 (b)................. 10,092
--------
Government Trust Certificate (0.3%):
2,285 Government Trust Certificate,
Israel, 9.40%, 5/15/02........... 2,417
--------
Resolution Trust Corp. (0.1%):
1,000 Resolution Trust Corp., 0.00%,
7/15/02.......................... 732
--------
Tennessee Valley Authority (0.5%):
3,200 Tennessee Valley Authority, 8.63%,
11/15/29......................... 3,456
--------
Total U.S. Government Agency Securities 16,697
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS (12.4%):
U.S. Treasury Bonds (9.0%):
$ 3,250 13.38%, 8/15/01.................... $ 4,070
9,600 11.88%, 11/15/03 (b)............... 12,271
14,000 9.00%, 11/15/18.................... 17,313
11,250 8.13%, 8/15/21 (b)................. 12,886
3,000 8.00%, 11/15/21 (b)................ 3,394
17,600 7.13%, 2/15/23 (b)................. 18,136
--------
68,070
--------
U.S. Treasury Notes (3.4%):
15,000 6.25%, 8/31/00 (b)................. 14,998
10,300 6.63%, 6/30/01 (b)................. 10,402
--------
25,400
--------
Total U.S. Treasury Obligations 93,470
--------
REPURCHASE AGREEMENTS (1.1%):
8,469 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $8,680
U.S. Treasury Notes, 5.75%,
10/31/00, market value $8,639)... 8,469
--------
Total Repurchase Agreements 8,469
--------
Total (Cost--$725,490) (a) $749,380
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $755,952.
(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.................................................. $25,110
Unrealized depreciation.................................................. (1,220)
-------
Net unrealized appreciation.............................................. $23,890
=======
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
TBA To be announced
See notes to financial statements.
31
<PAGE> 461
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Treasury & Agency Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY (33.4%):
Federal Farm Credit Bank (6.5%):
$ 7,000 7.16%, 5/15/06..................... $ 7,170
--------
Federal Home Loan Bank (9.1%):
3,800 5.70%, 3/11/99*.................... 3,776
4,300 7.74%, 10/01/03.................... 4,303
2,000 6.26%, 11/26/03.................... 1,939
--------
10,018
--------
Other U.S. Agencies (17.8%):
4,000 Student Loan Marketing Association,
6.29%, 10/20/99.................. 3,995
6,000 Student Loan Marketing Association,
6.00%, 3/5/01.................... 5,894
10,000 Tennessee Valley Authority, 6.13%,
7/15/03.......................... 9,699
--------
19,588
--------
Total U.S. Government Agency 36,776
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS (64.9%):
U.S. Treasury Bonds (9.2%):
$ 8,000 10.75%, 8/15/05.................... $ 10,094
--------
U.S. Treasury Notes (55.7%):
12,500 5.88%, 10/31/98 (b)................ 12,488
25,000 7.75%, 11/30/99.................... 25,864
23,000 6.63%, 6/30/01 (b)................. 23,227
--------
61,579
--------
Total U.S. Treasury Obligations 71,673
--------
INVESTMENT COMPANIES (1.1%):
1,183 The One Group Treasury Only Money
Market Fund, Fiduciary Class..... 1,183
--------
Total Investment Companies 1,183
--------
Total (Cost--$108,064) (a) $109,632
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $110,258.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $1,621
Unrealized depreciation.................................................. (53)
------
Net unrealized appreciation.............................................. $1,568
======
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at June 30, 1997.
See notes to financial statements.
32
<PAGE> 462
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
ULTRA
SHORT- LIMITED VOLATILITY INTERMEDIATE GOVERNMENT INCOME TREASURY &
TERM INCOME BOND BOND BOND BOND AGENCY
FUND FUND FUND FUND FUND FUND
----------- ------------------ ------------ ---------- -------- ----------
(Amounts in Thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value.......... $ 146,382 $580,213 $542,523 $761,271 $740,911 $109,632
Repurchase agreements, at
cost.......................... 17,390 5,742 15,554 71,674 8,469 --
--------- -------- -------- -------- -------- --------
Total (cost $163,219; $581,508;
$555,733; $826,948; $725,490;
$108,064, respectively)....... 163,772 585,955 558,077 832,945 749,380 109,632
Interest receivable............ 776 6,275 6,392 5,966 11,377 1,290
Receivable from brokers for
investments sold.............. 241 14 5 -- 5,009 --
Receivable for capital shares
issued........................ 1,066 11 207 18 14 --
Net receivable for variation
margin on futures contracts... 26 -- -- -- -- --
Deferred organization costs.... 3 -- -- 2 -- 3
Prepaid expenses and other
assets........................ -- 12 1 21 7 2
--------- -------- -------- -------- -------- --------
TOTAL ASSETS................... 165,884 592,267 564,682 838,952 765,787 110,927
--------- -------- -------- -------- -------- --------
LIABILITIES:
Dividends payable.............. 694 3,068 2,981 3,973 4,259 586
Payable to brokers for
investments purchased......... 18,263 -- 10,073 63,696 5,113 --
Payable for capital shares
redeemed...................... -- 3 5 5 25 --
Accrued expenses and other
payables:
Investment advisory fees...... 23 146 149 259 247 18
Administration fees........... -- 83 76 78 105 3
12b-1 fees.................... 7 4 11 16 11 --
Other......................... 23 9 49 46 75 62
--------- -------- -------- -------- -------- --------
TOTAL LIABILITIES.............. 19,010 3,313 13,344 68,073 9,835 669
--------- -------- -------- -------- -------- --------
NET ASSETS:
Capital........................ 150,589 595,935 554,206 786,147 786,479 108,512
Undistributed (distributions in
excess of) net investment
income........................ (201) (246) 69 (101) 288 --
Accumulated undistributed net
realized gains (losses) from
investment and futures
transactions.................. (4,042) (11,182) (5,281) (21,164) (54,705) 178
Net unrealized appreciation
(depreciation) from
investments and futures....... 528 4,447 2,344 5,997 23,890 1,568
--------- -------- -------- -------- -------- --------
Net Assets..................... $ 146,874 $588,954 $551,338 $770,879 $755,952 $110,258
========= ======== ======== ======== ======== ========
Net Assets
Fiduciary................... $ 114,413 $563,979 $522,423 $724,423 $730,754 $110,084
Class A..................... 29,643 20,055 18,763 34,727 14,325 94
Class B..................... 2,818 4,920 10,152 11,729 10,873 80
--------- -------- -------- -------- -------- --------
Total.......................... $ 146,874 $588,954 $551,338 $770,879 $755,952 $110,258
========= ======== ======== ======== ======== ========
Outstanding units of beneficial
interest (shares)
Fiduciary................... 11,588 53,876 52,660 74,751 77,589 11,024
Class A..................... 3,003 1,918 1,886 3,583 1,522 9
Class B..................... 287 466 1,023 1,210 1,145 8
--------- -------- -------- -------- -------- --------
Total.......................... 14,878 56,260 55,569 79,544 80,256 11,041
========= ======== ======== ======== ======== ========
Net asset value:
Fiduciary
Offering and redemption
price per share........ $ 9.87 $ 10.47 $ 9.92 $ 9.69 $ 9.42 $ 9.99
========= ======== ======== ======== ======== ========
Class A
Redemption price per
share.................. $ 9.87 $ 10.46 $ 9.95 $ 9.69 $ 9.41 $ 9.98
========= ======== ======== ======== ======== ========
Maximum sales charge.... 3.00% 3.00 4.50% 4.50% 4.50% 3.00%
========= ======== ======== ======== ======== ========
Maximum offering price
(100%/ (100%--maximum
sales charge) of net
asset value adjusted to
nearest cent) per
share.................. $ 10.18 $ 10.78 $ 10.42 $ 10.15 $ 9.85 $ 10.29
========= ======== ======== ======== ======== ========
Class B
Offering price per share
(a).................... $ 9.81 $ 10.53 $ 9.92 $ 9.69 $ 9.49 $ 9.99
========= ======== ======== ======== ======== ========
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
33
<PAGE> 463
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
ULTRA
SHORT- LIMITED VOLATILITY INTERMEDIATE GOVERNMENT INCOME TREASURY &
TERM INCOME BOND BOND BOND BOND AGENCY
FUND FUND FUND FUND FUND FUND(a)
----------- ------------------ ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income............... $ 6,022 $ 39,891 $ 28,044 $ 51,661 $47,951 $3,404
Dividend income............... -- 32 1 2 -- 9
Income from securities
lending...................... -- 187 200 87 138 7
------- -------- -------- -------- ------ ------
Total Income.................. 6,022 40,110 28,245 51,750 48,089 3,420
------- -------- -------- -------- ------ ------
EXPENSES:
Investment advisory fees...... 520 3,660 2,365 3,293 3,873 198
Administration fees........... 157 1,009 652 1,210 1,067 82
12b-1 fees (Class A).......... 47 73 52 129 43 --(b)
12b-1 fees (Class B).......... 17 50 80 113 88 --(b)
Custodian and accounting
fees......................... 9 58 54 117 56 12
Legal and audit fees.......... 5 21 6 31 20 6
Organization costs............ 5 -- -- 3 -- --
Trustees' fees and expenses... 2 7 3 10 7 1
Transfer agent fees........... 19 56 40 83 47 9
Registration and filing
fees......................... 35 95 50 148 47 71
Printing costs................ 10 56 37 67 60 11
Other......................... 6 5 4 15 4 1
------- -------- -------- -------- ------ ------
Total expenses before
waivers...................... 832 5,090 3,343 5,219 5,312 391
Less waivers.................. (457) (1,867) (1,115) (463) (1,312) (167)
------- -------- -------- -------- ------ ------
Net Expenses............... 375 3,223 2,228 4,756 4,000 224
------- -------- -------- -------- ------ ------
Net Investment Income......... 5,647 36,887 26,017 46,994 44,089 3,196
------- -------- -------- -------- ------ ------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS AND
FUTURES:
Net realized gains (losses)
from investment and futures
transactions................. (269) (2,851) (935) (894) (280) 178
Net change in unrealized
appreciation (depreciation)
from investments and
futures...................... 1,032 5,502 3,378 10,875 6,049 (341)
------- -------- -------- -------- ------ ------
Net realized/unrealized gains
(losses) from investments and
futures...................... 763 2,651 2,443 9,981 5,769 (163)
------- -------- -------- -------- ------ ------
Change in net assets resulting
from operations.............. $ 6,410 $ 39,538 $ 28,460 $ 56,975 $49,858 $3,033
======= ======== ======== ======== ======= ======
</TABLE>
- ------------
(a) The Fund commenced operations on January 20, 1997.
(b) Amounts are less than $1,000.
See notes to financial statements.
34
<PAGE> 464
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
ULTRA SHORT-TERM LIMITED VOLATILITY
INCOME FUND BOND FUND INTERMEDIATE BOND FUND
------------------------ ------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996(a) 1997 1996 1997 1996
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income....................... $ 5,647 $ 3,180 $ 36,887 $ 28,018 $ 26,017 $ 14,817
Net realized gains (losses) from investment
and futures transactions.................. (269) (594) (2,851) 1,885 (935) 1,421
Net change in unrealized appreciation
(depreciation) from investments and
futures................................... 1,032 150 5,502 (6,631) 3,378 (5,722)
-------- -------- --------- --------- -------- --------
Change in net assets resulting from
operations.................................. 6,410 2,736 39,538 23,272 28,460 10,516
-------- -------- --------- --------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income.................. (4,769) (2,924) (35,406) (26,964) (24,622) (14,065)
Tax return of capital....................... -- (26) -- -- -- --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.................. (761) (129) (1,219) (878) (940) (607)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.................. (94) (24) (262) (175) (455) (144)
-------- -------- --------- --------- -------- --------
Change in net assets from shareholder
distributions............................... (5,624) (3,103) (36,887) (28,017) (26,017) (14,816)
-------- -------- --------- --------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................. 109,550 38,704 117,648 325,572 187,226 121,175
Proceeds from shares issued in connection
with acquisition.......................... -- -- -- 123,673 -- --
Proceeds from shares issued in connection
with conversion........................... -- -- -- -- 207,582 --
Dividends reinvested........................ 790 1,028 3,251 8,797 1,664 3,437
Cost of shares redeemed..................... (26,641) (32,817) (165,778) (248,283) (98,172) (66,140)
-------- -------- --------- --------- -------- --------
Change in net assets from share
transactions................................ 83,699 6,915 (44,879) 209,759 298,300 58,472
-------- -------- --------- --------- -------- --------
Change in net assets.......................... 84,485 6,548 (42,228) 205,014 300,743 54,172
NET ASSETS:
Beginning of period......................... 62,389 55,841 631,182 426,168 250,595 196,423
-------- -------- --------- --------- -------- --------
End of period............................... $146,874 $ 62,389 $ 588,954 $ 631,182 $551,338 $250,595
======== ======== ========= ========= ======== ========
SHARE TRANSACTIONS:
Issued...................................... 11,129 3,934 11,253 31,111 18,923 12,114
Issued in connection with acquisition....... -- -- -- 11,748 -- --
Issued in connection with conversion........ -- -- -- -- 20,926 --
Reinvested.................................. 81 105 311 834 169 343
Redeemed.................................... (2,708) (3,338) (15,866) (23,593) (9,913) (6,607)
-------- -------- --------- --------- -------- --------
Change in shares.............................. 8,502 701 (4,302) 20,100 30,105 5,850
======== ======== ========= ========= ======== ========
Undistributed (distributions in excess of)
net investment income included in net
assets:
End of period............................... $ (201) $ (313) $ (246) $ (121) $ 69 $ 94
======== ======== ========= ========= ======== ========
</TABLE>
- ------------
(a) Previously named the Government ARM Fund
See notes to financial statements.
35
<PAGE> 465
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
TREASURY & AGENCY
GOVERNMENT BOND FUND INCOME BOND FUND FUND
------------------------ ------------------------ -----------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED JANUARY 20, 1997
JUNE 30, JUNE 30, JUNE 30, JUNE 30, THROUGH JUNE 30,
1997 1996 1997 1996 1997(a)
---------- ---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............................ $ 46,994 $ 31,623 $ 44,089 $ 34,329 $ 3,196
Net realized gains (losses) from investment and
futures transactions........................... (894) (2,769) (280) (1,361) 178
Net change in unrealized appreciation
(depreciation) from investments and futures.... 10,875 (15,409) 6,049 (11,155) (341)
--------- --------- --------- --------- ---------
Change in net assets resulting from operations..... 56,975 13,445 49,858 21,813 3,033
--------- --------- --------- --------- ---------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income....................... (44,081) (30,195) (42,737) (33,573) (3,196)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income....................... (2,290) (1,103) (828) (545) --(b)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income....................... (623) (324) (524) (211) --(b)
--------- --------- --------- --------- ---------
Change in net assets from shareholder
distributions.................................... (46,994) (31,622) (44,089) (34,329) (3,196)
--------- --------- --------- --------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued...................... 229,453 451,887 224,558 166,169 6,409
Proceeds from shares issued in connection with
acquisition.................................... -- 301,865 -- -- --
Proceeds from shares issued in connection with
conversion..................................... -- -- 132,470 -- 113,243
Dividends reinvested............................. 3,881 8,081 4,757 13,106 --(b)
Cost of shares redeemed.......................... (199,344) (407,217) (148,078) (113,090) (9,231)
--------- --------- --------- --------- ---------
Change in net assets from share transactions....... 33,990 354,616 213,707 66,185 110,421
--------- --------- --------- --------- ---------
Change in net assets............................... 43,971 336,439 219,476 53,669 110,258
NET ASSETS:
Beginning of period.............................. 726,908 390,469 536,476 482,807 --
--------- --------- --------- --------- ---------
End of period.................................... $ 770,879 $ 726,908 $ 755,952 $ 536,476 $ 110,258
========= ========= ========= ========= =========
SHARE TRANSACTIONS:
Issued........................................... 23,794 45,897 23,912 17,425 644
Issued in connection with acquisition............ -- 30,887 -- -- --
Issued in connection with conversion............. -- -- 14,063 -- 11,324
Reinvested....................................... 404 821 508 1,371 --(b)
Redeemed......................................... (20,680) (41,383) (15,750) (11,865) (927)
--------- --------- --------- --------- ---------
Change in shares................................... 3,518 36,222 22,733 6,931 11,041
========= ========= ========= ========= =========
Undistributed (distributions in excess of)
net investment income included in net assets:
End of period.................................... $ (101) $ (325) $ 288 $ 396 $ --
========= ========= ========= ========= =========
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Dollar and share amounts are less than 1,000.
See notes to financial statements.
36
<PAGE> 466
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30,1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Ultra Short-Term Income
Fund (previously named the Government ARM Fund), the Limited Volatility Bond
Fund, the Intermediate Bond Fund, the Government Bond Fund, the Income Bond
Fund , and the Treasury & Agency Fund (individually a "Fund", collectively
the "Funds") only. The Funds are each offered in Fiduciary Class, Class A and
Class B Shares. Class A Shares are subject to initial sales charges, imposed
at the time of purchase, in accordance with the Funds' prospectuses. Certain
redemptions of Class B Shares are subject to contingent deferred sales
charges in accordance with the Funds' prospectuses. Each Fund is a
diversified mutual fund.
The Trust entered into an Agreement and Plan of Reorganization (the
"Agreement") with the Paragon Portfolio ("Paragon"), a Massachusetts business
trust. Pursuant to the Agreement all of the assets and liabilities of each
Paragon Fund transferred to a fund of The One Group in exchange for shares of
the corresponding fund of The One Group. The statements of changes in net
assets and financial highlights for periods prior to the reorganization,
March 25, 1996, are presented for funds of The One Group only.
The Funds investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
----------------------------- -----------------------------------------------------------------
<S> <C>
Ultra Short-Term Income Fund A high level of current income consistent with low volatility of
principal by investing in a diversified portfolio of short-term
investment grade securities.
Limited Volatility Bond Fund Current income consistent with the preservation of capital
through investment in high and medium-grade fixed-income
securities.
Intermediate Bond Fund Current income consistent with the preservation of capital by
investing in high and medium-grade fixed-income securities with
intermediate maturities.
Government Bond Fund A high level of current income with liquidity and safety of
principal.
Income Bond Fund A high level of current income by investing primarily in a
diversified portfolio of high, medium and low grade debt
securities.
Treasury & Agency Fund A high level of current income by investing in U.S. Treasury and
other U.S. Agency obligations with a primary, but not exclusive,
focus on issues that produce income exempt from state income
taxes.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Corporate debt securities and debt securities of U.S. issuers (other than
short-term investments maturing in 60 days or less), including municipal
securities, are valued on the basis of valuations provided by dealers or
by
Continued
37
<PAGE> 467
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
an independent pricing service approved by the Board of Trustees.
Short-term investments maturing in 60 days or less are valued at
amortized cost, which approximates market value. 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. Investments for which there are no such
quotations or valuations are valued at fair value as determined in good
faith by the Adviser under the direction of the Board of Trustees.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that Banc
One Investment Advisors Corporation (the "Advisor") has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Fund
requires that the securities purchased in a repurchase agreement
transaction be transferred to the custodian in a manner sufficient to
enable the Fund to obtain those securities in the event of a counterparty
default. The seller, under the repurchase agreement, is required to
maintain the value of the securities held at not less than the repurchase
price, including accrued interest. Repurchase agreements are considered
to be loans by a fund under the 1940 Act.
WRITTEN OPTIONS
The Funds may write covered call or put options for which premiums
received are recorded as liabilities and are subsequently adjusted to the
current value of the options written. Premiums received from writing
options which expire are treated as realized gains. Premiums received
from writing options, which are either exercised or closed, are offset
against the proceeds received or amount paid on the transaction to
determine realized gains or losses.
FUTURES CONTRACTS
The Funds may enter into futures contracts for the delayed delivery of
securities at a fixed price at some future date or for the change in the
value of a specified financial index over a predetermined time period.
Cash or securities are deposited with brokers in order to maintain a
position. Subsequent payments made or received by the fund based on the
daily change in the market value of the position are recorded as
unrealized appreciation or depreciation until the contract is closed out,
at which time the appreciation or depreciation is realized.
INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked either
directly or inversely to changes in foreign currencies, interest rates,
commodities, indices or other reference instruments. Indexed securities
may be more volatile than the referenced instrument itself, but any loss
is limited to the amount of the original investment.
MORTGAGE ROLLS
The Funds may enter into mortgage "dollar rolls" in which the Fund sells
mortgage-backed securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar securities
on a specified future date. During the roll period, the Fund forgoes
principal and interest paid on the mortgage-backed securities. The Fund
is compensated by fee income or the difference between the current sales
price and the lower forward price for the future purchase.
Continued
38
<PAGE> 468
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities in
which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn interest on securities lent while simultaneously seeking to
earn interest on the investment of collateral. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines established
by the Board of Trustees and when, in the judgment of the Advisor, the
consideration which can be earned currently from such securities loans
justifies the attendant risk. Loans are subject to termination by the Funds
or the borrower at any time, and are, therefore, not considered to be
illiquid investments. As of June 30, 1997, the following Funds had securities
with the following market values on loan (amounts in thousands):
<TABLE>
<CAPTION>
MARKET VALUE
OF LOANED
SECURITIES
------------
<S> <C>
Limited Volatility Bond Fund................................. $112,080
Intermediate Bond Fund....................................... 129,598
Government Bond Fund......................................... 30,498
Income Bond Fund............................................. 86,176
Treasury & Agency Fund....................................... 16,979
</TABLE>
The loaned securities were fully collateralized by cash, U.S. Government
securities, and commercial paper as of June 30, 1997.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net realized
gains or losses from sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on the
accrual basis. Dividends are recorded on the ex-dividend date. Interest income,
including any discount or premium, is accrued as earned using the effective
interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that Fund,
while the expenses which are attributable to more than one fund of the Trust are
allocated among the respective Funds. Each class of shares bears its pro-rata
portion of expenses attributable to its series, except that each class
separately bears expenses related specifically to that class, such as
distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly for the
Funds. Net realized capital gains, if any, are distributed at least annually.
Dividends are declared separately for each class. No class has preferential
dividend rights; differences in per share dividend rates are generally due to
differences in separate class expenses.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due to
Continued
39
<PAGE> 469
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
differing treatments for mortgage-backed securities, expiring capital loss
carryforwards, and deferrals of certain losses. Permanent book and tax basis
differences have been reclassified among the components of net assets.
ORGANIZATION COSTS
Costs incurred by the Trust in connection with its organization, including the
fees and expenses of registering and qualifying its shares for distribution have
been deferred and are being amortized using the straight-line method over a
period of five years beginning with the commencement of each Fund's operations.
All such costs, which are attributable to more than one fund of the Trust, have
been allocated among the respective funds pro-rata, based on the relative net
assets of each Fund. In the event that any of the initial shares are redeemed
during such period by any holder thereof, the related fund will be reimbursed by
such holder for any unamortized organization costs in the proportion as the
number of initial shares being redeemed bears to the number of initial shares
outstanding at the time of redemption.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax purposes.
Each Fund intends to continue to qualify as a regulated investment company by
complying with the provisions available to certain investment companies as
defined in applicable sections of the Internal Revenue Code, and to make
distributions from net investment income and from net realized capital gains
sufficient to relieve it from all, or substantially all, Federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more classes. The Trust is registered to offer forty
series and five classes of shares: Fiduciary, Class A, Class B, Class C and
Service. Currently, the Trust consists of thirty three active funds and not
all funds can offer all classes of shares. As of June 30, 1997, no
shareholders were in Class C or the Service Class of the Funds. Shareholders
are entitled to one vote for each full share held and will vote in the
aggregate and not by class or series, except as otherwise expressly required
by law or when the Board of Trustees has determined that the matter to be
voted on affects only the interest of shareholders of a particular class or
series. The following is a summary of transactions in Fund shares for the
fiscal years ending June 30, 1997 and 1996:
Continued
40
<PAGE> 470
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
ULTRA SHORT-TERM LIMITED VOLATILITY
INCOME FUND BOND FUND INTERMEDIATE BOND FUND
------------------------ ------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996(a) 1997 1996 1997 1996
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued................. $ 77,614 $ 35,008 $ 111,732 $ 196,323 $ 172,698 $102,645
Proceeds from shares issued in connection
with acquisition.......................... -- -- -- 115,134 -- --
Proceeds from shares issued in connection
with conversion........................... -- -- -- -- 207,582 --
Dividends reinvested........................ 148 923 2,151 8,093 661 2,976
Cost of shares redeemed..................... (21,314) (29,367) (157,344) (129,046) (91,579) (62,091)
-------- -------- --------- --------- --------- --------
Change in net assets from Fiduciary Share
transactions.............................. $ 56,448 $ 6,564 $ (43,461) $ 190,504 $ 289,362 $ 43,530
======== ======== ========= ========= ========= ========
CLASS A SHARES:
Proceeds from shares issued................. $ 29,729 $ 2,666 $ 5,026 $ 126,619 $ 9,430 $ 12,374
Proceeds from shares issued in connection
with acquisition.......................... -- -- -- 8,153 -- --
Dividends reinvested........................ 578 89 870 569 671 381
Cost of shares redeemed..................... (4,720) (3,395) (7,282) (118,533) (5,173) (3,716)
-------- -------- --------- --------- --------- --------
Change in net assets from Class A Share
transactions.............................. $ 25,587 $ (640) $ (1,386) $ 16,808 $ 4,928 $ 9,039
======== ======== ========= ========= ========= ========
CLASS B SHARES:
Proceeds from shares issued................. $ 2,207 $ 1,030 $ 890 $ 2,630 $ 5,098 $ 6,156
Proceeds from shares issued in connection
with acquisition.......................... -- -- -- 386 -- --
Dividends reinvested........................ 64 16 230 135 332 80
Cost of shares redeemed..................... (607) (55) (1,152) (704) (1,420) (333)
-------- -------- --------- --------- --------- --------
Change in net assets from Class B Share
transactions.............................. $ 1,664 $ 991 $ (32) $ 2,447 $ 4,010 $ 5,903
======== ======== ========= ========= ========= ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued...................................... 7,886 3,560 10,686 19,600 17,457 10,266
Issued in connection with acquisition....... -- -- -- 10,936 -- --
Issued in connection with conversion........ -- -- -- -- 20,926 --
Reinvested.................................. 15 94 206 768 67 296
Redeemed.................................... (2,166) (2,989) (15,059) (12,260) (9,247) (6,200)
-------- -------- --------- --------- --------- --------
Change in Fiduciary Shares.................. 5,735 665 (4,167) 19,044 29,203 4,362
======== ======== ========= ========= ========= ========
CLASS A SHARES:
Issued...................................... 3,018 269 482 11,297 951 1,231
Issued in connection with acquisition....... -- -- -- 775 -- --
Reinvested.................................. 59 10 83 54 68 39
Redeemed.................................... (480) (344) (697) (11,265) (522) (373)
-------- -------- --------- --------- --------- --------
Change in Class A Shares.................... 2,597 (65) (132) 861 497 897
======== ======== ========= ========= ========= ========
CLASS B SHARES:
Issued...................................... 225 105 85 215 515 617
Issued in connection with acquisition....... -- -- -- 36 -- --
Reinvested.................................. 7 1 22 12 34 8
Redeemed.................................... (62) (5) (110) (68) (144) (34)
-------- -------- --------- --------- --------- --------
Change in Class B Shares.................... 170 101 (3) 195 405 591
======== ======== ========= ========= ========= ========
</TABLE>
- ------------
(a) Previously named the Government ARM Fund.
Continued
41
<PAGE> 471
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
TREASURY & AGENCY
GOVERNMENT BOND FUND INCOME BOND FUND FUND
------------------------ ------------------------ -----------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED JANUARY 20, 1997
JUNE 30, JUNE 30, JUNE 30, JUNE 30, THROUGH JUNE 30,
1997 1996 1997 1996 1997(a)
---------- ---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued...................... $ 217,351 $ 135,419 $ 210,985 $ 154,901 $ 6,235
Proceeds from shares issued in connection with
acquisition.................................... -- 273,384 -- -- --
Proceeds from shares issued in connection with
conversion..................................... -- -- 132,470 -- 113,243
Dividends reinvested............................. 1,826 7,234 3,766 12,601 --(b)
Cost of shares redeemed.......................... (181,374) (128,141) (142,285) (109,230) (9,231)
--------- --------- --------- --------- ---------
Change in net assets from Fiduciary Share
transactions................................... $ 37,803 $ 287,896 $ 204,936 $ 58,272 $ 110,247
========= ========= ========= ========= =========
CLASS A SHARES:
Proceeds from shares issued...................... $ 9,184 $ 307,157 $ 7,637 $ 6,470 $ 94
Proceeds from shares issued in connection with
acquisition.................................... -- 26,507 -- -- --
Dividends reinvested............................. 1,575 647 647 391 --(b)
Cost of shares redeemed.......................... (15,371) (278,122) (4,192) (3,302) --
--------- --------- --------- --------- ---------
Change in net assets from Class A Share
transactions................................... $ (4,612) $ 56,189 $ 4,092 $ 3,559 $ 94
========= ========= ========= ========= =========
CLASS B SHARES:
Proceeds from shares issued...................... $ 2,918 $ 9,312 $ 5,936 $ 4,798 $ 80
Proceeds from shares issued in connection with
acquisition.................................... -- 1,973 -- -- --
Dividends reinvested............................. 480 200 344 114 --(b)
Cost of shares redeemed.......................... (2,599) (954) (1,601) (558) --(b)
--------- --------- --------- --------- ---------
Change in net assets from Class B Share
transactions................................... $ 799 $ 10,531 $ 4,679 $ 4,354 $ 80
========= ========= ========= ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued........................................... 22,536 16,246 22,470 16,245 627
Issued in connection with acquisition............ -- 27,974 -- -- --
Issued in connection with conversion............. -- -- 14,063 -- 11,324
Reinvested....................................... 190 735 403 1,318 --(b)
Redeemed......................................... (18,817) (12,833) (15,133) (11,460) (927)
--------- --------- --------- --------- ---------
Change in Fiduciary Shares....................... 3,909 32,122 21,803 6,103 11,024
========= ========= ========= ========= =========
CLASS A SHARES:
Issued........................................... 956 28,902 814 680 9
Issued in connection with acquisition............ -- 2,711 -- -- --
Reinvested....................................... 164 66 69 41 --(b)
Redeemed......................................... (1,593) (28,451) (448) (347) --
--------- --------- --------- --------- ---------
Change in Class A Shares......................... (473) 3,228 435 374 9
========= ========= ========= ========= =========
CLASS B SHARES:
Issued........................................... 302 749 628 500 8
Issued in connection with acquisition............ -- 202 -- -- --
Reinvested....................................... 50 20 36 12 --(b)
Redeemed......................................... (270) (99) (169) (58) --(b)
--------- --------- --------- --------- ---------
Change in Class B Shares......................... 82 872 495 454 8
========= ========= ========= ========= =========
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Dollar and share amounts are less than 1,000.
Continued
42
<PAGE> 472
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor are parties to an investment advisory agreement
under which the Advisor is entitled to receive an annual fee, computed daily
and paid monthly, equal to the following percentages of the Funds' average
net assets: 0.60% of the Income Bond Fund, the Intermediate Bond Fund and the
Limited Volatility Bond Fund; 0.55% of the Ultra Short-Term Income Fund;
0.45% of the Government Bond Fund; and 0.40% of the Treasury & Agency Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administrative agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly, at an annual rate of 0.20% on
the first $1.5 billion of Trust net assets (excluding the Investor Growth
Fund, the Investor Growth & Income Fund, the Investor Conservative Growth
Fund and the Investor Balanced Fund (the "Investor Funds") and the Treasury
Only Money Market Fund and the Government Money Market Fund--the
"Institutional Money Market Funds"); 0.18% on the next $0.5 billion of Trust
net assets (excluding the Investor Funds and the Institutional Money Market
Funds); and 0.16% of Trust net assets (excluding the Investor Funds and the
Institutional Money Market Funds) over $2 billion. The Advisor also serves as
Sub-Administrator to each fund of the Trust, pursuant to an agreement between
the Administrator and the Advisor. Pursuant to this agreement, the Advisor
performs many of the Administrator's duties, for which the Advisor receives a
fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A and Class B Shares are subject to a distribution
and shareholder services plan (the "Plans") pursuant to Rule 12b-1 under the
1940 Act. As provided in the Plans, the Trust will pay the Distributor a fee
of 0.35% of the average daily net assets of Class A Shares of each of the
Funds and 1.00% of the average daily net assets of the Class B Shares of each
of the Funds. Currently, the Distributor has voluntarily agreed to limit
payments under the Plans to 0.25% of average daily net assets of the Class A
Shares of each Fund, 0.75% of average daily net assets of the Class B Shares
of Ultra Short-Term Income Fund, Limited Volatility Bond Fund and Treasury &
Agency Fund and 0.90% of average daily net assets of Intermediate Bond Fund,
Government Bond Fund and Income Bond Fund. Up to 0.25% of the fees payable
under the Plans may be used as compensation for shareholder services by the
Distributor and/or financial institutions and intermediaries. Fees paid under
the Plans may be applied by the Distributor toward (i) compensation for its
services in connection with distribution assistance or provision of
shareholder services; or (ii) payments to financial institutions and
intermediaries such as banks (including affiliates of the Adviser), brokers,
dealers and other institutions, including the Distributor's affiliates and
subsidiaries as compensation for services or reimbursement of expenses
incurred in connection with distribution assistance or provision of
shareholder services. Fiduciary Class Shares of each Fund are offered without
distribution fees. For the period ended June 30, 1997, the Distributor
received $952,230 from commissions earned on sales of Class A Shares and
redemptions of Class B Shares, of which the Distributor re-allowed $936,799
to affiliated broker-dealers of the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
43
<PAGE> 473
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees. For the period ended June 30, 1997, fees in
the following amounts were waived (amounts in thousands):
<TABLE>
<CAPTION>
12B-1 FEES
INVESTMENT WAIVED
ADVISORY FEES ADMINISTRATION ------------------
WAIVED FEES WAIVED CLASS A CLASS B
------------- -------------- ------- -------
<S> <C> <C> <C> <C>
Ultra Short-Term Income Fund......................... $ 343 $ 96 $13 $ 5
Limited Volatility Bond Fund......................... 1,831 -- 21 15
Intermediate Bond Fund............................... 1,092 -- 15 8
Government Bond Fund................................. 195 220 37 11
Income Bond Fund..................................... 1,291 -- 12 9
Treasury & Agency Fund............................... 99 68 -- --
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the period
ended June 30, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES OTHER SECURITIES
--------------------- ---------------------
PURCHASES SALES PURCHASES SALES
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Ultra Short-Term Income Bond Fund..................... $ 103,208 $ 55,715 $ 32,312 $ 7,013
Limited Volatility Bond Fund.......................... 236,987 337,634 149,624 100,204
Intermediate Bond Fund................................ 356,607 175,250 147,606 40,473
Government Bond Fund.................................. 461,056 424,490 -- --
Income Bond Fund...................................... 273,442 191,748 299,740 154,985
Treasury & Agency Fund................................ 60,025 63,239 -- --
</TABLE>
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as written options, futures,
structured notes and indexed securities involves risk in excess of the
amounts reflected in the Statement of Assets and Liabilities. The face or
contract amounts reflect the extent of the involvement the Funds have in the
particular class of instrument. Risks associated with these instruments
include an imperfect correlation between the movements in the price of the
instruments and the price of the underlying securities and interest rates, an
illiquid secondary market for the instruments or inability of counterparties
to perform under the terms of the contract. The Funds enter into these
contracts primarily as a means to hedge against adverse fluctuations in
securities.
7. REORGANIZATIONS:
The Trust entered an Agreement and Plan of Reorganization ("Reorganization")
with Paragon pursuant to which all of the assets and liabilities of each
Paragon Fund transferred to a fund of The One Group in exchange for shares of
the corresponding fund of The One Group. The Paragon Short-Term Government
Fund and the Paragon Intermediate-Term Bond Fund transferred their assets and
liabilities to the Limited Volatility Bond Fund and the Government Bond Fund,
respectively. The Reorganization, which qualified as a tax-free exchange for
Federal income tax purposes, was completed on March 25, 1996 following
approval by shareholders of Paragon at a special shareholder meeting. The
following is a summary of shares outstanding, net assets, net asset value per
share and unrealized appreciation immediately before and after the
Reorganization (amounts in thousands except net asset value):
Continued
44
<PAGE> 474
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
<TABLE>
<CAPTION> AFTER
BEFORE REORGANIZATION REORGANIZATION
----------------------- -----------------
PARAGON
SHORT-TERM LIMITED LIMITED
GOVERNMENT VOLATILITY VOLATILITY
FUND BOND FUND BOND FUND
---------- --------- --------------
<S> <C> <C> <C>
Shares...................................................... 12,208 39,898 51,646
Net Assets.................................................. $123,673 $420,044 $543,717
Net Asset Value:
Fiduciary................................................. $ 10.53 $ 10.53
Class A................................................... $ 10.13 $ 10.52 $ 10.52
Class B................................................... $ 10.13 $ 10.59 $ 10.59
Unrealized Appreciation (Depreciation)...................... $ (785) $ 4,397 $ 3,612
</TABLE>
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
--------------------------- --------------
PARAGON
INTERMEDIATE-
TERM BOND GOVERNMENT GOVERNMENT
FUND BOND FUND BOND FUND
------------- ---------- --------------
<S> <C> <C> <C>
Shares.................................................... 29,536 44,653 75,540
Net Assets................................................ $ 301,865 $436,393 $738,258
Net Asset Value:
Fiduciary............................................... $ 9.77 $ 9.77
Class A................................................. $ 10.22 $ 9.78 $ 9.78
Class B................................................. $ 10.25 $ 9.77 $ 9.77
Unrealized Appreciation................................... $ 2,883 $ 5,934 $ 8,817
</TABLE>
Additionally, the Limited Volatility Bond Fund and the Government Bond Fund
had capital loss carryforwards from Paragon of approximately $1,106,000 and
$3,757,000, respectively.
8. CONVERSION OF COMMON TRUST FUNDS:
On January 20, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following
is a summary of shares issued, net assets converted, net asset value per
share issued and unrealized appreciation of assets acquired as of the
conversion date (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
NET ASSET
VALUE
SHARES NET ASSETS PER SHARE UNREALIZED
ISSUED CONVERTED ISSUED APPRECIATION
------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Income Bond Fund....................................... 14,063 $132,470 $ 9.42 $4,511
Intermediate Bond Fund................................. 20,926 $207,582 $ 9.92 $1,740
Treasury & Agency Fund................................. 11,324 $113,243 $10.00 $1,909
</TABLE>
Continued
45
<PAGE> 475
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
9. FEDERAL TAX INFORMATION (UNAUDITED):
At June 30, 1997 the following Funds have capital loss carryforwards which
are available to offset future capital gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYFORWARD (000) EXPIRES
------------------ -------
<S> <C> <C>
Ultra Short-Term Income Fund........................................... $2,283 2003
Ultra Short-Term Income Fund........................................... 1,065 2004
Ultra Short-Term Income Fund........................................... 682 2005
Limited Volatility Bond Fund........................................... 197 2000
Limited Volatility Bond Fund........................................... 165 2001
Limited Volatility Bond Fund........................................... 443 2002
Limited Volatility Bond Fund........................................... 2,720 2003
Limited Volatility Bond Fund........................................... 3,301 2004
Limited Volatility Bond Fund........................................... 651 2005
Intermediate Bond Fund................................................. 222 2000
Intermediate Bond Fund................................................. 845 2001
Intermediate Bond Fund................................................. 1,321 2002
Intermediate Bond Fund................................................. 1,980 2003
Intermediate Bond Fund................................................. 530 2005
Government Bond Fund................................................... 2,565 2002
Government Bond Fund................................................... 10,809 2003
Government Bond Fund................................................... 5,314 2004
Income Bond Fund....................................................... 50,654 2003
Income Bond Fund....................................................... 1,963 2004
</TABLE>
Under current tax law, capital losses realized after October 31 may be deferred
and treated as occurring on the first day of the following fiscal year. The
following deferred losses will be treated as arising on the first day of the
fiscal year ended June 30, 1998 (amounts in thousands):
<TABLE>
<CAPTION>
POST-OCTOBER
CAPITAL LOSSES (000)
--------------------
<S> <C>
Ultra Short-Term Income Fund................................... $ 37
Limited Volatility Bond Fund................................... 3,705
Intermediate Bond Fund......................................... 384
Government Bond Fund........................................... 2,425
Income Bond Fund............................................... 2,089
</TABLE>
Continued
46
<PAGE> 476
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ULTRA SHORT-TERM INCOME FUND
------------------------------------------------------
FIDUCIARY
------------------------------------------------------
YEARS ENDED JUNE 30,
------------------------------------------------------
1997 1996 1995 1994 1993(a)
-------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................................... $ 9.79 $ 9.84 $ 9.85 $ 10.03 $ 10.00
-------- ------- ------- -------- --------
Investment Activities
Net investment income................................... 0.62 0.62 0.55 0.36 0.17
Net realized and unrealized gains (losses) from
investments
and futures........................................... 0.05 (0.07) (0.05) (0.15) 0.03
-------- ------- ------- -------- --------
Total from Investment Activities...................... 0.67 0.55 0.50 0.21 0.20
-------- ------- ------- -------- --------
Distributions
Net investment income................................... (0.59) (0.60) (0.48) (0.37) (0.17)
In excess of net investment income...................... -- -- (0.03) (0.02) --
-------- ------- ------- -------- --------
Total Distributions................................... (0.59) (0.60) (0.51) (0.39) (0.17)
-------- ------- ------- -------- --------
NET ASSET VALUE,
END OF PERIOD........................................... $ 9.87 $ 9.79 $ 9.84 $ 9.85 $ 10.03
======== ======= ======= ======== ========
Total Return.............................................. 7.14% 5.71% 5.14% 2.16% 4.93%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $114,413 $57,276 $51,050 $139,593 $154,413
Ratio of expenses to average net assets................. 0.35% 0.45% 0.61% 0.65% 0.58%(b)
Ratio of net investment income to average net assets.... 6.02% 6.20% 5.18% 3.70% 4.71%(b)
Ratio of expenses to average net assets*................ 0.81% 1.06% 1.01% 0.81% 1.03%(b)
Ratio of net investment income to average net assets*... 5.56% 5.59% 4.78% 3.54% 4.26%(b)
Portfolio Turnover (c).................................. 70.36% 67.65% 2.91% 242.20% 109.96%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on February 2, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
47
<PAGE> 477
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ULTRA SHORT-TERM INCOME FUND
--------------------------------------------------
CLASS A
--------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------ ------ ------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.......................................... $ 9.78 $ 9.83 $ 9.84 $ 10.03 $10.00
------- ------ ------ ------- -------
Investment Activities
Net investment income........................................ 0.58 0.58 0.52 0.36 0.14
Net realized and unrealized gains (losses) from investments
and futures................................................ 0.09 (0.06) (0.06) (0.17) 0.03
------- ------ ------ ------- -------
Total from Investment Activities........................... 0.67 0.52 0.46 0.19 0.17
------- ------ ------ ------- -------
Distributions
Net investment income........................................ (0.58) (0.57) (0.46) (0.34) (0.14)
In excess of net investment income........................... -- -- (0.01) (0.04) --
------- ------ ------ ------- -------
Total Distributions........................................ (0.58) (0.57) (0.47) (0.38) (0.14)
------- ------ ------ ------- -------
NET ASSET VALUE,
END OF PERIOD................................................ $ 9.87 $ 9.78 $ 9.83 $ 9.84 $10.03
------- ------ ------ ------- ------
Total Return (Excludes Sales Charge)........................... 7.00% 5.42% 4.84% 1.95% 4.78%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................ $29,643 $3,969 $4,631 $19,053 $3,106
Ratio of expenses to average net assets...................... 0.61% 0.70% 0.86% 0.89% 0.81%(b)
Ratio of net investment income to average net assets......... 5.78% 5.95% 4.88% 3.54% 4.47%(b)
Ratio of expenses to average net asset*...................... 1.17% 1.41% 1.36% 1.14% 1.34%(b)
Ratio of net investment income to average net asset*......... 5.22% 5.24% 4.38% 3.29% 3.95%(b)
Portfolio Turnover (c)....................................... 70.36% 67.65% 2.91% 242.20% 109.96%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced offering on March 10, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
48
<PAGE> 478
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ULTRA SHORT-TERM INCOME FUND
--------------------------------------
CLASS B
--------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------
1997 1996 1995 1994(a)
------ ------ ------ --------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................................................... $ 9.76 $ 9.84 $ 9.86 $ 9.98
------ ------ ------ -------
Investment Activities
Net investment income................................................... 0.54 0.52 0.47 0.12
Net realized and unrealized gains (losses) from investments and
futures............................................................... 0.05 (0.07) (0.04) (0.11)
------ ------ ------ -------
Total from Investment Activities...................................... 0.59 0.45 0.43 0.01
------ ------ ------ -------
Distributions
Net investment income................................................... (0.54) (0.53) (0.45) (0.12)
In excess of net investment income...................................... -- -- -- (0.01)
------ ------ ------ -------
Total Distributions................................................... (0.54) (0.53) (0.45) (0.13)
------ ------ ------ -------
NET ASSET VALUE,
END OF PERIOD........................................................... $ 9.81 $ 9.76 $ 9.84 $ 9.86
====== ====== ====== =======
Total Return (Excludes Sales Charge)...................................... 6.22% 4.63% 4.77% (0.09)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................... $2,818 $1,144 $ 160 $ 15
Ratio of expenses to average net assets................................. 1.07% 1.20% 1.31% 1.41% (c)
Ratio of net investment income to average net assets.................... 5.18% 5.45% 4.91% 3.49% (c)
Ratio of expenses to average net assets*................................ 1.81% 2.06% 1.96% 1.83% (c)
Ratio of net investment income to average net assets*................... 4.44% 4.59% 4.26% 3.07% (c)
Portfolio Turnover (d).................................................. 70.36% 67.65% 2.91% 242.20%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
49
<PAGE> 479
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED VOLATILITY BOND FUND
--------------------------------------------------------
FIDUCIARY
--------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................... $ 10.42 $ 10.53 $ 10.33 $ 10.87 $ 10.72
-------- -------- -------- -------- --------
Investment Activities
Net investment income................................. 0.63 0.64 0.60 0.54 0.61
Net realized and unrealized gains (losses) from
investments
and futures......................................... 0.05 (0.11) 0.19 (0.45) 0.25
-------- -------- -------- -------- --------
Total from Investment Activities.................... 0.68 0.53 0.79 0.09 0.86
-------- -------- -------- -------- --------
Distributions
Net investment income................................. (0.63) (0.64) (0.59) (0.55) (0.62)
In excess of net investment income.................... -- -- -- (0.02) --
Net realized gains.................................... -- -- -- (0.06) (0.09)
-------- -------- -------- -------- --------
Total Distributions................................. (0.63) (0.64) (0.59) (0.63) (0.71)
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD......................................... $ 10.47 $ 10.42 $ 10.53 $ 10.33 $ 10.87
======== ======== ======== ======== ========
Total Return............................................ 6.75% 5.13% 7.96% 0.79% 8.27%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..................... $563,979 $604,916 $410,746 $447,394 $397,820
Ratio of expenses to average net assets............... 0.51% 0.51% 0.52% 0.50% 0.56%
Ratio of net investment income to average net
assets.............................................. 6.06% 6.06% 5.82% 5.10% 5.70%
Ratio of expenses to average net assets*.............. 0.81% 0.82% 0.85% 0.85% 0.90%
Ratio of net investment income to average net
assets*............................................. 5.76% 5.75% 5.49% 4.75% 5.36%
Portfolio Turnover (a)................................ 66.61% 75.20% 76.43% 30.61% 40.28%
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
50
<PAGE> 480
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED VOLATILITY BOND FUND
---------------------------------------------------
CLASS A
---------------------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................ $ 10.41 $ 10.52 $ 10.32 $ 10.87 $ 10.72
------- ------- ------- ------- -------
Investment Activities
Net investment income...................................... 0.61 0.63 0.56 0.52 0.59
Net realized and unrealized gains (losses) from investments
and futures.............................................. 0.05 (0.13) 0.21 (0.46) 0.24
------- ------- ------- ------- -------
Total from Investment Activities......................... 0.66 0.50 0.77 0.06 0.83
------- ------- ------- ------- -------
Distributions
Net investment income...................................... (0.61) (0.61) (0.56) (0.51) (0.59)
In excess of net investment income......................... -- -- (0.01) (0.04) --
Net realized gains......................................... -- -- -- (0.06) (0.09)
------- ------- ------- ------- -------
Total Distributions...................................... (0.61) (0.61) (0.57) (0.61) (0.68)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 10.46 $ 10.41 $ 10.52 $ 10.32 $ 10.87
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)......................... 6.47% 4.86% 7.67% 0.49% 8.04%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $20,055 $21,343 $12,516 $15,216 $15,719
Ratio of expenses to average net assets.................... 0.76% 0.76% 0.77% 0.75% 0.76%
Ratio of net investment income to average net assets....... 5.81% 5.81% 5.57% 4.92% 5.35%
Ratio of expenses to average net assets*................... 1.16% 1.17% 1.20% 1.20% 1.27%
Ratio of net investment income to average net assets*...... 5.41% 5.40% 5.14% 4.47% 4.84%
Portfolio Turnover (a)..................................... 66.61% 75.20% 76.43% 30.61% 40.28%
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
51
<PAGE> 481
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED VOLATILITY BOND FUND
--------------------------------------
CLASS B
--------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------
1997 1996 1995 1994(a)
------ ------ ------ --------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................................................... $10.49 $10.60 $10.40 $10.78
------ ------ ------ ------
Investment Activities
Net investment income................................................... 0.55 0.55 0.53 0.17
Net realized and unrealized gains (losses) from investments and
futures............................................................... 0.04 (0.10) 0.19 (0.37)
------ ------ ------ ------
Total from Investment Activities...................................... 0.59 0.45 0.72 (0.20)
------ ------ ------ ------
Distributions
Net investment income................................................... (0.55) (0.56) (0.52) (0.15)
In excess of net realized gains......................................... -- -- -- (0.03)
------ ------ ------ ------
Total Distributions................................................... (0.55) (0.56) (0.52) (0.18)
------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD........................................................... $10.53 $10.49 $10.60 $10.40
====== ====== ====== ======
Total Return (Excludes Sales Charge)...................................... 5.74% 4.28% 7.18% (1.81)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................... $4,920 $4,923 $2,906 $1,974
Ratio of expenses to average net assets................................. 1.20% 1.26% 1.28% 1.26%(c)
Ratio of net investment income to average net assets.................... 5.21% 5.31% 5.10% 4.39%(c)
Ratio of expenses to average net assets*................................ 1.81% 1.82% 1.86% 1.86%(c)
Ratio of net investment income to average net assets*................... 4.60% 4.75% 4.52% 3.79%(c)
Portfolio Turnover (d).................................................. 66.61% 75.20% 76.43% 30.61%
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
52
<PAGE> 482
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
------------------------------------------------------
FIDUCIARY
------------------------------------------------------
YEARS ENDED JUNE 30,
------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................................... $ 9.84 $ 10.01 $ 9.72 $ 10.51 $ 10.09
-------- -------- -------- ------- -------
Investment Activities
Net investment income................................... 0.65 0.66 0.66 0.60 0.63
Net realized and unrealized gains (losses) from
investments
and futures........................................... 0.08 (0.17) 0.29 (0.67) 0.42
-------- -------- -------- ------- -------
Total from Investment Activities...................... 0.73 0.49 0.95 (0.07) 1.05
-------- -------- -------- ------- -------
Distributions
Net investment income................................... (0.65) (0.66) (0.66) (0.60) (0.63)
In excess of net investment income...................... -- -- -- (0.02) --
Net realized gains...................................... -- -- -- (0.10) --
-------- -------- -------- ------- -------
Total Distributions................................... (0.65) (0.66) (0.66) (0.72) (0.63)
-------- -------- -------- ------- -------
NET ASSET VALUE,
END OF PERIOD........................................... $ 9.92 $ 9.84 $ 10.01 $ 9.72 $ 10.51
======== ======== ======== ======= =======
Total Return.............................................. 7.68% 4.95% 10.15% (0.74)% 10.67%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $522,423 $230,812 $191,216 $98,483 $44,252
Ratio of expenses to average net assets................. 0.54% 0.54% 0.56% 0.32% 0.39%
Ratio of net investment income to average net assets.... 6.63% 6.56% 6.88% 6.04% 6.14%
Ratio of expenses to average net assets*................ 0.81% 0.87% 0.99% 0.87% 1.17%
Ratio of net investment income to average net assets*... 6.36% 6.23% 6.45% 5.49% 5.36%
Portfolio Turnover (a).................................. 55.91% 101.06% 99.71% 85.62% 21.51%
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
53
<PAGE> 483
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
------------------------------
CLASS A
------------------------------
YEARS ENDED JUNE 30,
------------------------------
1997 1996 1995(a)
------- ------- --------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................................... $ 9.87 $ 10.04 $ 9.45
------- ------- ------
Investment Activities
Net investment income......................................................... 0.63 0.64 0.37
Net realized and unrealized gains (losses) from investments and futures....... 0.08 (0.17) 0.59
------- ------- ------
Total from Investment Activities............................................ 0.71 0.47 0.96
------- ------- ------
Distributions
Net investment income......................................................... (0.63) (0.64) (0.37)
------- ------- ------
Total Distributions......................................................... (0.63) (0.64) (0.37)
------- ------- ------
NET ASSET VALUE,
END OF PERIOD................................................................. $ 9.95 $ 9.87 $10.04
======= ======= ======
Total Return (Excludes Sales Charge)............................................ 7.40% 4.77% 10.29%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................................. $18,763 $13,706 $4,941
Ratio of expenses to average net assets....................................... 0.78% 0.79% 0.83%(c)
Ratio of net investment income to average net assets.......................... 6.35% 6.31% 6.64%(c)
Ratio of expenses to average net assets*...................................... 1.16% 1.22% 1.66%(c)
Ratio of net investment income to average net assets*......................... 5.97% 5.88% 5.81%(c)
Portfolio Turnover (d)........................................................ 55.91% 101.06% 99.71
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced operations November 30, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
54
<PAGE> 484
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
------------------------------
CLASS B
------------------------------
YEARS ENDED JUNE 30,
------------------------------
1997 1996 1995(a)
------- ------- --------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................................... $ 9.83 $ 10.01 $ 9.45
------- ------- ------
Investment Activities
Net investment income......................................................... 0.56 0.58 0.23
Net realized and unrealized gains (losses) from investments and futures....... 0.09 (0.18) 0.56
------- ------- ------
Total from Investment Activities............................................ 0.65 0.40 0.79
------- ------- ------
Distributions
Net investment income......................................................... (0.56) (0.58) (0.23)
------- ------- ------
Total Distributions......................................................... (0.56) (0.58) (0.23)
------- ------- ------
NET ASSET VALUE,
END OF PERIOD................................................................. $ 9.92 $ 9.83 $10.01
======= ======= ======
Total Return (Excludes Sales Charge)............................................ 6.83% 4.10% 8.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................................. $10,152 $ 6,077 $ 266
Ratio of expenses to average net assets....................................... 1.44% 1.44% 1.51%(c)
Ratio of net investment income to average net assets.......................... 5.71% 5.66% 6.15%(c)
Ratio of expenses to average net assets*...................................... 1.81% 1.87% 2.34%(c)
Ratio of net investment income to average net assets*......................... 5.34% 5.23% 5.31%(c)
Portfolio Turnover (d)........................................................ 55.91% 101.06% 99.71%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on November 30, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
55
<PAGE> 485
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
-------------------------------------------------------
FIDUCIARY
-------------------------------------------------------
YEARS ENDED JUNE 30,
-------------------------------------------------------
1997 1996 1995 1994 1993(a)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................... $ 9.56 $ 9.81 $ 9.35 $ 10.15 $ 10.00
-------- -------- -------- -------- -------
Investment Activities
Net investment income.................................. 0.62 0.62 0.62 0.51 0.20
Net realized and unrealized gains (losses) from
investments and futures.............................. 0.13 (0.25) 0.46 (0.77) 0.15
-------- -------- -------- -------- -------
Total from Investment Activities..................... 0.75 0.37 1.08 (0.26) 0.35
-------- -------- -------- -------- -------
Distributions
Net investment income.................................. (0.62) (0.62) (0.61) (0.50) (0.20)
In excess of net investment income..................... -- -- (0.01) (0.02) --
In excess of net realized gains........................ -- -- -- (0.02) --
-------- -------- -------- -------- -------
Total Distributions.................................. (0.62) (0.62) (0.62) (0.54) (0.20)
-------- -------- -------- -------- -------
NET ASSET VALUE,
END OF PERIOD.......................................... $ 9.69 $ 9.56 $ 9.81 $ 9.35 $ 10.15
======== ======== ======== ======== =======
Total Return............................................. 8.10% 3.81% 12.04% (2.73)% 9.03%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................... $724,423 $677,326 $379,826 $209,692 $52,152
Ratio of expenses to average net assets................ 0.62% 0.68% 0.71% 0.68% 0.69%(b)
Ratio of net investment income to average net assets... 6.45% 6.34% 6.65% 5.13% 5.43%(b)
Ratio of expenses to average net assets*............... 0.68% 0.69% 0.73% 0.71% 1.05%(b)
Ratio of net investment income to average net
assets*.............................................. 6.39% 6.33% 6.63% 5.10% 5.07%(b)
Portfolio Turnover (c)................................. 60.53% 62.70% 106.14% 377.78% 139.24%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced offering on February 8, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
56
<PAGE> 486
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
---------------------------------------------------
CLASS A
---------------------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................ $ 9.56 $ 9.81 $ 9.35 $ 10.17 $ 10.22
------- ------- ------- ------- -------
Investment Activities
Net investment income...................................... 0.60 0.60 0.61 0.48 0.17
Net realized and unrealized gains (losses) from investments
and futures.............................................. 0.13 (0.25) 0.45 (0.79) (0.05)
------- ------- ------- ------- -------
Total from Investment Activities......................... 0.73 0.35 1.06 (0.31) 0.12
------- ------- ------- ------- -------
Distributions
Net investment income...................................... (0.60) (0.60) (0.59) (0.47) (0.17)
In excess of net investment income......................... -- -- (0.01) (0.02) --
In excess of net realized gains............................ -- -- -- (0.02) --
------- ------- ------- ------- -------
Total Distributions...................................... (0.60) (0.60) (0.60) (0.51) (0.17)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 9.69 $ 9.56 $ 9.81 $ 9.35 $ 10.17
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)......................... 7.83% 3.58% 11.84% (3.16)% 5.35%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $34,727 $38,800 $ 8,130 $ 1,690 $ 840
Ratio of expenses to average net assets.................... 0.87% 0.93% 0.97% 0.92% 0.95%(b)
Ratio of net investment income to average net assets....... 6.20% 6.09% 6.46% 4.84% 5.56%(b)
Ratio of expenses to average net assets*................... 1.03% 1.04% 1.09% 1.05% 1.44%(b)
Ratio of net investment income to average net assets*...... 6.04% 5.98% 6.34% 4.71% 5.07%(b)
Portfolio Turnover (c)..................................... 60.53% 62.70% 106.14% 377.78% 139.24%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on March 6, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
57
<PAGE> 487
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
----------------------------------------
CLASS B
----------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------
1997 1996 1995 1994(a)
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................. $ 9.56 $ 9.81 $ 9.35 $ 10.04
------- ------- ------- -------
Investment Activities
Net investment income................................................ 0.54 0.54 0.55 0.18
Net realized and unrealized gains (losses) from investments and
futures............................................................ 0.13 (0.25) 0.46 (0.69)
------- ------- ------- -------
Total from Investment Activities................................... 0.67 0.29 1.01 (0.51)
------- ------- ------- -------
Distributions
Net investment income................................................ (0.54) (0.54) (0.55) (0.16)
In excess of net investment income................................... -- -- -- (0.02)
------- ------- ------- -------
Total Distributions................................................ (0.54) (0.54) (0.55) (0.18)
------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD........................................................ $ 9.69 $ 9.56 $ 9.81 $ 9.35
======= ======= ======= =======
Total Return (Excludes Sales Charge)................................... 7.14% 2.95% 11.20% (4.99)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................... $11,729 $10,782 $ 2,513 $ 656
Ratio of expenses to average net assets.............................. 1.52% 1.58% 1.62% 1.52%(c)
Ratio of net investment income to average net assets................. 5.55% 5.44% 5.76% 4.60%(c)
Ratio of expenses to average net assets*............................. 1.68% 1.69% 1.74% 1.63%(c)
Ratio of net investment income to average net assets*................ 5.39% 5.33% 5.64% 4.49%(c)
Portfolio Turnover (d)............................................... 60.53% 62.70% 106.14% 377.78%
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
58
<PAGE> 488
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME BOND FUND
--------------------------------------------------------
FIDUCIARY
--------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................... $ 9.33 $ 9.54 $ 9.23 $ 10.43 $ 10.18
-------- -------- -------- -------- --------
Investment Activities
Net investment income................................. 0.64 0.65 0.64 0.54 0.66
Net realized and unrealized gains (losses) from
investments and futures............................. 0.09 (0.21) 0.35 (0.74) 0.38
-------- -------- -------- -------- --------
Total from Investment Activities.................... 0.73 0.44 0.99 (0.20) 1.04
-------- -------- -------- -------- --------
Distributions
Net investment income................................. (0.64) (0.65) (0.64) (0.57) (0.66)
Net realized gains.................................... -- -- (0.04) (0.43) (0.13)
-------- -------- -------- -------- --------
Total Distributions................................. (0.64) (0.65) (0.68) (1.00) (0.79)
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD......................................... $ 9.42 $ 9.33 $ 9.54 $ 9.23 $ 10.43
======== ======== ======== ======== ========
Total Return............................................ 8.10% 4.62% 11.29% (2.54)% 10.62%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..................... $730,754 $520,239 $474,124 $560,071 $483,291
Ratio of expenses to average net assets............... 0.60% 0.59% 0.59% 0.53% 0.56%
Ratio of net investment income to average net
assets.............................................. 6.85% 6.76% 6.94% 5.35% 6.44%
Ratio of expenses to average net assets*.............. 0.80% 0.81% 0.86% 0.85% 0.90%
Ratio of net investment income to average net
assets*............................................. 6.65% 6.54% 6.67% 5.03% 6.10%
Portfolio Turnover (a)................................ 55.18% 95.52% 262.25% 131.04% 143.52%
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
59
<PAGE> 489
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME BOND FUND
---------------------------------------------------
CLASS A
---------------------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................ $ 9.32 $ 9.54 $ 9.22 $ 10.43 $ 10.16
------- ------- ------- ------- -------
Investment Activities
Net investment income...................................... 0.62 0.63 0.61 0.52 0.63
Net realized and unrealized gains (losses) from investments
and futures.............................................. 0.09 (0.23) 0.36 (0.75) 0.41
------- ------- ------- ------- -------
Total from Investment Activities......................... 0.71 0.40 0.97 (0.23) 1.04
------- ------- ------- ------- -------
Distributions
Net investment income...................................... (0.62) (0.62) (0.60) (0.55) (0.64)
In excess of net investment income......................... -- -- (0.01) -- --
Net realized gains......................................... -- -- (0.04) (0.43) (0.13)
------- ------- ------- ------- -------
Total Distributions...................................... (0.62) (0.62) (0.65) (0.98) (0.77)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 9.41 $ 9.32 $ 9.54 $ 9.22 $ 10.43
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)......................... 7.85% 4.26% 10.90% (2.33)% 10.58%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $14,325 $10,127 $ 6,796 $ 5,347 $ 7,064
Ratio of expenses to average net assets.................... 0.85% 0.84% 1.01% 0.78% 0.77%
Ratio of net investment income to average net assets....... 6.59% 6.51% 6.57% 5.25% 6.12%
Ratio of expenses to average net assets*................... 1.15% 1.16% 1.38% 1.20% 1.26%
Ratio of net investment income to average net assets*...... 6.29% 6.19% 6.20% 4.83% 5.63%
Portfolio Turnover (a)..................................... 55.18% 95.52% 262.25% 131.04% 143.52%
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
60
<PAGE> 490
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME BOND FUND
---------------------------------------
CLASS B
---------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------
1997 1996 1995 1994(a)
------- ------ ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................... $ 9.40 $ 9.62 $ 9.29 $ 9.97
------- ------ ------- -------
Investment Activities
Net investment income................................................. 0.56 0.56 0.56 0.17
Net realized and unrealized gains (losses) from investments and
futures............................................................. 0.09 (0.21) 0.38 (0.70)
------- ------ ------- -------
Total from Investment Activities.................................... 0.65 0.35 0.94 (0.53)
------- ------ ------- -------
Distributions
Net investment income................................................. (0.56) (0.57) (0.57) (0.15)
Net realized gains.................................................... -- -- (0.04) --
------- ------ ------- -------
Total Distributions................................................. (0.56) (0.57) (0.61) (0.15)
------- ------ ------- -------
NET ASSET VALUE,
END OF PERIOD......................................................... $ 9.49 $ 9.40 $ 9.62 $ 9.29
======= ====== ======= =======
Total Return (Excludes Sales Charge).................................... 7.15% 3.65% 10.63% (5.29)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..................................... $10,873 $6,110 $ 1,887 $ 723
Ratio of expenses to average net assets............................... 1.50% 1.49% 1.49% 1.45%(c)
Ratio of net investment income to average net assets.................. 5.95% 5.86% 6.16% 5.20%(c)
Ratio of expenses to average net assets*.............................. 1.80% 1.81% 1.86% 1.84%(c)
Ratio of net investment income to average net assets*................. 5.65% 5.54% 5.80% 4.81%(c)
Portfolio Turnover (d)................................................ 55.18% 95.52% 262.25% 131.04%
</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 Shares commenced offering on January 17, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
61
<PAGE> 491
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TREASURY & AGENCY FUND
--------------------------------------------------------
FIDUCIARY CLASS A CLASS B
---------------- ---------------- ----------------
JANUARY 20, 1997 JANUARY 20, 1997 JANUARY 20, 1997
THROUGH THROUGH THROUGH
JUNE 30, JUNE 30, JUNE 30,
1997 (a) 1997 (a) 1997 (a)
---------------- ---------------- ----------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................................... $ 10.00 $10.00 $10.00
-------- ------ ------
Investment Activities
Net investment income.................................... 0.28 0.29 0.26
Net realized and unrealized gains (losses) from
investments and futures................................ (0.01) (0.02) (0.01)
-------- ------ ------
Total from Investment Activities....................... 0.27 0.27 0.25
-------- ------ ------
Distributions
Net investment income.................................... (0.28) (0.29) (0.26)
-------- ------ ------
NET ASSET VALUE,
END OF PERIOD............................................ $ 9.99 $ 9.98 $ 9.99
======== ====== ======
Total Return (Excludes Sales Charge) (b)................... 2.78% 2.78% 2.58%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $110,084 $ 94 $ 80
Ratio of expenses to average net assets (c).............. 0.45% 0.71% 1.23%
Ratio of net investment income to average net assets
(c).................................................... 6.44% 6.47% 6.30%
Ratio of expenses to average net assets* (c)............. 0.78% 1.15% 1.81%
Ratio of net investment income to average net assets*
(c).................................................... 6.11% 6.03% 5.72%
Portfolio Turnover (d)................................... 54.44% 54.44% 54.44%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
62
<PAGE> 492
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
Ultra Short-Term Income Fund (formally the Government ARM Fund), the Limited
Volatility Bond Fund, the Intermediate Bond Fund, the Government Bond Fund, the
Income Bond Fund and the Treasury & Agency Fund (six series of The One Group
Family of Mutual Funds), including the schedules of portfolio investments, as of
June 30, 1997, and the related statements of operations, statements of changes
in net assets and the financial highlights for each period presented except as
noted in the next paragraph. These financial statements and financial highlights
are the responsibility of The One Group Family of Mutual Funds' management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
The financial highlights for the year ended June 30, 1993 for the Intermediate
Bond Fund were audited by other auditors whose report dated August 25, 1993
expressed an unqualified opinion on the financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above, except as noted in the second paragraph present fairly, in all material
respects, the financial position of the Ultra Short-Term Income Fund, the
Limited Volatility Bond Fund, the Intermediate Bond Fund, the Government Bond
Fund, the Income Bond Fund and the Treasury & Agency Fund as of June 30, 1997,
the results of their operations, the changes in their net assets and the
financial highlights for the periods indicated herein, in conformity with
generally accepted accounting principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
63
<PAGE> 493
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS (99.8%):
Alabama (0.1%):
$ 500 Docks Department, Facilities
Revenue, 7.30%, 10/1/01, Callable
10/1/98 @102, BIG................. $ 528
--------
Alaska (0.2%):
1,000 Anchorage, GO, 6.00%, 10/1/10,
FGIC.............................. 1,081
--------
Arizona (2.7%):
1,000 Educational Loan Marketing Corp.,
AMT, 7.30%, 9/1/03, Callable
9/1/99 @102, MBIA................. 1,054
1,000 Educational Loan Marketing Corp.,
AMT, 7.35%, 9/1/04, Callable
9/1/99 @102, MBIA................. 1,054
775 Educational Loan Marketing Corp.,
AMT, 7.38%, 9/1/05, Callable
9/1/99 @102, MBIA................. 815
1,105 Maricopa County Development
Authority, Multifamily Housing,
5.65%, 1/1/09, Callableb 1/1/07
@101.............................. 1,112
1,280 Maricopa County Development
Authority, Multifamily Housing,
6.05%, 7/1/17, Callable 1/1/07
@101.............................. 1,288
1,000 Northern Arizona University, 6.50%,
6/1/10, FGIC...................... 1,137
700 Phoenix Industrial Development
Authority, 6.00%, 12/1/10,
Callable 12/1/03 @102............. 705
2,835 Phoenix Airport Revenue, AMT, Series
D, 6.00%, 7/1/06, MBIA............ 3,055
2,060 Pima County, Arizona Industrial
Development Authority, 5.45%,
4/1/10, Callable 4/1/07 @102,
MBIA.............................. 2,096
--------
12,316
--------
Arkansas (0.7%):
1,195 Sebastian County, Community Junior
College, 5.30%, 4/1/09, Callable
4/1/07 @101, AMBAC................ 1,209
1,060 Sebastian County, Community Junior
College, 5.35%, 4/1/10, Callable
4/1/07 @101, AMBAC................ 1,068
1,000 State Capital Appreciation, Series
97A, 0.00%, 6/1/14................ 392
585 State Development Authority, Single
Family Mortgage Revenue, Series G,
5.50%, 1/1/10..................... 596
--------
3,265
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
California (5.6%):
$ 2,000 ABAG Finance Authority for Nonprofit
Corp., Multi-Family Housing
Revenue, AMT, 5.70%, 11/1/26,
Callable 11/1/06 @100............. $ 2,060
1,945 ABAG Finance Authority, Multi-Family
Housing Revenue, AMT, 6.75%,
4/20/07, GNMA..................... 2,115
500 Castaic Lake Water Agency,
Certificates Partnership, Water
System Improvement Project, 7.00%,
8/1/04, Callable 8/1/00 @102,
MBIA.............................. 550
1,000 Escondido Multifamily Housing,
Series 97B, 5.40%, 1/1/27,
Mandatory Put 7/1/07 @100......... 1,013
1,250 Housing Finance Agency Revenue, AMT,
Series G, 5.70%, 8/1/07, Callable
8/1/05 @102, MBIA................. 1,290
290 Housing Finance Agency Revenue, Home
Mortgage, Series F, 7.00%, 8/1/02,
Callable 2/1/00 @102.............. 303
1,750 Riverside County, CA, 5.75%,
6/1/09............................ 1,871
3,000 Sacramento Municipal Utility
District, 5.40%, 11/15/06,
Callable 11/15/03 @102, FSA....... 3,087
1,000 San Francisco City & County
Airports, Common International
Airport Revenue, 6.30%, 5/1/11,
Callable 5/1/02 @102, AMBAC....... 1,075
5,000 San Francisco City & County
Utilities, 5.00%, 11/1/17,
Callable 11/1/06 @101.5........... 4,758
1,000 Southern Public Power Authority,
Transmission Project, Revenue,
0.00%, 7/1/15, MBIA............... 369
1,000 State, 7.00%, 10/1/07............... 1,180
5,975 State Public Works, Department of
Corrections, Bridge Lease, 5.50%,
1/1/14, Callable 1/1/06 @102,
AMBAC............................. 6,025
--------
25,696
--------
Colorado (10.7%):
3,290 Arapahoe County, Capital
Improvements, Project E-470,
0.00%, 8/31/03.................... 2,412
1,135 Arapahoe County, School District #
001 Englewood, 0.00%, 11/1/09..... 600
1,580 Boulder County, Revenue, NCAR
Project, 6.90%, 12/1/07, Callable
12/1/01 @101...................... 1,729
</TABLE>
Continued
21
<PAGE> 494
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 1,000 Denver City & County, Airport
Revenue, AMT, 6.75%, 11/15/13,
Callable 11/15/02 @102, MBIA...... $ 1,086
2,000 Denver City & County, Airport
Revenue, Series B, AMT, 5.75%,
11/15/09, Callable 11/15/06 @102,
MBIA.............................. 2,066
2,645 Denver City & County, Airport
Revenue, Series B, AMT, 7.50%,
11/15/25, Callable 11/15/97
@102.............................. 2,724
9,750 Denver City & County, School
District # 1, GO, 0.00%,
12/1/06........................... 6,077
1,000 Denver City & County, School
District, No. 001, GO Refunding,
6.50%, 12/1/10.................... 1,137
3,000 El Paso County, School District,
7.13%, 12/1/19, Callable 12/1/07
@125.............................. 3,693
1,135 Health Facilities Authority Revenue,
6.40%, 1/1/10, Callable 1/1/07
@101.............................. 1,150
825 Highlands Ranch Metropolitan
District Co., 5.75%, 9/1/10,
AMBAC............................. 877
1,750 Highlands Ranch Metropolitan
District Co., 5.75%, 9/1/12,
AMBAC............................. 1,853
370 Housing Finance Authority, 5.25%,
5/1/05............................ 372
3,250 Housing Finance Authority Series 97
B-3, 6.80%, 11/1/28, Callable
5/1/07 @105....................... 3,569
275 Housing Finance Authority, AMT,
5.63%, 5/1/04..................... 281
3,220 Housing Finance Authority, GO,
Series A, 6.40%, 8/1/06, Callable
8/1/02 @102, MBIA................. 3,363
800 Housing Finance Authority,
Refunding, Single Family, Series
D, 5.65%, 12/1/04, Callable 5/1/03
@100.............................. 818
805 Housing Finance Authority, Single
Family Program, Series F, AMT,
6.75%, 12/1/04.................... 831
500 Jefferson County, Partnership,
6.45%, 12/1/04, Callable 12/1/02
@102, MBIA........................ 550
3,000 Meridian Metropolitan District,
7.50%, 12/1/11, Callable 12/1/01
@101.............................. 3,297
1,000 Mountain Village Metropolitan
District, San Miguel County, GO,
8.10%, 12/1/11, Callable 12/1/02
@101.............................. 1,125
4,500 Northern Colorado Water Conservancy,
6.00%, 12/1/15, Callable 7/10/97
@100.............................. 4,507
1,620 Pueblo County, Single Family
Mortgage Revenue, 6.40%, 11/1/13,
Callable 11/1/04 @102............. 1,691
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 1,065 Student Obligation, 6.00%, 9/1/01... $ 1,108
740 Student Obligation Bond Authority,
Student Loan Revenue, AMT, 7.25%,
9/1/05, Callable 9/01/00 @100..... 772
1,250 Summit County, School District No.
1, Refunding, 6.75%, 12/1/04,
FGIC.............................. 1,411
--------
49,099
--------
Connecticut (2.3%):
1,000 Bridgeport, Refunding, 6.50%,
9/1/08, AMBAC..................... 1,128
1,575 Series A, 5.30%, 5/15/10, Callable
5/15/06 @101...................... 1,586
2,475 State GO, Series B, 6.00%,
10/1/05........................... 2,684
1,015 State Health & Educational
Facilities, Series 97E, 5.50%,
7/1/09, Callable 7/1/07 @102...... 1,020
1,765 State Housing Finance Authority,
6.70%, 11/15/12, Callable 11/15/02
@102.............................. 1,864
2,000 State Resource Recovery Authority,
5.75%, 11/15/07, MBIA............. 2,134
--------
10,416
--------
Florida (5.7%):
410 Broward County, Florida Resource
Recovery Revenue, North, 7.95%,
12/1/08, Callable 12/1/99 @103.... 447
435 Broward County, Florida Resource
Recovery Revenue, South, 7.95%,
12/1/08, Callable 12/1/99 @103.... 474
1,300 Broward County, Housing Authority,
5.55%, 7/1/09, Callable 7/1/06
@102.............................. 1,317
2,000 Broward County, Housing Finance
Authority, Single Family Mortgage
Revenue, AMT, 5.00%, 10/1/29,
Callable 4/1/07 @102.............. 2,037
1,500 Cape Coral Special Obligation
Revenue Water Improvements,
Special Assessment - Water
Utility, 6.38%, 6/1/09, Callable
6/1/02 @102, FSA.................. 1,620
420 Cape Coral, Split Obligations, Waste
Revenue, 6.25%, 6/1/06, Callable
6/1/02 @102, FSA.................. 456
1,070 Clay County, Housing Finance
Authority Revenue, Single Family
Mortgage, AMT, 6.25%, 9/1/13,
Callable 3/1/05 @102.............. 1,106
</TABLE>
Continued
22
<PAGE> 495
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Florida, continued:
$ 1,370 Clay County, Housing Financial
Authority Revenue, Single Family
Mortgage, AMT, 6.20%, 9/1/11,
Callable 3/1/05 @102.............. $ 1,413
2,010 Clay County, Housing Financial
Authority, AMT, 5.25%, 10/1/07,
Callable 4/1/07 @102.............. 2,017
1,000 Dade County, Aviation Revenue,
Series A, 6.00%, 10/1/08, Callable
10/1/05 @102, AMBAC............... 1,084
1,155 Department of Corrections,
Okeechobee Correctional Facility,
6.00%, 3/1/06, Callable 3/1/05
@102, AMBAC....................... 1,251
2,000 Escambia County, Housing Finance
Authority, Multifamily Housing
Revenue, 5.75%, 4/1/04, Callable
12/30/03 @100, GNMA............... 2,038
1,185 Indian River County, Hospital
Revenue, 5.95%, 10/1/09, Callable
1/1/07 @102, FSA.................. 1,266
1,285 Indian River County, Hospital
Revenue, 6.00%, 10/1/10, Callable
1/1/07 @102, FSA.................. 1,368
260 Manatee County, Housing Finance
Authority Mortgage Revenue, 6.38%,
11/1/05........................... 263
560 Manatee County, Housing Finance
Authority Revenue, 6.75%,
11/1/13........................... 588
1,000 Orlando Water and Electricity
Revenue, 8.00%, 4/1/03............ 1,175
1,500 Pinellas County Housing, AMT, Series
A, 6.85%, 3/1/29, Callable 3/1/07
@102.............................. 1,593
6,300 Plantation Water & Sewer Revenue,
0.00%, 3/1/07, MBIA............... 3,744
830 Tampa Capital Improvement Program,
Series B, 8.38%, 10/1/18, Callable
10/1/98 @100...................... 863
555 Tampa Water & Sewer Revenue, 0.00%,
10/1/05........................... 366
--------
26,486
--------
Georgia (0.9%):
1,500 Atlanta Airport Facilities, 6.50%,
1/1/08, AMBAC..................... 1,697
1,000 Atlanta Airport Facilities Revenue,
Series A, 6.50%, 1/1/07, AMBAC.... 1,124
1,215 Columbus Water & Sewer Revenue,
6.30%, 5/1/06, Callable 11/1/02
@102, FGIC........................ 1,318
--------
4,139
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Hawaii (1.4%):
$ 1,000 Honolulu City & County, GO, 5.60%,
4/1/08............................ $ 1,047
1,000 Honolulu City & County, GO, Series
A, 5.60%, 4/1/07, FSA............. 1,053
3,500 Honolulu City & County, GO, Series
A, 7.35%, 7/1/08.................. 4,173
--------
6,273
--------
Idaho (1.5%):
965 Housing Agency, Single Family
Mortgages, Series D1, 5.90%,
7/1/06............................ 996
1,745 Student Loan Fund Marketing
Association, Inc., 6.40%, 10/1/99,
GSL............................... 1,775
1,050 Student Loan Fund Marketing
Association, Inc., Student Loan
Revenue, 6.25%, 4/1/98............ 1,057
705 Student Loan Fund Marketing
Association, Inc., Student Loan
Revenue, AMT, 5.88%, 4/1/99....... 715
1,300 University of Idaho, University
Revenue, 5.75%, 4/1/06, FSA....... 1,387
1,060 University of Idaho, University
Revenue, 5.50%, 4/1/13, Callable
4/1/07 @101, MBIA................. 1,076
--------
7,006
--------
Illinois (7.3%):
3,500 Chicago Board of Education, 5.80%,
12/1/17, Callable 12/1/07 @102,
AMBAC............................. 3,565
1,000 Chicago Metro Water Reclamation
District - Greater Chicago Capital
Improvements, GO, 7.25%,
12/1/12........................... 1,211
4,245 Chicago Metro Water Reclamation
District - Greater Chicago Capital
Improvements, GO, 6.25%, 12/1/14,
Callable 12/1/05 @100............. 4,541
3,045 Chicago Park District, GO, 6.35%,
11/15/08, Callable 11/15/05 @102,
MBIA.............................. 3,352
2,585 Chicago Water Revenue, 6.50%,
11/1/10, FGIC..................... 2,904
1,770 Chicago, Single Family Mortgage
Revenue, 0.00%, 10/1/09, Callable
4/1/98 @48.84, MBIA............... 757
1,450 Chicago, Single Family Mortgage
Revenue, 0.00%, 10/1/09, Callable
10/1/05 @78.60, MBIA.............. 660
</TABLE>
Continued
23
<PAGE> 496
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Illinois, continued:
$ 7,000 Development Finance Authority,
Pollution Control Revenue, 7.25%,
6/1/11, Callable 6/1/01 @102...... $ 7,596
935 Evanston Residential Mortgage,
6.38%, 1/1/09, Callable 7/1/02
@102, AMBAC....................... 984
555 Health Facilities Authority Revenue,
7.90%, 8/15/03, Callable 8/1/97
@102, MBIA........................ 568
1,645 Health Facilities Authority Revenue,
6.13%, 11/15/07, Callable 11/15/04
@102, MBIA........................ 1,779
1,500 Health Facilities Authority Revenue,
6.75%, 1/1/10, Callable 1/1/00
@102, FGIC........................ 1,594
2,500 Student Assistance, Student Loan
Revenue, AMT, Series M, 6.60%,
3/1/07, Callable 3/1/02 @102...... 2,647
1,350 Winnebago County, School District No
122, Harlem-Loves Park, Refunding,
6.35%, 6/1/07, FGIC............... 1,506
--------
33,664
--------
Indiana (3.2%):
2,150 Brownsburg Indiana Building, 5.50%,
2/1/15, Callable 2/1/07 @102,
MBIA.............................. 2,140
500 Columbus Sewer Works Revenue, 7.10%,
2/15/00........................... 534
1,000 Fort Wayne Hospital Authority,
Parkview Memorial Hospital
Project, Series A, 7.50%,
11/15/11, Callable 11/15/99 @102,
FGIC.............................. 1,082
705 Fremont Middle School Building
Corp., 6.60%, 9/15/04, Prerefunded
3/15/02 @101, AMBAC............... 775
700 Health Facility Financing Authority,
Hospital Revenue, Lutheran
Hospital Indiana, 7.25%, 2/15/06,
Callable 3/15/02 @101, AMBAC...... 747
500 Indiana State University, 6.90%,
8/1/03, Callable 8/1/00 @102...... 546
2,855 Indianapolis Economic Development
Revenue, Knob-in-the-Woods
Project, 6.38%, 12/1/04, Manadtory
Put 12/1/04 @100.................. 3,085
500 Lawrence Township School District,
6.75%, 1/5/05..................... 558
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Indiana, continued:
$ 1,500 New Albany Floyd County, Indiana
School Building, 6.20%, 7/1/03.... $ 1,625
1,500 New Albany Floyd County, Indiana
School Building, 6.20%, 7/1/04.... 1,633
1,000 Noblesville Hamilton County,
Building, 7.00%, 2/1/13,
Prerefunded 2/1/01 @102........... 1,104
1,000 State Vocational Technical College
Building Facilities Fee, 6.50%,
7/1/07, Callable 1/1/05 @102,
AMBAC............................. 1,120
--------
14,949
--------
Iowa (1.4%):
700 Des Moines Water Revenue, Series B,
5.50%, 12/1/04, Callable 12/1/01
@100.............................. 721
1,710 Finance Authority, 6.35%, 7/1/09,
Callable 1/1/03 @102, AMBAC....... 1,791
1,000 Finance Authority, Private College
Revenue, 5.75%, 12/1/08, MBIA..... 1,063
880 Finance Authority, Single Family
Mortgage, Series F, 6.15%, 7/1/04,
Callable 1/1/03 @102, AMBAC....... 903
500 Sioux City Iowa Water Revenue,
6.05%, 6/1/06, Callable 6/1/00
@100.............................. 515
1,500 Student Loan Liquidity Corp.,
Student Loan Revenue, Series C,
6.50%, 12/1/99, AMBAC............. 1,564
--------
6,557
--------
Kansas (0.4%):
1,750 Wichita Hospital Revenue, St.
Francis Regional Hospital, 6.25%,
10/1/10, Callable 10/1/02 @102,
MBIA.............................. 1,865
--------
Kentucky (1.2%):
845 Campbell & Kenton Counties,
Sanitation District #1, 6.50%,
8/1/05, ETM....................... 859
2,855 Junction City, Kentucky College
Revenue, 5.88%, 4/1/17, Callable
4/1/07 @102....................... 2,929
1,000 Kenton County, Public Properties
Corp., 5.63%, 12/1/12, Callable
12/1/06 @101...................... 1,015
2,000 Owensboro Electric Light & Power
Revenue, 0.00%, 1/1/09, Callable
1/1/98 @33.44, BIG................ 648
--------
5,451
--------
</TABLE>
Continued
24
<PAGE> 497
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana (1.4%):
$ 246 Housing Agency Mortgage Revenue,
7.80%, 12/1/09, Callable 6/1/04
@105, GNMA........................ $ 275
1,710 Jefferson Parish Louisiana Home
Mortgage, AMT, Series A, 5.45%,
12/1/08........................... 1,733
2,000 Public Facilities Authority Revenue,
AMT, 6.75%, 9/1/06, Callable
9/1/02 @102....................... 2,121
2,000 St. Charles Parish Pollution
Control, 8.25%, 6/1/14, Callable
6/1/99 @103....................... 2,169
--------
6,298
--------
Maine (0.1%):
535 State Street Housing Preservation
Corp., 100 State Street Project,
7.20%, 1/1/02..................... 566
--------
Maryland (0.3%):
1,150 Anne Arundel County, GO, Series B,
AMT, 7.70%, 3/15/06, Callable
3/15/99 @102...................... 1,232
650 Prince Georges County, Maryland
Housing Authority, 0.00%, 9/1/08,
ETM............................... 364
--------
1,596
--------
Massachusetts (2.1%):
1,650 Beverly Massachusetts, 6.60%,
3/15/09, Callable 3/15/04 @102,
FSA............................... 1,824
760 Education Loan Authority, AMT,
7.25%, 1/1/09, Callable 1/1/01
@102.............................. 815
860 Health & Educational Facilities,
6.13%, 7/1/04, Callable 7/1/02
@102.............................. 911
2,030 State Port Authority Revenue,
Special Facilities, US Air
Project, Series A, AMT, 5.50%,
9/1/10, MBIA...................... 2,038
2,400 State, GO, Series C, 6.00%,
8/1/09............................ 2,605
1,465 Worcester, GO, Series A, 6.10%,
5/1/08, Callable 5/1/05 @102,
MBIA.............................. 1,590
--------
9,783
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Michigan (1.0%):
$ 780 Detroit Convention Facilities,
5.25%, 9/30/12, Callable 9/30/03
@102.............................. $ 744
2,000 State Hospital Finance Authority
Revenue, Mercy Mount Clemens
Corp., 6.25%, 5/15/11, Callable
5/15/01 @102...................... 2,091
1,500 State Hospital Finance Authority,
Series A, 8.10%, 10/1/13, Callable
10/1/05 @102...................... 1,725
--------
4,560
--------
Minnesota (0.3%):
1,500 Northern Municipal Power Agency,
Minnesota Electric, Series A,
5.90%, 1/1/07, Callable 1/1/03
@102, AMBAC....................... 1,599
--------
Mississippi (0.3%):
1,475 Home Corp., Single Family Series D,
5.25%, 7/1/12, Callable 7/1/07
@105, FNMA/GNMA................... 1,591
--------
Missouri (3.0%):
1,895 Carthage Waterworks & Wastewater
Treatment Systems, 6.30%, 7/1/09,
Callable 7/1/04 @101, MBIA........ 2,060
1,520 Fort Zumwalt School District, 5.20%,
3/1/09, Callable 3/1/07 @100,
AMBAC............................. 1,523
1,735 Fort Zumwalt School District, 5.30%,
3/1/10, Callable 3/1/07 @100,
AMBAC............................. 1,737
1,480 Kansas City Industrial Development
Authority, Multifamily Housing
Revenue, Series A, AMT, 5.63%,
7/1/05............................ 1,527
1,430 Kansas City Municipal Corp. Revenue,
5.40%, 1/15/08, Callable 1/15/06
@101, AMBAC....................... 1,473
2,500 St. Louis Convention & Sports
Complex, 5.50%, 8/15/13, Callable
8/15/03 @102, MBIA................ 2,505
2,955 St. Louis Land Clearance
Redevelopment Authority Housing
Revenue, 5.95%, 7/1/22, Mandatory
Put 4/1/07 @100, FNMA............. 3,099
--------
13,924
--------
Montana (0.3%):
1,370 Montana Long Range Bombing Project,
Series 96D, 5.25%, 8/1/16,
Callable 8/1/06 @100.............. 1,367
--------
</TABLE>
Continued
25
<PAGE> 498
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Nebraska (0.5%):
$ 2,250 Higher Education Loan Program,
Series A-6, AMT, 5.90%, 6/1/03.... $ 2,317
--------
Nevada (2.9%):
1,025 Douglas County, School District,
Series A, 5.90%, 6/1/08, Callable
6/1/02 @101, FGIC................. 1,073
2,000 Las Vegas, Sewer Revenue, 6.60%,
10/1/12, Callable 4/1/02 @102,
FGIC.............................. 2,214
500 Municipal Bond Bank Project #32,
7.00%, 8/1/05, ETM................ 576
1,000 Municipal Bond Bank Project #20-23A,
7.00%, 7/1/01, ETM................ 1,044
3,010 Washoe County, School District, GO,
6.13%, 8/1/07, Callable 8/1/02
@101, MBIA........................ 3,194
5,000 Washoe County, Water Facilities
Revenue, Sierra Pacific Power,
AMT, 6.65%, 6/1/17, Callable
12/1/02 @102, MBIA................ 5,398
--------
13,499
--------
New Hampshire (0.3%):
1,225 Higher Education & Health Facilities
Authority Revenue, 6.25%, 1/1/06,
Callable 7/1/04 @102.............. 1,312
--------
New Jersey (0.4%):
1,630 South Brunswick Township, 6.40%,
8/1/07, Callable 8/1/05 @100,
FGIC.............................. 1,798
--------
New Mexico (2.9%):
104 Albuquerque, 7.65%, 8/15/07, FGIC... 106
1,000 Albuquerque Apartment Revenue, AMT,
6.50%, 7/1/11, Callable 7/1/00
@105, AMBAC....................... 1,086
3,000 Albuquerque Gross Receipts Tax,
5.38%, 7/1/01, Callable 7/1/99
@100, MBIA........................ 3,044
1,195 Educational Assistance Foundation,
Student Loan Revenue, Series A,
AMT, 6.45%, 4/1/99, AMBAC......... 1,232
2,070 Educational Assistance Foundation,
Student Loan Revenue, Series A,
AMT, 6.55%, 4/1/00, AMBAC......... 2,161
5,455 Educational Assistance Foundation,
Student Loan Revenue, Series A,
AMT, 6.85%, 4/1/05, Callable
4/1/02 @102, AMBAC................ 5,816
--------
13,445
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
New York (2.1%):
$ 1,815 Islip Resource Recovery, Series D,
6.15%, 7/1/05, AMBAC.............. $ 1,978
1,500 Metropolitan Transportation, 6.38%,
7/1/10, Callable 7/1/02 @102,
FGIC.............................. 1,626
2,950 Monroe County, 6.10%, 3/1/08,
Callable 3/1/01 @102, MBIA........ 3,121
1,395 Nassau County, 5.63%, 8/1/03,
FGIC.............................. 1,475
1,655 State Dorm Authorized Revenue Bond,
5.25%, 5/15/09.................... 1,695
--------
9,895
--------
North Dakota (3.0%):
1,000 Bismarck North Dakota Infrastructure
Project, 8.60%, 10/1/02, Callable
10/1/97 @100...................... 1,010
345 Fargo District Building Authority,
5.88%, 4/15/08, Callable 4/15/05
@100.............................. 351
1,100 Grand Forks Health Care System,
5.30%, 8/15/10, Callable 8/15/07
@102, MBIA........................ 1,091
3,700 Grand Forks Health Care System,
5.60%, 8/15/17, Callable 8/15/07
@102, MBIA........................ 3,673
6,050 Grand Forks Sales Tax Revenue Bond,
5.10%, 12/15/10, Callable 12/15/07
@100.............................. 6,054
630 Housing Finance Agency, AMT, 6.25%,
7/1/09, Callable 7/1/04 @102...... 644
1,270 Water Development, 5.70%, 7/1/17,
Callable 7/1/07 @100; AMBAC....... 1,273
--------
14,096
--------
Ohio (1.9%):
1,000 Cuyahoga County, Hospital Revenue,
University Hospital Health System,
Series 96B, 6.00%, 1/15/05........ 1,075
1,600 Eaton Industrial Development, Baxter
International Project, 6.50%,
12/1/12, Callable 12/1/02 @102.... 1,714
500 Hamilton Waterworks Water Utility
Improvement, 6.40%, 10/15/07,
Callable 10/15/01 @102, MBIA...... 543
700 Olentangy Local School District,
5.05%, 12/1/09, Callable 12/1/07
@100.............................. 697
</TABLE>
Continued
26
<PAGE> 499
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,270 Olentangy Local School District,
5.15%, 12/1/10, Callable 12/1/07
@100.............................. $ 1,264
1,500 State Higher Educational Facilities,
5.15%, 5/15/10, Callable 5/15/07
@102, MBIA........................ 1,494
2,000 State Higher Educational Facilities,
5.25%, 11/1/16, Callable 11/1/06
@101.............................. 1,960
--------
8,747
--------
Oklahoma (0.6%):
2,500 IDR, 6.25%, 8/15/12, Callable
8/15/05 @102, AMBAC............... 2,685
--------
Oregon (2.4%):
2,350 Jackson County, School District #5
Ashland, GO, 5.70%, 6/1/07, FSA... 2,505
1,000 Lane County, School District #52
Bethel, GO, 6.00%, 6/1/06, FSA.... 1,086
3,630 Marion County, Oregon, 5.50%,
10/1/05, AMBAC.................... 3,804
1,435 Port of Portland Airport Revenue,
Series 7-A, 6.75%, 7/1/09,
Callable 7/1/01 @101, MBIA........ 1,557
2,075 Washington County, School District
No. 88, GO, 6.10%, 6/1/05,
Callable 12/15/04 @100, FSA....... 2,253
--------
11,205
--------
Pennsylvania (4.4%):
3,500 Allegheny County, GO, 0.00%,
2/15/02, MBIA..................... 3,829
3,200 Dauphin County, Industrial
Development Authority, Pollution
Control Revenue, 6.00%, 1/1/08,
Callable 7/10/97 @100, MBIA....... 3,202
1,500 Hospital Revenue Bond, 6.40%,
1/1/06, Callable 1/1/05 @102,
AMBAC............................. 1,653
2,750 Indiana County, Industrial
Development Authority, Pollution
Control Revenue, 6.00%, 6/1/06,
MBIA.............................. 2,980
1,000 McKeesport Area School District,
Series B, 0.00%, 10/1/01.......... 819
2,350 Philadelphia Airport Revenue, Series
A, AMT, 5.50%, 6/15/05, AMBAC..... 2,445
2,500 Philadelphia Water & Waste, 5.65%,
6/15/12, Callable 6/15/03 @102,
FGIC.............................. 2,506
3,000 Southeastern Pennsylvania
Transportation, 5.38%, 3/1/17,
Callable 3/1/07 @102, FGIC........ 2,967
--------
20,401
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Puerto Rico (0.1%):
$ 400 Tourism Financing Authority, 5.90%,
7/1/08, Callable 1/1/05 @102,
MBIA.............................. $ 429
--------
Rhode Island (1.6%):
1,000 Housing & Mortgage Financial Corp.,
Series 15-B, 6.20%, 10/1/06,
Callable 4/1/04 @102, MBIA........ 1,043
1,015 Providence, Refunding, 5.25%,
1/15/08, Callable 1/15/07 @101,
FSA............................... 1,022
1,305 Providence, Refunding, 5.35%,
1/15/09, Callable 1/15/07 @101,
FSA............................... 1,311
3,985 State Capital Development, Series
97A, 5.00%, 8/1/09, Callable
8/1/07 @101, MBIA................. 3,933
--------
7,309
--------
South Carolina (1.6%):
1,760 Greenville School Public Facilities,
5.60%, 3/1/10..................... 1,815
1,045 Hilton Head Island, GO, 5.50%,
8/1/09, MBIA...................... 1,092
250 Piedmont, Municipal Power Agency,
Electric Revenue, Series A, 6.55%,
1/1/16, Callable 1/1/98 @100...... 251
2,250 State Electric Expansion System,
5.88%, 7/1/18, Callable 7/10/97
@100.............................. 2,251
825 State Public Service, 5.88%, 7/1/18,
Callable 7/10/97 @100, MBIA....... 825
1,000 York County, School District #3, GO,
5.40%, 3/1/08, Callable 3/1/06
@101, FSA......................... 1,035
--------
7,269
--------
South Dakota (1.8%):
350 Building Authority, 10.50%, 9/1/00,
ETM............................... 366
3,675 Health & Educational Facility
Authority Revenue, St. Luke's
Midland Regional Medical, 6.63%,
7/1/11, Callable 7/1/01 @102,
MBIA.............................. 3,945
250 State Lease Revenue, Series A,
6.48%, 9/1/05, FSA................ 275
925 Student Loan Assistance Corp.,
Series A, 8.00%, 8/1/98, Callable
8/1/97 @102....................... 965
2,745 Student Loan Assistance Corp.,
Student Loan Revenue, Series B,
AMT, 7.63%, 8/1/06, Callable
8/1/99 @102, MBIA................. 2,901
--------
8,452
--------
</TABLE>
Continued
27
<PAGE> 500
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Tennessee (1.5%):
$ 1,050 Chattanooga-Hamilton County,
Hospital Authority, Hospital
Revenue, 5.63%, 10/1/09, FSA...... $ 1,099
2,000 Housing Development, 6.20%, 7/1/18,
Callable 7/1/05 @102.............. 2,074
1,330 Metropolitan Government Nashville &
Davidson County, 7.00%, 1/1/14.... 1,347
1,460 Nashville & Davidson County, H & E,
5.10%, 7/1/09, Callable 7/1/07
@101.............................. 1,459
1,000 Trenton Industrial Development
Revenue, Series A, 5.40%,
10/1/02........................... 1,001
--------
6,980
--------
Texas (9.1%):
2,800 Austin Housing Finance Corp., Single
Family Mortgage Revenue, AMT,
0.00%, 12/1/11.................... 1,254
1,000 Austin Utility Systems Revenue,
0.00%, 5/15/08, MBIA.............. 573
5,000 Coastal Bend Health Facilities,
Incarnate World Health Services,
5.93%, 11/15/13, Callable 11/15/02
@102, AMBAC....................... 5,088
3,600 Grand Prairie Health Facilities
Refunding, Dallas/Fort Worth
Medical Center Project, 6.50%,
11/1/04, AMBAC.................... 3,972
3,300 Grand Prairie Health Facilities
Refunding, Dallas/Fort Worth
Medical Center Project, 6.88%,
11/1/10, AMBAC.................... 3,693
5,000 Harris County, Capital Appreciation,
Toll Road, Sub-Lien A, GO, 0.00%,
8/15/03, MBIA..................... 3,733
3,700 Harris County, Capital Appreciation,
Toll Road, Sub-Lien A, GO, 0.00%,
8/15/05, MBIA..................... 2,471
1,455 Health Facilities Development Corp.
Hospital Revenue, All Saints
Episcopal Hospital, 6.25%,
8/15/12, Callable 8/15/03 @102,
MBIA.............................. 1,549
1,085 Housing Agency Residential
Development Revenue, Series D,
AMT, 8.40%, 1/1/21, Callable
7/1/97 @102....................... 1,133
3,000 Panhandle Plains Texas Higher
Education Inc., AMT, 5.55%,
3/1/05............................ 3,052
1,000 Red River Authority, Pollution
Control Revenue, AMT, 6.88%,
4/1/17, Callable 4/1/02 @102...... 1,076
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Texas, continued:
$ 1,500 San Antonio Electric & Gas, 6.50%,
2/1/12, Callable 2/1/99 @101.5.... $ 1,558
600 San Antonio Electric & Gas,
Refunding, Series B, 7.00%,
2/1/09, Callable 2/1/99 @101.5.... 628
1,000 San Antonio Electric & Gas, Series
B, 7.00%, 2/1/09, Callable 2/1/99
@101.5............................ 1,055
345 Southeast Texas Housing Financial
Corp., AMT, Series B, 6.75%,
5/1/10............................ 355
1,330 State Higher Education Coordinating
Board, Student Loan, AMT, 7.45%,
10/1/06, Callable 10/1/01 @102.... 1,423
1,020 Texas Tech University Revenues,
5.95%, 2/15/13, Callable 2/15/05
@100, AMBAC....................... 1,058
3,000 Turnpike Authority Dallas Northway,
5.13%, 1/1/10, Callable 1/1/04
@102, AMBAC....................... 2,978
2,200 United Independent School District,
5.25%, 8/15/14, Callable 8/15/06
@100.............................. 2,164
3,000 University of Texas, Series 96 B,
4.88%, 8/15/10, Callable 8/15/06
@102.............................. 2,898
--------
41,711
--------
Utah (0.8%):
2,000 Intermountain Power Agency, Power
Supply Revenue, Series B, 6.50%,
7/1/09, MBIA...................... 2,259
1,385 State Housing Finance Authority,
AMT, 6.35%, 7/1/12, Callable
1/1/05 @102....................... 1,428
--------
3,687
--------
Vermont (0.4%):
415 Housing Finance Agency Single
Family, Series 4, 5.90%, 11/1/03,
Callable 11/1/02 @102............. 427
1,500 University of Vermont & State
Agricultural College, Series 1973
A, 5.80%, 7/1/13, Callable 8/1/97
@101.............................. 1,512
--------
1,939
--------
Virginia (1.2%):
3,905 State Housing Development Authority,
Commonwealth Mortgage, Series A,
AMT, 6.80%, 7/1/06, AMBAC......... 4,152
1,340 State Housing Development Authority,
Commonwealth Mortgage, Series J,
6.65%, 7/1/10, Callable 1/1/05
@102%............................. 1,407
--------
5,559
--------
</TABLE>
Continued
28
<PAGE> 501
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Washington (3.1%):
$ 1,830 Chelan County, Washington Public
Utilities Revenue, 5.90%, 7/1/13,
Mandatory Put 7/1/03 @102......... $ 1,863
1,360 King County, School District #400,
GO, 6.50%, 12/1/08................ 1,542
1,084 Kitsap County, Consolidated Housing,
7.00%, 8/20/08, GNMA.............. 1,176
1,000 Seattle Light & Power Revenue,
6.00%, 8/1/13, Callable 8/1/02
@102.............................. 1,026
1,000 Seattle Solid Waste, Series B,
7.00%, 5/1/03, Callable 5/1/99
@102, BIG......................... 1,065
3,000 Snohomish County, Public Utility
District #001, Electric Revenue,
6.00%, 1/1/13, Callable 1/1/03
@102, FGIC........................ 3,101
700 State Certificates Partnership,
Series A, 6.80%, 4/1/06, Callable
4/1/01 @102....................... 750
3,500 State Nuclear Project #1, Series A,
6.00%, 7/1/08, AMBAC.............. 3,753
--------
14,276
--------
West Virginia (1.5%):
1,500 Board of Regents Revenue, Series A,
5.90%, 4/1/04, ETM................ 1,557
2,495 Harrison County, Community Split
Obligation, Series A, 6.25%,
5/15/10........................... 2,757
500 School Building Authority Revenue
Capital Improvement, Series B,
6.95%, 7/1/03, Prerefunded 7/1/00
@102, MBIA........................ 546
2,000 State Housing Development Fund,
Housing Finance, AMT, 7.20%,
11/1/20, Callable 5/1/02 @102..... 2,122
--------
6,982
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Wisconsin (0.4%):
$ 1,500 Center District Tax Revenue Capital
Appreciation, Senior Dedicated,
Series A, 0.00%, 12/15/18, MBIA... $ 452
500 Mukwonago School District, 5.80%,
3/1/07, Prerefunded 3/1/02 @100,
AMBAC............................. 528
1,000 State, Series A, 6.30%, 5/1/07,
Prerefunded 5/1/02 @100........... 1,080
--------
2,060
--------
Wyoming (1.2%):
875 Community Development Authority
Single Family Mortgage, Series A,
7.25%, 6/1/07, Callable 6/1/01
@102.............................. 910
600 State Farm Lane Board Capital
Facilities Revenue Refunding,
6.00%, 10/1/05, Callable 10/1/02
@102.............................. 640
2,200 Student Loan Corp., Student Loan
Revenue, AMT, 4.00%, 12/1/05*..... 2,200
400 Student Loan Corp., Student Loan
Revenue, AMT, Series A, 4.00%,
12/1/45*.......................... 400
1,395 Sweetwater County, School District
#2, Green River, GO, 7.00%,
6/1/04, MBIA...................... 1,583
--------
5,733
--------
Total Municipal Bonds 461,861
--------
INVESTMENT COMPANIES (0.8%):
3,601 Provident Municash.................. 3,601
--------
Total Investment Companies 3,601
--------
Total (Cost--$449,354) (a) $465,462
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $462,853.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $19. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $16,233
Unrealized depreciation.................................................. (144)
-------
Net unrealized appreciation.............................................. $16,089
=======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at June 30, 1997.
Continued
29
<PAGE> 502
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<S> <C>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrow to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
GSL Guaranteed Student Loans
IDR Industrial Development Reveneue
MBIA Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
30
<PAGE> 503
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS (98.7%):
Alaska (0.8%):
$ 1,250 Home Mortgage Revenue Refunding,
8.00%, 3/1/09, Callable 3/1/02
@102, FNMA......................... $ 1,344
200 Juneau City & Boro Home Mortgage
Revenue, 8.00%, 2/1/09, Callable
2/1/02 @100, FNMA.................. 215
15 State Housing Finance Corp., Revenue,
Local Guaranteed Housing, 8.20%,
12/1/97............................ 15
8,440 State Housing Finance Corp., 0.00%,
12/1/17, Callable 6/1/07 @54,
MBIA............................... 2,514
--------
4,088
--------
Arizona (0.8%):
325 Maricopa County, Industrial
Development, Multi-Family Housing,
7.25%, 7/1/17, Callable 7/1/07
@101............................... 328
1,500 Maricopa County, Industrial
Development, Multi-Family Housing
Revenue, Series A, 6.25%, 7/1/27,
Callable 1/1/07 @101............... 1,511
30 Salt River Project, Arizona
Agriculture Improvement & Power,
6.65%, 1/1/06, Callable 7/10/97
@101.5............................. 30
8 Salt River Project, Arizona
Agriculture Improvement & Power,
9.30%, 1/1/00, Callable 7/10/97
@101.5............................. 8
10 Salt River Project, Arizona
Agriculture Improvement & Power,
6.88%, 1/1/02, Callable 7/10/97
@101.5............................. 10
10 Salt River Project, Arizona
Agriculture Improvement & Power,
7.88%, 1/1/03, Callable 7/10/97
@101.5............................. 10
5 Salt River Project, Arizona
Agriculture Improvement & Power,
8.25%, 1/1/05...................... 5
10 Salt River Project, Arizona
Agriculture Improvement & Power,
7.15%, 1/1/05, Callable 1/1/98
@101.5............................. 10
2,000 University of Northern Arizona,
University Revenue, 5.00%, 6/1/11,
Callable 6/1/07 @101, FGIC......... 1,969
--------
3,881
--------
Arkansas (2.8%):
365 Drew County, Public Facilities Board,
7.90%, 8/1/11, Callable 8/1/03
@103, FNMA......................... 393
159 Drew County, Public Facilities Board,
7.75%, 8/1/11, Callable 2/1/04
@100............................... 170
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arkansas, continued:
$ 546 Jacksonville, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, 7.90%, 1/1/11,
Callable 7/1/03 @103............... $ 595
275 Jacksonville, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, 7.75%, 1/1/11,
Callable 7/1/05 @103............... 296
1,000 Jefferson County, PCR, Power & Light
Co. Project, 6.13%, 10/1/07,
Callable 4/1/06 @100, BIG.......... 1,001
247 Lonoke County, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, 7.38%, 4/1/11,
Callable 4/1/03 @103............... 266
659 Lonoke County, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, Series A-2,
7.90%, 4/1/11, FNMA................ 715
1,000 Paragould, Hospital Revenue, 6.38%,
10/1/17, Callable 10/1/06 @102..... 1,024
1,309 Pope County, Residential Facilities,
Housing Board Mortgage Revenue,
Series B, 7.75%, 9/1/11, Callable
8/1/02 @102, FHA................... 1,403
1,500 State Capital Appreciation, College
Savings, Series 97A, 0.00%,
6/1/16............................. 516
2,000 State Capital Appreciation, College
Savings, Series A, 0.00%, 6/1/15... 734
2,040 State Development Authority Revenue
Refunding, 8.00%, 8/15/11, Callable
8/15/01 @103....................... 2,192
3,650 State Development Finance Authority
Revenue, 0.00%, 6/1/15............. 1,263
90 State Development Finance Authority
Revenue, 7.70%, 12/1/14, Callable
12/1/97 @102....................... 92
915 State Development Finance Authority
Revenue, Single Family Housing,
7.75%, 4/1/21, Callable 4/1/99
@102, GNMA......................... 951
529 Stuttgart Public Facilities Board
Revenue, Series A-2, 7.90%, 9/1/11,
Callable 9/1/03 @103............... 577
262 Stuttgart Public Facilities Board
Revenue, Series B, 7.75%, 9/1/11,
Callable 3/1/06 @103............... 285
1,000 Texarkana, Public Facilities Board,
Waterworks Revenue, 5.40%, 9/1/15,
Callable 9/1/07 @100, FGIC......... 997
--------
13,470
--------
</TABLE>
Continued
31
<PAGE> 504
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
California (3.1%):
$ 1,255 Fairfield, Water Revenue, 0.00%,
4/1/15, Callable 4/1/05 @56.7,
AMBAC.............................. $ 458
1,080 Housing Finance Agency Revenue, Home
Mortgage, AMT, 7.50%, 2/1/23,
Callable 8/1/05 @102, FHA.......... 1,177
220 Housing Finance Agency Revenue, Home
Mortgage, Series B-1, AMT, 5.65%,
2/1/16, Callable 8/1/04 @102,
FHA................................ 223
25 Housing Finance Agency Revenue, Home
Mortgage, Series C, AMT, 7.45%,
8/1/11, Callable 8/1/01 @102....... 26
680 Housing Finance Agency Revenue, Local
or Guaranteed Housing, Series B,
8.63%, 8/1/15, Callable 8/1/00
@100, MBIA......................... 713
640 Housing Finance Agency Revenue,
Series H, AMT, 6.80%, 8/1/19,
Callable 8/1/04 @102, FHA.......... 663
870 Housing Finance Agency Revenue,
Single Family Housing, Series F,
7.88%, 8/1/19, Callable 8/1/98
@102............................... 901
1,000 Oakland, Revenue Refunding, Series A,
7.60%, 8/1/21, Callable 8/1/98
@102, FGIC......................... 1,056
855 Redondo Beach, Redevelopment Agency,
Residential Mortgage Revenue,
Series B, 6.25%, 6/1/11, Callable
6/1/03 @100........................ 866
470 Rural Home Mortgage Financing
Authority Revenue, Single Family
Mortgage Revenue, AMT, 5.50%,
2/1/06, GNMA....................... 481
350 Rural Home Mortgage Financing
Authority Revenue, Single Family
Mortgage Revenue, AMT, 7.25%,
12/1/24, Callable 12/1/04 @103,
GNMA............................... 374
1,355 Rural Home Mortgage Financing
Authority, AMT, 5.30%, 11/1/05..... 1,380
810 Rural Home Mortgage Financing
Authority, AMT, 7.55%, 11/1/26..... 915
805 Rural Home Mortgage Financing
Authority, AMT, 7.75%, 5/1/27...... 911
2,135 Sacramento, Municipal Utility
District, Electric Revenue, Series
P, 6.00%, 7/1/15, Callable 7/10/97
@100............................... 2,136
1,180 San Joaquin Hills Toll Road, 0.00%,
1/1/14............................. 441
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
California, continued:
$ 4,435 San Joaquin Hills Toll Road, 0.00%,
1/1/16............................. $ 1,456
1,105 State Department of Veterans'
Affairs, AMT, 7.38%, 8/1/12,
Callable 7/10/97 @102.............. 1,129
--------
15,306
--------
Colorado (14.9%):
5,250 Arapahoe County, Highway Revenue,
Series C, 0.00%, 8/31/15, Callable
8/31/05 @48.6...................... 1,619
5,030 Aurora, Single Family Mortgage
Revenue, Series A2, 0.00%, 9/1/15,
Prerefunded 3/1/13 @75.2........... 1,608
2,315 Brush Creek Metropolitan District,
GO, Refunding, 6.70%, 11/15/09,
Callable 11/15/03 @101............. 2,476
1,410 Central City Water Revenue, GO, Water
Utility Improvements, 7.40%,
12/1/07, Prerefunded 12/1/02
@100............................... 1,601
400 Central City Water Revenue, GO, Water
Utility Improvements, 8.63%,
9/15/11, Prerefunded 9/15/02
@100............................... 422
655 Central City Water Revenue, GO, Water
Utility Improvements, 7.50%,
12/1/12, Prerefunded 12/1/02
@100............................... 747
3,700 Colorado Springs Airport Revenue,
AMT, 6.90%, 1/1/12, Callable 1/1/03
@102, MBIA......................... 4,036
1,000 Denver City & County, Airport
Revenue, AMT, 6.75%, 11/15/13,
Callable 11/15/02 @102, MBIA....... 1,086
2,500 Denver City & County, Airport
Revenue, AMT, 5.63%, 11/15/08,
Callable 11/15/06 @102, MBIA....... 2,582
9,850 Denver City & County, Residual
Revenue, 0.00%, 7/10/14, Callable
7/1/01 @39.6....................... 2,951
1,250 Eagle's Nest Metropolitan District,
GO, Refunding, 6.50%, 11/15/17,
Callable 11/15/97 @107............. 1,307
236 El Paso County, Home Mortgage, Series
C, 8.30%, 9/20/18, Callable 12/1/97
@100............................... 259
1,280 El Paso County, Single Family
Mortgage Revenue, 0.00%, 9/1/15,
ETM................................ 459
2,500 Englewood, Multi-Family Housing,
Marks Apartment Revenue, 6.65%,
12/1/26, Callable 12/1/06 @102..... 2,616
</TABLE>
Continued
32
<PAGE> 505
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 1,415 Englewood, Multi-Family Housing,
Marks Apartment Revenue, Series B,
6.00%, 12/15/18, Callable 12/15/03
@100, LOC: Citibank................ $ 1,410
1,685 Housing Finance Authority, GO, 6.80%,
8/1/14, Callable 8/1/02 @102....... 1,759
2,560 Housing Finance Authority,
Multi-Family Mortgage Revenue,
Series B, 6.00%, 10/1/25, Callable
8/18/97 @101.5, FHA................ 2,079
165 Housing Finance Authority,
Multi-Family Revenue, AMT, 5.75%,
10/1/06, Callable 4/1/06 @102...... 171
875 Housing Finance Authority,
Multi-Family Revenue, Series A,
9.00%, 10/1/25, Callable 10/1/00
@100, FHA.......................... 883
285 Housing Finance Authority, Series A,
6.90%, 5/1/01...................... 300
2,500 Housing Finance Authority, Series
B-2, AMT, 7.00%, 5/1/26, Callable
5/1/07 @105........................ 2,737
3,550 Housing Finance Authority, Single
Family, 7.45%, 11/1/27, Callable
5/1/06 @105........................ 4,012
890 Housing Finance Authority, Single
Family Program, Series B, 6.13%,
5/1/13, Callable 11/1/04 @103,
FHA................................ 913
830 Housing Finance Authority, Single
Family Program, Series B, 7.50%,
11/1/24, Callable 11/1/04 @105,
FHA................................ 924
215 Housing Finance Authority, Single
Family Program, Series B-2, 6.90%,
8/1/17, Callable 2/1/01 @102,
FHA................................ 223
420 Housing Finance Authority, Single
Family Program, Series D-1, 6.60%,
8/1/17, Callable 8/1/01 @102,
FHA................................ 427
2,000 Housing Finance Authority, Single
Family Program, Series D-1, 7.38%,
6/1/26, Callable 12/1/05 @105...... 2,204
730 Housing Finance Authority, Single
Family Program, Series E, AMT,
6.25%, 12/1/09, Callable 12/1/04
@103............................... 758
415 Housing Finance Authority, Single
Family Program, Sub Series A, AMT,
6.50%, 12/1/02..................... 430
9,500 Housing Finance Authority, Single
Family Revenue, AMT, 7.25%, 5/1/27,
Callable 5/1/07 @105............... 10,465
970 Housing Finance Authority, Single
Family Revenue, Series 95C, 7.45%,
6/1/17, Callable 6/1/05 @105....... 1,092
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 490 Housing Finance Authority, Single
Family Revenue, Series A, 0.00%,
9/1/14, FHA........................ $ 81
425 Housing Finance Authority, Single
Family Revenue, Series A-3, AMT,
6.50%, 11/1/23, Callable 5/1/02
@102............................... 437
3,500 Housing Finance Authority, Single
Family Revenue, Series C-1, AMT,
7.55%, 11/1/27, Callable 11/1/06
@102............................... 3,905
1,155 Jefferson County, Single Family
Revenue, Refunding, Series A,
8.88%, 10/1/13, Callable 4/1/01
@103, MBIA......................... 1,238
7,525 Meridian Metropolitan District,
7.50%, 12/1/11, Callable 12/1/01
@101............................... 8,270
1,500 Mesa County, Residual Revenue
Refunding, 0.00%, 12/1/11, ETM..... 694
1,030 Mountain Village Metropolitan
District, San Miguel County, GO,
7.95%, 12/1/03, Callable 12/1/02
@101............................... 1,159
2,555 Mountain Village Metropolitan
District, San Miguel County, GO,
8.10%, 12/1/11, Callable 12/1/02
@101............................... 2,873
--------
73,213
--------
Connecticut (0.0%):
200 State Housing Mortgage, Series A,
7.63%, 11/15/17, Callable 8/1/97
@102.5............................. 205
--------
Delaware (0.0%):
930 New Castle County, Single Family
Mortgage Revenue, 0.00%, 11/1/16,
FGIC............................... 139
--------
Florida (5.9%):
1,250 Brevard County, Housing Finance
Authority, Single Family Mortgage
Revenue, AMT, 6.13%, 9/1/09,
Callable 9/1/04 @102............... 1,276
4,510 Duval County, Housing Finance
Authority, Single Family Mortgage
Revenue, Series C, 7.35%, 7/1/24,
Callable 9/1/00 @103, FGIC......... 4,814
565 Escambia County, Housing Finance
Authority, Single Family Revenue,
AMT, 6.60%, 10/1/12, Callable
4/1/05 @102, GNMA.................. 579
495 Housing Finance Agency, Home
Ownership Revenue, 7.50%, 9/1/14,
Callable 9/1/00 @102, GNMA......... 523
3,000 Lee County, Housing Finance
Authority, Single Family Revenue,
AMT, 7.20%, 3/1/27, Callable 3/1/07
@105............................... 3,298
</TABLE>
Continued
33
<PAGE> 506
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Florida, continued:
$ 1,000 Leon County, Housing Finance
Authority, Multi-County Program,
Series B, AMT, 7.30%, 1/1/28....... $ 1,109
1,845 Manatee County, Housing Finance
Authority, Mortgage Revenue, 8.38%,
5/1/25, Callable 5/1/04 @105....... 2,079
1,850 Manatee County, Housing Finance
Authority, Mortgage Revenue, AMT,
7.20%, 5/1/28, Callable 3/1/07
@105, GNMA......................... 2,036
790 Orange County, Housing Finance
Authority, Mortgage Revenue, Series
A, AMT, 7.25%, 9/1/19, Callable
3/1/01 @103........................ 833
800 Orange County, Housing Finance
Authority, Mortgage Revenue, Series
A, AMT, 7.38%, 9/1/24, Callable
3/1/01 @103, FHA................... 849
1,155 Palm Beach County, Housing Finance
Authority, Single Family Mortgage
Revenue, Series A, AMT, 6.38%,
10/1/06, Callable 10/1/04 @102..... 1,190
2,500 Pinellas County, Housing Finance
Authority, Single Family Mortgage
Revenue, Multi-County, Series A,
6.35%, 2/1/17, Callable 2/1/05
@102............................... 2,579
3,205 Pinellas County, Housing Finance
Authority, Single Family Mortgage
Revenue, Series 95-A, AMT, 6.25%,
8/1/12, Callable 2/1/05 @102....... 3,312
2,305 Polk County, Housing Finance
Authority, Single Family Mortgage
Revenue, Series A, AMT, 7.88%,
9/1/22, Callable 3/1/00 @103....... 2,443
1,320 Santa Rosa Bay Bridge Authority,
0.00%, 7/1/08...................... 692
1,625 Santa Rosa Bay Bridge Authority,
0.00%, 7/1/09...................... 785
500 State Finance Department, 6.25%,
7/1/09, Callable 7/1/02 @101,
MBIA............................... 536
--------
28,933
--------
Georgia (2.4%):
2,500 Cobb County, Housing Authority, Pass
through Certificates, Signature
Series B, 9.00%, 10/1/10........... 2,587
785 De Kalb County, Housing Authority
Revenue, 6.40%, 5/1/05, Callable
5/1/04 @100........................ 813
5,000 De Kalb County, Housing Authority
Revenue, Multi-Family Housing,
7.05%, 1/1/39, Callable 1/1/08
@104, FHA.......................... 5,378
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Georgia, continued:
$ 835 De Kalb County, Housing Authority
Revenue, Single Family Housing,
AMT, 7.65%, 6/1/18, Callable 6/1/04
@100, GNMA......................... $ 881
1,765 Fulton County, Housing Authority
Revenue, Multi-Family Housing,
Series A, AMT, 6.30%, 7/1/16,
Callable 7/1/06 @102............... 1,800
--------
11,459
--------
Idaho (1.1%):
1,500 Housing & Financial Assistance,
Single Family Mortgage, Series D,
AMT, 6.45%, 7/1/14, Callable 1/1/06
@102, FHA.......................... 1,556
2,155 Housing & Financial Assistance,
Single Family Mortgage, Series H,
AMT, 6.05%, 7/1/14, Callable 1/1/07
@102, FHA.......................... 2,182
325 Housing Agency, Single Family
Mortgage, AMT, 6.30%, 7/1/24,
Callable 1/1/03 @102............... 331
190 Housing Agency, Single Family
Mortgage, Series A-2, AMT, 6.55%,
7/1/24, Callable 1/1/03 @102....... 196
1,075 Housing Finance Assignment, Single
Family Mortgage Revenue, Series
97E-2, AMT, 5.95%, 7/1/14, Callable
1/1/07 @101.5...................... 1,084
--------
5,349
--------
Illinois (4.0%):
5,890 Addison Alton Electric Public
Improvements Revenue, Sub Series 1,
0.00%, 7/1/11, Callable 7/1/04
@62................................ 2,494
215 Aurora Kane & DuPage Counties, Single
Family Mortgage Revenue, Series A,
AMT, 7.95%, 10/1/25, GNMA.......... 237
355 Aurora, Single Family Mortgage
Revenue Refunding, Series B, AMT,
8.05%, 9/1/25, Callable 9/1/04
@105............................... 397
3,315 Bolingbrook Mortgage Revenue, Capital
Appreciation, Sub Series 1, 0.00%,
1/1/11, Callable 1/1/00 @48.6...... 1,242
1,765 Chicago, Residential Mortgage
Revenue, 0.00%, 10/1/09, Callable
4/1/98 @48.84, MBIA................ 755
1,500 Chicago, Single Family Mortgage
Revenue, AMT, 7.63%, 9/1/27,
Callable 6/15/06 @105, GNMA........ 1,686
</TABLE>
Continued
34
<PAGE> 507
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Illinois, continued:
$ 2,000 Chicago, Single Family Mortgage
Revenue, Series 97-A, AMT, 7.25%,
9/1/28, Callable 9/1/07 @105,
GNMA............................... $ 2,198
3,455 Chicago, Single Family Mortgage
Revenue, Series A, AMT, 7.00%,
9/1/27, Callable 3/1/06 @105....... 3,786
790 Danville, Single Family Mortgage
Revenue Refunding, 7.30%, 11/1/10,
Callable 11/1/03 @102.............. 834
3,530 Freeport Single Family Mortgage
Revenue, 0.00%, 8/1/10, Callable
10/1/01 @49........................ 1,244
730 Housing Development Authority,
Resident Mortgage Revenue, Series
A, AMT, 7.35%, 8/1/10, Callable
8/1/01 @102........................ 765
1,915 Housing Development Authority,
Residential Mortgage Revenue,
Series A, 0.00%, 2/1/17............ 264
4,685 Moline, Mortgage Revenue, Capital
Appreciation, Sub Series 1, 0.00%,
5/1/11, Callable 5/1/05 @65........ 1,768
1,040 Quincy, Single Family Mortgage
Revenue Refunding, 6.88%, 3/1/10,
Callable 3/1/04 @102............... 1,092
455 Rock Island, Residential Mortgage
Revenue Refunding, 7.70%, 9/1/08,
Callable 9/1/02 @102............... 486
--------
19,248
--------
Indiana (1.5%):
2,250 Marion County, Hospital Authority
Revenue, 6.50%, 9/1/13, Callable
9/1/99 @102........................ 2,431
1,000 State Housing Finance Authority,
Single Family Mortgage Revenue,
Series A-2, AMT, 6.45%, 7/1/14,
Callable 7/1/05 @102, FHA.......... 1,041
695 State Housing Finance Authority,
Single Family Mortgage Revenue,
Series B-2, AMT, 7.80%, 1/1/22,
Callable 7/1/00 @102, GNMA......... 732
3,130 State Toll Finance Authority, Toll
Road Revenue, 6.00%, 7/1/15,
Callable 7/1/97 @100............... 3,133
--------
7,337
--------
Iowa (1.6%):
650 Davenport, Home Ownership Mortgage
Revenue Refunding, 7.90%, 3/1/10,
Callable 9/1/04 @102............... 691
1,105 Finance Authority, Multi-Family
Revenue, AMT, 7.15%, 12/1/09....... 1,184
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Iowa, continued:
$15,025 Finance Authority, Single Family
Mortgage Revenue, 0.00%, 9/1/16,
AMBAC.............................. $ 1,786
2,535 Finance Authority, Single Family
Revenue Mortgage Backed Securities
Program, Series C, 6.40%, 7/1/19,
Callable 1/1/05 @102, GNMA......... 2,636
615 Finance Authority, Single Family
Revenue, AMT, 7.90%, 11/1/22,
Callable 11/1/99 @102, GNMA........ 645
885 Salix, PCR, Gas & Electric Project,
5.75%, 6/1/03, Callable 1/1/98
@100............................... 890
--------
7,832
--------
Kansas (2.5%):
470 Finney County, Single Family Mortgage
Revenue, 8.95%, 10/1/09, Callable
10/1/97 @100....................... 471
860 Ford County, Single Family Mortgage
Revenue, 7.90%, 8/1/10, Callable
8/1/02 @103, FHA................... 926
2,080 Johnson County, Single Family
Mortgage Revenue, 7.10%, 5/1/12,
Callable 5/1/04 @103............... 2,252
545 Labette County, Single Family
Mortgage Revenue, Series A, 8.40%,
12/1/11, Callable 12/1/97 @100..... 579
390 Olathe & Labette County, Single
Family Mortgage Revenue, Series
A-I, AMT, 8.10%, 8/1/23, Callable
2/1/05 @105........................ 434
2,400 Reno & Labette County, Single Family
Mortgage Revenue, Series A, 0.00%,
12/1/15, ETM, FGIC................. 849
530 Reno County, Single Family Mortgage
Revenue, Series B, 8.70%, 9/1/11,
Callable 9/1/01 @103............... 569
445 Sedgwick & Shawnee County, Single
Family Revenue, Series B, 8.05%,
5/1/14, GNMA....................... 488
465 Sedgwick & Shawnee County, Single
Family Revenue, Series B-2, 7.80%,
5/1/14, Callable 11/1/04 @103...... 508
470 Sedgwick & Shawnee County, Single
Family Revenue, Series C-2, 7.80%,
11/1/24, Callable 11/1/04 @105,
GNMA............................... 521
</TABLE>
Continued
35
<PAGE> 508
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kansas, continued:
$ 2,180 Sedgwick County, Mortgage Loan
Revenue, Series B, AMT, 7.80%,
6/1/22, Callable 6/1/00 @103,
AMBAC, GNMA........................ $ 2,309
735 Sedgwick County, Mortgage Loan
Revenue, Series C, 8.63%, 11/1/18,
Callable 11/1/97 @103, GNMA........ 761
2,120 Shawnee County, Single Family
Mortgage Revenue, 0.00%, 10/1/16,
Callable 10/1/01 @23, MBIA......... 300
1,070 Wichita, Single Family Mortgage
Revenue, Series A, 7.10%, 9/1/09,
Callable 3/1/03 @103............... 1,120
--------
12,087
--------
Kentucky (0.5%):
590 Housing Corp. Revenue, Series D, AMT,
6.13%, 7/1/22, Callable 7/1/98
@100............................... 600
1,760 Meade County, PCR, Olin Corp.
Project, 6.00%, 7/1/07, Callable
8/1/97 @100........................ 1,769
--------
2,369
--------
Louisiana (1.3%):
230 Calcasieu Parish, Public
Transportation Authority Revenue,
6.38%, 11/1/02..................... 238
900 Calcasieu Parish, Single Family
Mortgage Revenue, Series 92B,
0.00%, 5/1/13, Callable 11/1/02
@49................................ 302
865 Iberia Home Mortgage Authority,
Single Family Mortgage Revenue
Refunding, 7.38%, 1/1/11, Callable
1/1/01 @100........................ 932
5,000 New Orleans, 0.00%, 9/1/14, AMBAC.... 1,932
1,080 New Orleans, Home Mortgage Authority,
Special Obligation Refunding,
6.25%, 1/15/11..................... 1,171
89 Public Facilities Authority Revenue,
Single Family Mortgage, 7.50%,
10/1/15, Callable 4/15/98 @100..... 96
1,462 Public Facilities Authority Revenue,
Single Family Mortgage, Series C,
8.45%, 12/1/12, Callable 10/1/01
@101, FHA.......................... 1,553
180 St. Mary Public Finance Authority,
Single Family Revenue, Series A,
7.63%, 3/25/12, Callable 10/25/98
@100............................... 197
--------
6,421
--------
Maine (0.5%):
1,750 State Housing Authority, AMT, 6.10%,
11/15/16, Callable 11/15/06 @102... 1,773
810 State Housing Authority, Housing
Finance Revenue, Series I, AMT,
0.00%, 11/1/10, Callable 11/1/06
@80.2.............................. 387
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Maine, continued:
$ 535 State Housing Authority, Housing
Finance Revenue, Series I, AMT,
0.00%, 11/1/11, Callable 11/1/06
@75.3.............................. $ 239
260 State Housing Authority, Series D-5,
AMT, 6.90%, 11/15/01, Callable
5/15/01 @102....................... 271
--------
2,670
--------
Maryland (0.3%):
1,240 Maryland Community Development,
Multifamily Housing Revenue, Series
E, AMT, 6.85%, 5/15/25, Callable
5/15/04 @102, GNMA................. 1,304
--------
Massachusetts (0.7%):
170 State Housing Finance Agency, Single
Family Housing Revenue, AMT, 7.00%,
12/1/23, Callable 6/1/01 @102...... 173
1,020 State Housing Finance Agency, Single
Family Housing Revenue, AMT, 7.13%,
6/1/25, Callable 6/1/02 @102....... 1,083
1,920 State Port Authority Revenue, 7.13%,
7/1/12, Callable 8/1/97 @100.5..... 1,934
--------
3,190
--------
Michigan (1.2%):
620 Mount Clemens Housing Corp, Multi-
Family Housing Revenue, Series A,
6.25%, 6/1/03...................... 650
1,000 Riverview Community School District,
5.25%, 5/1/14, Callable 5/1/04
@102, AMBAC........................ 980
1,640 State Housing Development Authority,
Home Improvement, Series B, AMT,
7.65%, 12/1/12, Callable 12/1/99
@102, FHA.......................... 1,702
1,395 State Housing Development Authority,
Single Family Mortgage Revenue,
7.50%, 6/1/15, Callable 1/1/99
@100.75............................ 1,465
880 State Housing Development Authority,
Single Family Mortgage Revenue,
Series A, 7.70%, 12/1/16, Callable
6/1/99 @102........................ 899
--------
5,696
--------
Minnesota (0.2%):
2,950 Minneapolis Mortgage Revenue, 0.00%,
10/1/12, Callable 10/1/05 @100..... 1,107
--------
</TABLE>
Continued
36
<PAGE> 509
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Mississippi (2.2%):
$ 1,000 Higher Education Assistance Corp.,
Student Loan Revenue, AMT, 6.60%,
1/1/05, Callable 7/1/02 @102....... $ 1,053
915 Higher Education Assistance Corp.,
Student Loan Revenue, Series C,
AMT, 6.05%, 9/1/07, Callable 9/1/02
@102............................... 947
1,440 Higher Education, Student Loan
Revenue, Series 92C, AMT, 6.50%,
7/1/04, Callable 7/1/02 @102....... 1,523
1,390 Home Corp., Single Family Revenue,
7.10%, 12/1/10, Callable 3/1/98
@100............................... 1,444
2,000 Home Corp., Single Family Revenue,
Series B, AMT, 7.90%, 3/1/25,
Callable 3/1/05 @106, GNMA......... 2,220
2,000 Home Corp., Single Family Revenue,
Series F, AMT, 7.55%, 12/1/27,
Callable 12/1/06 @105, GNMA,
FNMA............................... 2,220
1,440 Housing Finance Corp., Single Family
Mortgage Revenue, AMT, 8.25%,
10/15/18, Callable 10/15/99 @102,
FGIC............................... 1,512
--------
10,919
--------
Missouri (2.3%):
645 Grandview Industrial Development
Authority, Multi-Family Housing
Revenue, 9.25%, 5/15/08, Callable
5/15/04 @103....................... 639
2,295 Jackson County, Industrial
Development Authority, Multi-Family
Housing Revenue, 10.00%, 3/1/10.... 2,311
1,000 Jefferson City, Missouri School
District, Series A, 6.70%,
3/1/11............................. 1,153
1,415 State Housing Development, Common
Mortgage Revenue, Single Family,
AMT, 7.38%, 8/1/23, Callable 2/1/01
@102, GNMA......................... 1,497
910 State Housing Development, Common
Mortgage Revenue, Single Family,
AMT, 7.25%, 9/1/26, Callable 3/1/06
@105, GNMA......................... 1,003
1,995 State Housing Development, Common
Mortgage Revenue, Single Family,
Series A, AMT, 7.20%, 9/1/26,
Callable 9/1/06 @105, GNMA......... 2,180
2,000 State Housing Development, Common
Mortgage Revenue, Single Family,
Series D, AMT, 7.10%, 9/1/27,
Callable 1/1/07 @102, GNMA......... 2,167
--------
10,950
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Montana (0.3%):
$ 1,551 Greenwood Plaza Housing, Inc.,
10.43%, 1/1/22, Callable 1/1/98
@102.5, FHA........................ $ 1,606
--------
Nebraska (0.2%):
2,725 Finance Authority, Single Family
Mortgage Revenue, 0.00%, 12/15/13,
FHA................................ 525
235 Finance Authority, Single Family
Mortgage Revenue, AMT, 6.35%,
3/15/06, Callable 9/15/02 @102..... 242
--------
767
--------
Nevada (2.0%):
1,500 Housing Division, Single Family
Mortgage, Series C, AMT, 6.60%,
4/1/14, Callable 4/1/06 @102....... 1,566
430 Housing Division, Single Family
Program, Series B-1, 6.20%,
10/1/15, Callable 4/1/04 @102...... 441
1,255 Housing Division, Single Family
Program, Series B-2, AMT, 7.90%,
10/1/21, Callable 4/1/00 @102...... 1,312
890 Housing Finance Authority, Single
Family Mortgage Revenue, Series Sub
B-1, AMT, 6.00%, 4/1/10, Callable
4/1/07 @102........................ 903
5,000 Washoe County, Water Facilities
Revenue, Sierra Pacific Power, AMT,
6.65%, 6/1/17, Callable 12/1/02
@102, MBIA......................... 5,398
--------
9,620
--------
New Hampshire (1.5%):
7,000 Higher Educational & Health
Facilities, 6.13%, 10/1/13,
Callable 10/1/03 @102.............. 7,065
--------
New Jersey (0.5%):
545 State Higher Education Assistance
Authority, Student Loan Revenue,
Series A, AMT, 7.00%, 7/1/05,
Callable 7/1/01 @102............... 575
935 State Housing & Mortgage Finance
Agency Revenue, 7.38%, 10/1/17,
Callable 10/1/99 @102, MBIA........ 980
710 State Housing & Mortgage Finance
Agency, Home Mortgage Revenue,
8.38%, 4/1/17, Callable 4/1/98
@103, MBIA......................... 741
--------
2,296
--------
</TABLE>
Continued
37
<PAGE> 510
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
New Mexico (1.7%):
$ 335 Bernalillo County, Multi-Family
Housing Revenue, Sub Series A2,
7.00%, 11/1/08, Callable 11/1/03
@103............................... $ 337
1,000 Educational Assistance Foundation,
Student Loan Program, AMT, 6.20%,
11/1/08, Callable 11/01/06 @102.... 1,038
600 Educational Assistance Foundation,
Student Loan Program, AMT, 6.30%,
11/1/09, Callable 11/1/06 @102..... 623
645 Hobbs, Single Family Mortgage Revenue
Refunding, 8.75%, 7/1/11, Callable
11/1/98 @100....................... 717
1,140 Las Cruces, Housing Development
Corp., Multi-family Revenue Refund
Mortgage, Series A, 6.40%, 10/1/19,
Callable 4/1/02 @102............... 1,158
170 Las Cruces, Housing Development
Corp., Multi-family Revenue Refund
Mortgage, Sub-Series B, 9.00%,
10/1/03............................ 175
395 Mortgage Finance Authority, Single
Family Mortgage Refunding, Series
A-2, 6.85%, 7/1/12, Callable 7/1/02
@102............................... 415
1,695 Mortgage Finance Authority, Single
Family Mortgage Refunding, Series
A-2, 6.90%, 7/1/24, Callable 7/1/02
@102............................... 1,772
890 Mortgage Finance Authority, Single
Family Mortgage Revenue, Series 95,
AMT, 6.45%, 7/1/25, Callable 1/1/06
@102, GNMA......................... 912
1,000 Mortgage Finance Authority, Single
Family Mortgage, AMT, 6.05%,
7/1/16, Callable 7/1/07 @102,
GNMA............................... 1,015
290 Mortgage Finance Authority, Single
Family Mortgage, Series A, AMT,
7.80%, 3/1/21, Callable 9/1/99
@102, FHA.......................... 303
--------
8,465
--------
New York (0.8%):
1,395 Mortgage Agency Revenue, Homeowner
Mortgage, AMT, 7.75%, 10/1/23,
Callable 4/1/01 @102............... 1,476
2,500 New York City, Industrial Development
Agency Revenue, Japan Airlines,
AMT, 6.00%, 11/1/15, Callable
11/1/04 @102, FHA.................. 2,586
--------
4,062
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
North Carolina (1.0%):
$ 1,700 Housing Finance Agency, Single Family
Revenue, Series O, AMT, 7.60%,
3/1/21, Callable 1/1/98 @101....... $ 1,769
475 Municipal Power Agency, Series B,
6.00%, 1/1/20, Callable 7/10/97
@100, MBIA......................... 475
1,025 University of North Carolina, Series
A, 5.30%, 5/15/12, Callable 5/15/07
@101............................... 1,003
1,425 University of North Carolina, Series
B, 5.10%, 5/15/09, Callable 5/15/07
@100............................... 1,441
--------
4,688
--------
North Dakota (0.8%):
1,585 State Housing Finance Agency, Housing
Finance Program, Series A, AMT,
6.00%, 7/1/17, Callable 1/1/07
@102............................... 1,603
505 State Housing Finance Agency, Single
Family Mortgage Revenue, Series
95A, AMT, 7.40%, 7/1/15, Callable
1/1/05 @102........................ 534
1,190 State Housing Finance Agency, Single
Family Mortgage Revenue, Series A,
AMT, 8.38%, 7/1/21, Callable 7/1/99
@103, FHA.......................... 1,251
300 Student Loan, Series D, AMT, 5.95%,
7/1/07, Callable 7/1/06 @100,
AMBAC.............................. 312
300 Student Loan, Series D, AMT, 6.15%,
7/1/09, Callable 7/1/06 @100,
AMBAC.............................. 312
--------
4,012
--------
Ohio (6.5%):
1,000 Akron, Bath, Copley, Hospital
Revenue, 7.00%, 1/1/12, ETM........ 1,157
4,500 Akron, Municipal Baseball Stadium,
0.00%, 12/1/16, Callable 12/1/06
@102............................... 3,661
2,000 Cleveland, Stadium Project, 6.00%,
11/15/08, AMBAC.................... 2,178
2,000 Cleveland, Stadium Project, 6.00%,
11/15/09, AMBAC.................... 2,168
2,000 Cleveland, Stadium Project, 5.25%,
11/15/10, Callable 11/15/07 @102,
AMBAC.............................. 2,001
2,000 Cleveland, Waterworks Revenue, Series
E, 6.00%, 1/1/17, Callable 8/1/97
@100............................... 2,005
1,000 Dayton, Special Facilities Revenue,
Emery Air Freight Corp., 6.05%,
10/1/09............................ 1,033
</TABLE>
Continued
38
<PAGE> 511
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 650 East Liverpool, Hospital Authority,
Series 91B, 8.13%, 10/1/11,
Callable 10/1/01 @102.............. $ 712
1,600 Forest Hills, Local School District,
GO, 6.25%, 12/1/20, Callable
12/1/06 @102, MBIA................. 1,711
1,900 Hamilton County, Multi-Family Housing
Revenue, AMT, 7.75%, 10/1/21,
Callable 10/1/06 @102.............. 1,918
1,330 Housing Financial Agency, Single
Family Mortgage Revenue, Series A,
7.65%, 3/1/29, Callable 9/1/99
@102, GNMA......................... 1,400
1,595 Housing Financial Agency, Single
Family Mortgage Revenue, Series D,
7.00%, 9/1/11, GNMA................ 1,689
1,005 Housing Financial Agency, Single
Family Mortgage Revenue, Series D,
7.05%, 9/1/16, Callable 9/1/01
@102, GNMA......................... 1,062
2,500 State Educational Loan Revenue,
Series A-1, AMT, 5.55%, 12/1/11,
Callable 6/1/07 @102, AMBAC........ 2,513
1,000 Student Loan Funding Corp., Sub
Series A, AMT, 6.10%, 8/1/07,
Callable 8/1/03 @100............... 1,016
600 University of Akron, General Receipts
Revenue, 5.00%, 1/1/08, Callable
1/1/07 @102, AMBAC................. 599
1,000 University of Akron, General Receipts
Revenue, 5.00%, 1/1/09, Callable
1/1/07 @102, AMBAC................. 989
1,455 University of Akron, General Receipts
Revenue, 5.13%, 1/1/10, Callable
1/1/07 @102, AMBAC................. 1,443
1,000 University of Akron, General Receipts
Revenue, 5.25%, 1/1/17, Callable
1/1/07 @102, AMBAC................. 973
1,200 Westlake, City School District,
5.90%, 12/1/16, Callable 12/1/06
@102............................... 1,239
--------
31,467
--------
Oklahoma (1.3%):
2,730 Housing Finance Agency, Single Family
Revenue, AMT, 7.05%, 9/1/26,
Callable 9/1/06 @105............... 2,967
3,000 Housing Finance Agency, Single Family
Revenue, Series B-2, AMT, 7.63%,
9/1/26, Callable 3/1/06 @105....... 3,292
--------
6,259
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Oregon (0.7%):
$ 600 Eugene, Trojan Nuclear Project
Revenue, 5.90%, 9/1/09, Callable
7/10/97 @100....................... $ 600
1,545 Portland, Housing Authority,
Multi-Family Housing Revenue, AMT,
6.13%, 5/1/17, Callable 5/1/00
@100............................... 1,561
1,055 State Housing & Community Services,
Single Family Mortgage Revenue,
Series 92G, AMT, 6.80%, 7/1/27,
Callable 11/18/02 @102............. 1,104
--------
3,265
--------
Pennsylvania (2.2%):
395 Chester County, Hospital Authority
Revenue, 7.00%, 7/1/10, Callable
8/1/97 @102........................ 404
1,000 Clarion County, Hospital Authority
Revenue, 8.10%, 7/1/12, Callable
7/1/99 @102........................ 1,057
2,000 Greene County, Industrial Development
Authority, Pollution Control
Revenue, 6.10%, 2/1/07, Callable
7/10/97 @100....................... 2,001
1,280 Housing Finance Agency, Single Family
Mortgage, AMT, 6.75%, 10/1/08,
Callable 10/1/05 @102.............. 1,437
2,550 Philadelphia, Gas Works Revenue,
Series A, 6.38%, 7/1/14, Callable
7/1/03 @102........................ 2,672
1,380 Pittsburgh, Urban Redevelopment
Authority, Mortgage Revenue, Series
A, AMT, 8.35%, 10/1/14, Callable
10/1/97 @103....................... 1,428
705 Pittsburgh, Urban Redevelopment
Authority, Mortgage Revenue, Sidney
Square, Project A, AMT, 6.10%,
9/1/10, Callable 9/1/06 @102....... 735
640 Pittsburgh, Urban Redevelopment
Authority, Single Family Mortgage
Revenue, Series C, AMT, 7.88%,
12/1/16, Callable 12/1/98 @102,
GNMA............................... 668
250 Scranton-Lackawanna, Hospital
Facilities Revenue, 7.25%, 7/1/99,
Callable 7/1/98 @102, BIG.......... 263
--------
10,665
--------
</TABLE>
Continued
39
<PAGE> 512
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Rhode Island (1.9%):
$ 2,630 Housing & Mortgage Financial Corp.,
Home Ownership Opportunity, AMT,
6.15%, 4/1/17, Callable 10/1/06
@102............................... $ 2,679
500 Housing & Mortgage Financial Corp.,
Home Ownership Opportunity, Series
15-B, 6.00%, 10/1/04, Callable
4/1/04 @102, MBIA.................. 513
1,000 Housing & Mortgage Financial Corp.,
Home Ownership Opportunity, Series
3A, 7.85%, 10/1/16, Callable
10/1/00 @102....................... 1,055
665 Housing & Mortgage Financial Corp.,
Homeownership Opportunity, Series
C-1, AMT, 6.80%, 10/1/23, Callable
10/1/01 @102....................... 682
4,500 State Capital Development, Series A,
5.00%, 8/1/10, Callable 8/1/07
@101, MBIA......................... 4,400
--------
9,329
--------
South Carolina (3.8%):
655 Horry County, Airport Revenue, Series
A, AMT, 5.60%, 7/1/17, Callable
7/1/07 @102, FSA................... 649
3,000 Piedmont, Municipal Power Agency,
Electric Revenue Refunding, Series
A, 6.60%, 1/1/21, Callable 1/1/98
@100............................... 3,011
5,000 Piedmont, Municipal Power Agency,
Electric Revenue Refunding, Series
B, 5.25%, 1/1/12, Callable 1/1/07
@101.5, MBIA....................... 4,930
6,175 Piedmont, Municipal Power Agency,
Electric Revenue, Series A, 6.55%,
1/1/16, Callable 1/1/98 @100....... 6,202
1,000 Resource Authority, Local Government
Program Revenue, Series A, 7.25%,
6/1/20, Callable 6/1/00 @102....... 1,068
2,500 State Housing Authority, Single
Family Mortgage, Series B, 7.00%,
7/1/11, Callable 7/1/02 @100, FHA,
VA................................. 2,555
--------
18,415
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
South Dakota (0.7%):
$ 400 Housing Development Authority,
Homeowner Mortgage, Series D-1,
AMT, 6.80%, 5/1/12, Callable 5/1/03
@102............................... $ 421
1,490 Student Loan Assistance Corp.,
Student Loan Revenue, Series B,
AMT, 7.63%, 8/1/06, Callable 8/1/99
@102, MBIA......................... 1,574
1,335 Student Loan Finance Corp., Student
Loan Revenue, Series A, AMT, 6.65%,
8/1/08, Callable 8/1/01 @102....... 1,391
--------
3,386
--------
Tennessee (1.6%):
910 Bristol, Multi-Family Home Revenue,
Shelby Heights Project, Series 97,
6.10%, 3/1/12, Callable 3/1/07
@101............................... 917
2,000 Housing Development Agency,
Homeownership Program, AMT, 7.38%,
7/1/23, Callable 7/1/01 @102....... 2,095
825 Housing Development Agency,
Homeownership Program, Series P,
7.70%, 7/1/16, Callable 7/1/00
@103............................... 869
1,305 Housing Development Agency,
Homeownership Program, Series V,
AMT, 7.65%, 7/1/22, Callable 7/1/01
@102............................... 1,372
665 La Follette, Housing Development
Corp., Mortgage Revenue Refunding,
Series A, 6.25%, 1/1/16, Callable
7/1/05 @102, MBIA, FHA............. 682
380 La Follette, Housing Development
Corp., Mortgage Revenue Refunding,
Series A, 6.37%, 1/1/20, Callable
7/1/05 @102, MBIA, FHA............. 391
1,285 Memphis Health, Educational & Housing
Revenue Refunding, 7.37%, 1/20/27,
Callable 1/20/02 @103, GNMA, FHA... 1,371
--------
7,697
--------
Texas (10.9%):
1,580 Beaumont, Housing Finance Corp.
Single Family Mortgage Revenue
Refunding, 9.20%, 3/1/12, Callable
9/1/01 @103........................ 1,757
1,765 Bexar County, Housing Finance Corp.,
Residual Revenue, GO, 0.00%,
3/1/15, Callable 1/1/99 @35.2...... 585
175 Cameron County, Housing Finance
Corp., Single Family Housing
Revenue Refunding, 6.20%, 3/1/13,
Callable 9/1/02 @103, GNMA, FNMA... 179
</TABLE>
Continued
40
<PAGE> 513
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Texas, continued:
$ 2,500 Central Housing Finance Corp., Single
Family Mortgage Revenue, Series A,
0.00%, 9/1/16, ETM................. $ 840
4,000 Dallas-Fort Worth, Regulation Airport
Revenue, 6.10%, 11/1/07, Callable
7/1/98 @100........................ 4,007
4,225 Dallas County, Housing Finance Corp.,
Single Family Mortgage Revenue,
0.00%, 1/1/17, FGIC................ 645
1,000 Dallas County, Improvement &
Refunding, Series A, 6.50%,
8/15/09, Callable 8/15/01 @100..... 1,075
640 El Paso, Housing Finance Corp.,
Single Family Mortgage Revenue
Refunding, Series A, AMT, 8.75%,
10/1/11, Callable 10/1/00 @100,
FHA................................ 711
410 El Paso, Housing Finance Corp.,
Single Family Mortgage Revenue,
AMT, 7.75%, 9/1/19, Callable 9/1/98
@103............................... 427
450 El Paso, Housing Finance Corp.,
Single Family Mortgage Revenue,
AMT, 8.20%, 3/1/21, Callable 3/1/99
@103............................... 472
3,630 Fort Worth, Housing Finance Corp.,
Home Mortgage Revenue Refunding,
Series A, 8.50%, 10/1/11, Callable
10/1/00 @100....................... 3,949
1,465 Galveston, Property Finance
Authority, Single Family Mortgage
Revenue Refunding, Series A, 8.50%,
9/1/11, Callable 9/1/01 @103....... 1,586
1,000 Houston, Hotel Occupancy Tax Revenue,
Series A, 7.00%, 7/1/15, Callable
7/1/01 @100, FGIC.................. 1,096
2,365 Houston, Housing Financial Corp.,
Single Family Mortgage Revenue
Refunding, Series B-2, 0.00%,
6/1/14, Callable 12/1/06 @58....... 676
2,500 Houston, Single Family Mortgage
Revenue, Series B-1, 8.00%, 6/1/14,
Callable 12/1/06 @102.............. 2,711
855 Laredo, Housing Finance Corp., Single
Family Mortgage Revenue, AMT,
6.20%, 10/1/19, Callable 4/1/04
@103, GNMA......................... 874
730 Lubbock, Housing Finance Corp.,
Single Family Mortgage Revenue,
8.00%, 12/1/20, Callable 1/1/99
@100, GNMA......................... 745
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Texas, continued:
$ 1,000 Lufkin, Health Facilities Development
Corp, Health Systems Revenue
Refunding, 6.50%, 2/15/06.......... $ 1,053
600 North Texas Higher Education
Authority, Student Loan Revenue,
Series D, 6.88%, 4/1/02, Callable
4/1/00 @102, AMBAC................. 636
9,000 Nueces County, Port Corpus Christi
Authority, PCR, AMT, 6.88%, 4/1/17,
Callable 4/1/02 @102............... 9,662
7,100 Red River Authority, PCR, AMT, 6.88%,
4/1/17, Callable 4/1/02 @102....... 7,638
2,000 San Antonio, Hotel Occupancy Revenue,
0.00%, 8/15/17, FGIC............... 643
1,555 Southeast Texas Housing Finance
Corp., Residual Revenue, Series A,
0.00%, 11/1/14..................... 560
1,500 State Department of Housing &
Community Affairs, Multi-Family
Housing Revenue, Series A, 6.30%,
1/1/16, Callable 1/1/07 @102....... 1,535
510 State Department of Housing &
Community Affairs, Multi-Family
Revenue, Series A, 5.90%, 7/1/06... 519
10,060 State Department of Housing &
Community Affairs, Single Family
Revenue Refunding, Series A, 0.00%,
3/1/15, Callable 8/1/97 @30........ 3,089
2,985 State Higher Education Coordinating
Board, Student Loan Revenue, AMT,
0.00%, 10/1/25, Callable 10/1/01
@100............................... 2,668
810 State Veterans Housing Assistance,
AMT, 6.05%, 12/1/12, Callable
12/1/02 @102....................... 823
200 Travis County, Housing Finance Corp.,
Residential Mortgage Revenue,
Series A, 7.00%, 12/1/11, Callable
12/1/01 @103....................... 212
730 Travis County, Housing Finance Corp.,
Single Family Mortgage Revenue
Refunding, Series A, 6.25%, 4/1/19,
Callable 4/1/99 @100, GNMA......... 756
1,220 Winter Garden Housing Finance Corp.,
Single Family Mortgage Revenue,
AMT, 6.20%, 10/1/19, Callable
4/1/99 @100, GNMA.................. 1,243
--------
53,372
--------
</TABLE>
Continued
41
<PAGE> 514
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Utah (1.3%):
$ 1,725 Provo City Housing Authority, Multi
Family Revenue, 5.80%, 7/20/22,
Callable 7/20/07 @102, GNMA........ $ 1,720
1,000 State Housing Finance Agency, Single
Family Mortgage, AMT, 5.95%,
7/1/09, Callable 1/1/07 @102,
FHA................................ 1,012
1,125 State Housing Finance Agency, Single
Family Mortgage, AMT, 6.25%,
7/1/14, Callable 1/1/07 @102,
FHA................................ 1,153
2,250 State Housing Finance Agency, Single
Family Mortgage, Issue A-1, 6.00%,
7/1/14, Callable 1/1/07 @102,
FHA................................ 2,269
245 State Housing Finance Agency, Single
Family Mortgage, Series A-1, 6.90%,
7/1/12, Callable 1/1/03 @102,
FHA................................ 258
--------
6,412
--------
Virginia (1.1%):
4,700 Metropolitan Washington D.C.
Airports, Series B, AMT, 5.25%,
10/1/11, Callable 10/1/07 @101,
FGIC............................... 4,639
755 Virginia Beach Development Authority,
Multi-Family Housing Revenue, 2nd
Mortgage, Series B, 8.75%, 1/15/09,
Callable 7/15/97 @100.............. 749
--------
5,388
--------
Washington (0.6%):
2,750 State Public Power Supply, Nuclear
Project No. 2, Revenue Refunding,
Series B, 5.63%, 7/1/12, Callable
7/1/03 @102, FSA................... 2,776
--------
West Virginia (1.3%):
315 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/11............ 129
340 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/12............ 129
340 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/13............ 119
385 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/15............ 115
410 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/16............ 112
1,000 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/20............ 205
1,595 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/21............ 306
1,630 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/22............ 292
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 1,665 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/23............ $ 279
8,370 Kanawha-Putnam County, Single Family
Mortgage, Series A, 0.00%, 12/1/16,
AMBAC.............................. 2,826
1,500 State Housing Development Fund,
Housing Finance, AMT, 7.20%,
11/1/20, Callable 5/1/02 @102,
FHA................................ 1,592
60 State Housing Development Fund,
Single Family Mortgage, 6.13%,
7/1/13, Callable 7/1/97 @100,
FHA................................ 60
--------
6,164
--------
Wisconsin (0.5%):
990 Housing & Economic Development, Home
Ownership Revenue, AMT, 8.00%,
3/1/21, Callable 9/1/00 @102,
FHA................................ 1,017
440 State, Series A, 7.50%, 1/1/15,
Callable 7/9/97 @101.5............. 448
1,000 State, Series A, AMT, 7.50%, 1/1/21,
Callable 7/1/00 @100............... 1,041
--------
2,506
--------
Wyoming (4.9%):
120 Community Development Authority,
Single Family Mortgage, Series A,
6.88%, 6/1/14, Callable 6/1/01
@102, FHA.......................... 123
350 Community Development Authority,
Single Family Mortgage, Series E,
AMT, 7.75%, 6/1/09, Callable
11/30/98 @100.9.................... 362
4,400 Student Loan Corp., Student Loan
Revenue, AMT, 4.00%, 12/1/05*...... 4,400
9,900 Student Loan Corp., Student Loan
Revenue, AMT, Series A, 4.00%,
12/1/45*........................... 9,899
8,900 Student Loan Corp., Student Loan
Revenue, Series A, AMT, 4.00%,
2/1/32*............................ 8,900
--------
23,684
--------
Total Municipal Bonds 480,539
--------
INVESTMENT COMPANIES (1.2%):
5,672 Provident Municash................... 5,672
--------
Total Investment Companies 5,672
--------
Total (Cost--$476,532) (a) $486,211
========
</TABLE>
Continued
42
<PAGE> 515
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
- ------------
Percentages indicated are based on net assets of $486,664.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $74. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $10,279
Unrealized depreciation.................................................. (674)
-------
Net unrealized appreciation.............................................. $ 9,605
=======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at June 30, 1997.
<TABLE>
<S> <C>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FHA Insured by Federal Housing Authority
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
LOC Letters of Credit
MBIA Insured by Municipal Bond Insurance Association
PCR Pollution Control Revenue
VA Veterans Administration
</TABLE>
See notes to financial statements.
43
<PAGE> 516
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS (98.6%):
Arizona (0.3%):
$ 1,000 Tucson & Pima County, Single Family
Mortgage Revenue, 0.00%, 12/1/14,
ETM............................... $ 378
--------
Colorado (0.6%):
2,000 El Paso County, Single Family
Mortgage Revenue, 0.00%, 9/1/15,
ETM............................... 718
--------
Kansas (0.8%):
1,600 Kansas City, Single Family Mortgage
Revenue, Series 1983 A, 0.00%,
12/1/14, ETM...................... 604
1,000 Saline County, Single Family
Mortgage Revenue, Series 1983 A,
0.00%, 12/1/15, ETM............... 354
--------
958
--------
Kentucky (95.1%):
225 Ashland Utility Refunding Revenue,
6.65%, 4/1/04, Callable 10/1/97
@102.............................. 231
1,500 Berea College Utility Revenue, AMT,
5.90%, 6/1/17, Callable 6/1/07
@102.............................. 1,515
200 Boone County, Certificates of
Participation, Public Golf, 6.35%,
11/15/02.......................... 215
200 Boone County, Certificates of
Participation, Public Golf, 6.40%,
11/15/03, Callable 11/15/02
@102.............................. 217
250 Boone County, School District
Finance Corp., School Building
Revenue, 6.70%, 9/1/06, Callable
9/1/01 @103....................... 275
310 Boone County, School District
Finance Corp., School Building
Revenue, 7.10%, 8/1/07, Callable
8/1/00 @103....................... 341
1,000 Boone County, School District
Finance Corp., School Building
Revenue, 6.70%, 9/1/07, Callable
9/1/01 @103....................... 1,097
395 Boone County, School District
Finance Corp., School Building
Revenue, 7.10%, 8/1/08, Callable
8/1/00 @103....................... 435
230 Bowling Green, Key Municipal
Projects Corp., Lease Revenue,
7.20%, 10/1/01, Callable 4/1/99
@102.............................. 245
280 Bowling Green, Key Municipal
Projects Corp., Lease Revenue,
7.40%, 10/1/04, Callable 4/1/99
@102.............................. 299
250 Campbell & Kenton Counties,
Sanitation District #1, Sanitation
District Revenue, 7.10%, 8/15/99,
Callable 8/15/97 @100.5........... 252
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 315 Campbell & Kenton Counties,
Sanitation District #1, Sanitation
District Revenue, 6.38%, 8/1/03,
ETM............................... $ 330
630 Campbell & Kenton Counties,
Sanitation District #1, Sanitation
District Revenue, 7.13%, 8/1/05,
ETM............................... 662
415 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/09, Callable
6/1/02 @102....................... 439
445 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/10, Callable
6/1/02 @102....................... 469
325 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/11, Callable
6/1/02 @102....................... 342
510 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/12, Callable
6/1/02 @102....................... 535
250 Danville, Hospital Revenue, Hospital
Revenue Refunding, Esphraim
McDowell Region, 6.20%, 4/1/98,
FGIC.............................. 254
345 Danville, Hospital Revenue, Hospital
Revenue Refunding, Esphraim
McDowell Region, 6.40%, 4/1/00,
FGIC.............................. 363
100 Danville, Multi-City Lease Revenue,
Metro Sewer District, 6.35%,
2/1/02, Prerefunded 2/1/01 @102,
MBIA.............................. 108
225 Danville, Multi-City Lease Revenue,
Metro Sewer District, 6.50%,
2/1/04, Prerefunded 2/1/01 @102,
MBIA.............................. 245
500 Daviess County, Hospital Revenue,
Owensboro-Daviess County, 6.00%,
8/1/04, Callable 8/1/02 @102,
MBIA.............................. 536
500 Development Finance Authority,
Hospital Revenue, Baptist
Hospital, Inc., 6.88%, 9/1/99,
ETM, BIG.......................... 528
4,500 Development Finance Authority,
Hospital Revenue, Elizabeth,
Med-A, 6.00%, 11/1/10, Callable
11/1/01 @100, FGIC................ 4,692
500 Development Finance Authority,
Pooled Loan Program, 6.80%,
12/1/97, FGIC..................... 506
500 Eastern Kentucky University,
Revenue, 6.00%, 5/1/99, AMBAC..... 516
</TABLE>
Continued
44
<PAGE> 517
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 250 Eastern Kentucky University,
Revenues Construction, Educational
Buildings, Series 0, 6.70%,
5/1/07, Callable 5/1/01 @102,
AMBAC............................. $ 272
655 Fayette County, School District
Finance Corp., School Building
Refunding Revenue, 6.00%, 5/1/02,
Callable 5/1/00 @102.............. 693
1,255 Fayette County, School District
Finance Corp., School Building
Revenue, Series A, 5.35%, 1/1/13,
Callable 1/1/07 @102.............. 1,253
200 Hardin County, Water District #1,
Waterworks Refunding Revenue,
6.70%, 9/1/05, Callable 3/1/01
@102.............................. 217
180 Henderson Electric Light & Power
Revenue, 5.70%, 3/1/03, Callable
7/10/97 @100...................... 180
1,025 Higher Education Student Loan Corp.,
Insured Student Loan Revenue,
Series C, 6.50%, 6/1/02, GSL...... 1,098
1,500 Higher Education Student Loan Corp.,
Insured Student Loan Revenue,
Series C, AMT, 5.45%, 6/1/03,
GSL............................... 1,540
1,705 Higher Education Student Loan Corp.,
Insured Student Loan Revenue,
Series D, AMT, 7.00%, 12/1/06,
Callable 12/1/01 @102, GSL........ 1,861
760 Housing Corp. Revenue, 7.40%,
1/1/10, Callable 7/1/00 @102...... 802
500 Housing Corp. Revenue, Series A,
5.40%, 1/1/05, Callable 7/1/03
@102, FHA, FNMA, VA............... 517
500 Housing Corp. Revenue, Series A,
5.50%, 1/1/06, Callable 7/1/03
@102, FHA, FNMA, VA............... 518
500 Housing Corp. Revenue, Series A,
5.60%, 1/1/07, Callable 7/1/03
@102, FHA, FNMA, VA............... 518
400 Housing Corp. Revenue, Series B,
5.85%, 7/1/00, FHA, FNMA, VA...... 414
275 Housing Corp. Revenue, Series B,
6.20%, 7/1/03, Callable 7/1/02
@102, FHA, FNMA, VA............... 287
1,745 Housing Corp. Revenue, Series D,
5.80%, 7/1/13, Callable 7/1/06
@102.............................. 1,776
410 Infrastructure Authority Revenue,
Governmental Agencies Program
Revenue, 5.25%, 8/1/04, Callable
8/1/03 @102....................... 422
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 110 Infrastructure Authority Revenue,
Governmental Agencies Program
Revenue, 6.00%, 8/1/11, Callable
8/1/01 @100....................... $ 112
500 Infrastructure Authority Revenue,
Governmental Agencies Program
Revenue, 5.75%, 8/1/13, Callable
8/1/03 @102....................... 508
500 Infrastructure Authority Revenue,
Governmental Agencies Program,
Refunding Revenue, 5.40%, 8/1/06,
Callable 8/1/03 @102.............. 516
1,000 Infrastructure Authority Revenue,
Revolving Fund Program, Series E,
6.40%, 6/1/04, Callable 6/1/01
@102.............................. 1,076
710 Infrastructure Authority Revenue,
Revolving Fund Program, Series E,
6.50%, 6/1/05, Callable 6/1/01
@102.............................. 764
250 Infrastructure Authority Revenue,
Series G, 6.10%, 6/1/02........... 267
250 Interlocal School Transportation
Assoc., Equipment Lease Revenue,
6.00%, 3/1/01..................... 263
405 Interlocal School Transportation
Assoc., Equipment Lease Revenue,
6.00%, 3/1/02..................... 429
135 Jefferson County, Capital Projects,
7.70%, 6/1/01, Callable 12/1/97,
ETM............................... 151
500 Jefferson County, Capital Projects,
First Mortgage Refunding Revenue,
6.38%, 12/1/07, ETM............... 527
725 Jefferson County, Capital Projects,
Series A, 6.10%, 8/15/07, Callable
2/15/03 @102...................... 778
1,000 Jefferson County, Capital Projects,
Series A, 5.50%, 4/1/10, Callable
4/1/06 @102, AMBAC................ 1,022
1,000 Jefferson County, Capital Projects,
Series A, 5.50%, 4/1/11, Callable
4/1/06 @102, AMBAC................ 1,018
500 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.05%,
5/1/02, AMBAC..................... 533
1,000 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.10%,
5/1/03, Callable 5/1/02 @102,
AMBAC............................. 1,076
</TABLE>
Continued
45
<PAGE> 518
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 300 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.20%,
5/1/04, Callable 5/1/02 @102,
AMBAC............................. $ 324
500 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.38%,
5/1/08, Callable 5/1/02 @102,
AMBAC............................. 538
930 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 5.65%,
1/1/10, Callable 1/1/07 @102...... 951
2,000 Jefferson County, Hospital Revenue,
Alliant Hospital Systems, 6.20%,
10/1/04, Callable 10/1/02 @102,
MBIA.............................. 2,171
550 Jefferson County, Pollution Control
Revenue, Louisville Gas & Electric
Co., 7.45%, 6/15/15, Callable
6/15/00 @102...................... 601
1,000 Jefferson County, School District
Finance Corp., School Building
Revenue, 6.00%, 1/1/04, Callable
7/1/02 @102, MBIA................. 1,073
625 Jefferson County, School District
Finance Corp., School Building
Revenue, 7.15%, 9/1/04,
Prerefunded 9/1/00 @103........... 694
675 Jefferson County, School District
Finance Corp., School Building
Revenue, 7.20%, 9/1/05,
Prerefunded 9/1/00 @103........... 751
1,430 Jefferson County, School District
Finance Corp., School Building
Revenue, 5.25%, 7/1/07, Callable
7/1/05 @102, MBIA................. 1,471
2,315 Junction City, College Revenue,
Centre College Project, 5.70%,
4/1/12, Callable 4/1/07 @102...... 2,394
500 Kenton County, Airport Revenue,
International, Series AR-A, AMT,
6.10%, 3/1/04, Callable 3/1/02
@101, FSA......................... 531
1,000 Kenton County, Airport Revenue,
International, Series AR-A, AMT,
6.20%, 3/1/05, Callable 3/1/02
@101, FSA......................... 1,063
500 Kenton County, Airport Revenue,
International, Series B, AMT,
5.75%, 3/1/07, Callable 3/1/03
@102, FSA......................... 524
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 500 Kenton County, Airport Revenue,
International, Series B, AMT,
5.75%, 3/1/08, Callable 3/1/03
@102, FSA......................... $ 520
380 Kenton County, Public Properties
Corp. Revenue, Community Health
Care Facilities Project, 7.00%,
10/1/06, Prerefunded 10/1/99
@102.............................. 410
200 Kenton County, School District
Finance Corp., School Building
Revenue, 6.30%, 12/1/00........... 212
100 Kenton County, School District
Finance Corp., School Building
Revenue, 6.50%, 12/1/02, Callable
12/1/01 @102...................... 110
325 Kenton County, School District
Finance Corp., School Building
Revenue Refunding, 5.25%, 7/1/07,
Callable 7/1/03 @102.............. 334
495 Kenton County, Water District,
Waterworks Revenue, District #001,
6.30%, 2/1/02, FGIC............... 532
1,015 Kenton County, Water District,
Waterworks Revenue, District #001,
6.38%, 2/1/04, Callable 2/1/02
@103, FGIC........................ 1,110
265 Lexington-Fayette Urban County
Government, Economic Development
Revenue, 7.54%, 12/1/03........... 265
300 Lexington-Fayette Urban County
Government, Educational Facilities
Revenue, Transylvania University,
7.15%, 2/1/00, Callable 2/1/99
@102, MBIA........................ 319
250 Lexington-Fayette Urban County
Government, Educational Facilities
Revenue, Transylvania University,
7.25%, 2/1/02, Callable 2/1/99
@102, MBIA........................ 265
335 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.20%, 4/1/05,
Prerefunded 4/1/02 @102........... 366
355 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.30%, 4/1/06,
Prerefunded 4/1/02 @102........... 389
</TABLE>
Continued
46
<PAGE> 519
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 380 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.40%, 4/1/07,
Prerefunded 4/1/02 @102........... $ 418
405 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.40%, 4/1/08,
Prerefunded 4/1/02 @102........... 445
425 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.40%, 4/1/09,
Prerefunded 4/1/02 @102........... 467
425 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Greenspace Project Revenue,
6.75%, 12/1/05, Prerefunded
12/1/00 @102...................... 466
240 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Greenspace Project Revenue,
6.75%, 12/1/07, Prerefunded
12/1/00 @102...................... 263
350 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Mortgage Revenue, 6.70%,
2/1/02, Callable 2/1/00 @102...... 376
210 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Mortgage Revenue, 6.88%,
2/1/06, Callable 2/1/00 @102...... 225
430 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Mortgage Revenue, 6.75%,
7/1/07, Prerefunded 7/1/00 @102... 468
500 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Sewer System Revenue,
6.35%, 7/1/07, Callable 7/1/02
@102, MBIA........................ 545
240 Lexington-Fayette Urban County
Government, School Building
Revenue, 6.90%, 11/1/97........... 242
250 Lexington-Fayette Urban County
Government, School Building
Revenue, 6.85%, 6/1/01, Callable
12/1/99 @103...................... 272
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 625 Lexington-Fayette Urban County
Government, School Building
Revenue, 7.00%, 6/1/04, Callable
12/1/99 @103...................... $ 683
1,930 Lexington-Fayette Urban County
Government, Sewer System Revenue,
6.35%, 7/1/09, Callable 7/1/02
@102, MBIA........................ 2,102
935 Lexington-Fayette Urban County
Government, University of Kentucky
Alumni Assoc., Inc., 6.50%,
11/1/07, Callable 11/1/04 @102,
MBIA.............................. 1,046
1,420 Louisville & Jefferson County,
Airport Authority Revenue, AMT,
6.00%, 7/1/10, Callable 7/1/07
@102, MBIA........................ 1,504
200 Louisville & Jefferson County,
Metropolitan Sewer District, Sewer
Revenue, 6.25%, 6/1/99, ETM....... 208
300 Louisville & Jefferson County,
Metropolitan Sewer District, Sewer
Revenue, 6.90%, 5/1/01,
Prerefunded 5/1/99 @102, MBIA..... 320
825 Louisville & Jefferson County, Sewer
& Drain System Revenue, 6.40%,
5/15/08, Callable 11/15/04 @102,
AMBAC............................. 916
205 Louisville Packaging Authority
Revenue, 6.60%, 12/1/03, Callable
6/1/01 @103....................... 224
100 Louisville Public Properties Corp.
Revenue, 6.25%, 5/1/98, Callable
11/1/97 @101...................... 102
300 Louisville Public Properties Corp.
Revenue, 6.00%, 4/1/04, Callable
4/1/99 @102....................... 313
300 Louisville Public Properties Corp.
Revenue, 6.00%, 4/1/05, Callable
4/1/99 @102....................... 314
295 Louisville Public Properties Corp.,
First Mortgage Revenue, 6.15%,
12/1/05, Callable 12/1/02 @102.... 318
200 Louisville Public Properties Corp.,
First Mortgage Revenue Refunding,
6.40%, 12/1/07, Callable 12/1/02
@102.............................. 217
1,000 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.40%, 11/15/04, Callable
11/15/00 @102..................... 1,035
</TABLE>
Continued
47
<PAGE> 520
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 500 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.63%, 11/15/07, Callable
11/15/00 @102..................... $ 520
1,540 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.75%, 11/15/09, Callable
11/15/00 @102..................... 1,595
1,530 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.75%, 11/15/10, Callable
11/15/00 @102..................... 1,577
2,090 McCracken County, Hospital Revenue,
Mercy Health System, 6.40%,
11/1/07, Callable 11/1/04 @102,
MBIA.............................. 2,317
1,000 McCracken County, Hospital Revenue,
Mercy Health System, Series A,
6.20%, 11/1/05, Callable 11/1/04
@102, MBIA........................ 1,096
505 McCreary County, School District
Finance Corp., School Building
Revenue, 6.60%, 10/1/08, Callable
10/1/01 @103...................... 556
215 Mercer County, School District
Finance Corp., School Building
Revenue, 6.38%, 12/1/07, Callable
12/1/01 @103...................... 231
300 Morehead State University, Housing &
Dining System Revenue, 6.10%,
11/1/05, Callable 11/1/01 @102,
AMBAC............................. 321
200 Morehead State University, Housing &
Dining System Revenue, Series M,
6.30%, 11/1/08, Callable 11/1/01
@102, AMBAC....................... 217
215 Muhlenberg County, School District
Finance Corp., School Building
Revenue, 5.85%, 8/1/09, Callable
8/1/02 @102....................... 224
750 Muhlenberg County, School District
Finance Corp., School Building
Revenue, Second Series, 5.85%,
8/1/10, Callable 8/1/02 @102...... 779
460 Murray State University Revenues,
Series G, Second Series, 5.60%,
5/1/07, Callable 5/1/03 @102...... 478
240 Murray State University, Educational
Buildings Refunding Revenue,
5.60%, 5/1/06, Callable 5/1/03
@102.............................. 250
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 530 Northern Kentucky University,
Educational Buildings Revenue,
6.10%, 5/1/06, Callable 5/1/02
@102, AMBAC....................... $ 568
300 Owensboro, Electric Light & Power
Revenue, 6.75%, 1/1/03, ETM....... 319
205 Paducah Electric Plant Board
Revenue, 6.30%, 1/1/08, Callable
1/1/01 @102, AMBAC................ 220
300 Paducah Waterworks Revenue, 6.10%,
7/1/00, MBIA...................... 316
300 Paducah Waterworks Revenue, 6.60%,
7/1/05, Callable 7/1/01 @102,
MBIA.............................. 325
1,085 Perry County, School District,
Financial Corp. School Building
Revenue, 6.25%, 7/1/09, Callable
7/1/02 @102....................... 1,157
130 Richmond Water & Gas Revenue, 5.40%,
12/1/99, ETM...................... 134
250 Richmond Water, Gas & Sewer Revenue
Refunding Bonds, 6.50%, 6/1/99,
ETM, MBIA......................... 261
410 Rowan County, School Building
Revenue, 6.35%, 6/1/03, Callable
12/1/97 @103, MBIA................ 425
330 Scott County, School District
Financial Corp., School Building
Revenue, 7.10%, 12/1/02, Callable
12/1/98 @103...................... 353
545 Shelby County, School District
Financial Corp., School Building
Revenue, 6.10%, 9/1/02, Callable
9/1/01 @103....................... 582
100 Shelby County, School District
Financial Corp., School Building
Revenue, 6.25%, 9/1/03, Callable
9/1/01 @103....................... 108
500 Shelby County, School District
Financial Corp., School Building
Revenue, 6.50%, 9/1/05, Callable
9/1/01 @103....................... 549
200 Shelby County, School District
Financial Corp., School Building
Revenue, 6.50%, 9/1/07, Callable
9/1/01 @103....................... 217
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #26, 7.40%,
6/1/00, Callable 12/1/98 @102..... 1,065
2,300 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #50, 6.00%,
2/1/10, Prerefunded 2/1/01 @100... 2,427
</TABLE>
Continued
48
<PAGE> 521
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 1,475 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #53, 6.25%,
10/1/02, Callable 10/1/01 @102.... $ 1,593
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #54, 5.10%,
9/1/00............................ 1,023
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #54, 5.90%,
9/1/07, Callable 9/1/02 @102...... 1,061
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #56, 5.70%,
9/1/06, Callable 9/1/04 @102...... 1,061
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #56, 5.80%,
9/1/07, Callable 9/1/04 @102...... 1,065
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #59, 5.30%,
5/1/07, Callable 11/1/05 @102..... 1,030
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #59, 5.38%,
11/1/09, Callable 11/1/05 @102.... 1,016
275 State Property & Buildings
Commission Revenues, Revenue
Refunding, Toyota Corp., 6.40%,
11/1/01........................... 296
250 State Turnpike Authority, Economic
Development, Recovery Road
Revenue, 6.13%, 7/1/07, ETM....... 265
500 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 7.13%,
5/15/01, Prerefunded 5/15/00
@101.5............................ 545
750 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.70%,
1/1/03............................ 787
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.20%,
7/1/03, AMBAC..................... 1,032
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.40%,
7/1/05, AMBAC..................... 1,040
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 7.38%,
5/15/07, Prerefunded 5/15/00
@101.5............................ $ 1,097
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 6.50%,
7/1/08, AMBAC..................... 1,130
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.50%,
7/1/09, AMBAC..................... 1,045
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 0.00%,
1/1/10, FGIC...................... 518
2,600 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.63%,
7/1/10, Callable 7/1/05 @102,
AMBAC............................. 2,690
500 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.75%,
7/1/11, Callable 7/1/05 @102,
AMBAC............................. 520
2,750 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project S, 5.50%,
7/1/08, AMBAC..................... 2,893
250 State Turnpike Authority, Economic
Development, Toll Road Revenue
Refunding Bonds, 5.80%, 7/1/99,
ETM............................... 258
500 State Turnpike Authority, Resource
Recovery Revenue, 6.63%, 7/1/08,
ETM............................... 548
1,000 State Turnpike Authority, Resource
Recovery Revenue, 1985 Series A,
6.00%, 7/1/09, Callable 7/16/97
@100.............................. 1,001
225 State Turnpike Authority, Toll Road
Revenue Refunding, 6.13%, 7/1/08,
ETM............................... 240
535 University of Kentucky Revenues,
Community Colleges, Educational
Buildings Revenue, 6.30%, 5/1/02,
Callable 11/1/01 @102............. 575
1,000 University of Kentucky Revenues,
Community Colleges, Educational
Buildings Revenue Bonds, 6.60%,
5/1/01............................ 1,076
</TABLE>
Continued
49
<PAGE> 522
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 475 University of Kentucky Revenues,
Community Colleges, Educational
Buildings Revenue, Southeast,
6.30%, 5/1/05, Callable 11/1/01
@102.............................. $ 511
500 University of Louisville Revenues,
Construction of Educational
Buildings, Series I, Refunding
Revenue, 5.40%, 5/1/07, Callable
5/1/03 @102....................... 517
500 University of Louisville Revenues,
Construction of Educational
Buildings, Series I, Refunding
Revenue, 5.40%, 5/1/08, Callable
5/1/03 @102....................... 512
500 University of Louisville Revenues,
Construction of Educational
Buildings, Series I, Refunding
Revenue, 5.40%, 5/1/09, Callable
5/1/03 @102....................... 508
1,000 University of Louisville,
Educational Buildings Refunding
Revenue, 5.38%, 5/1/06, Callable
5/1/03 @102....................... 1,035
330 Versailles County, Water & Sewer,
6.30%, 12/1/09, Callable 12/1/01
@103.............................. 355
305 Warren County, Water District
Revenue, 7.13%, 1/1/03, Callable
7/1/99 @103, MBIA................. 329
715 Winchester Utilities Revenue, 7.45%,
7/1/08, Prerefunded 7/1/98 @103,
MBIA.............................. 761
280 Winchester Utilities Revenue, 7.45%,
7/1/09, Prerefunded 7/1/98 @103,
MBIA.............................. 298
950 Winchester Utilities Revenue, 5.30%,
7/1/09, Callable 7/1/03 @102...... 954
--------
118,834
--------
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Louisiana (0.9%):
$ 3,000 Public Facilities Authority Revenue,
Multi-Family, Series A, 0.00%,
2/1/20, ETM....................... $ 823
1,000 Public Facilities Authority Revenue,
Series B, 0.00%, 12/1/19, ETM..... 284
--------
1,107
--------
Mississippi (0.6%):
2,500 Home Corp., Residual Revenue, 0.00%,
9/15/16, Callable 3/15/04 @ 41.6,
ETM............................... 755
--------
Texas (0.3%):
1,000 Central Housing Finance Corp.,
Single Family Mortgage Revenue,
Series A, 0.00%, 9/1/16, ETM...... 336
--------
Total Municipal Bonds 123,086
--------
INVESTMENT COMPANIES (0.3%):
342 The One Group Municipal Money Market
Fund, Fiduciary Class............. 342
--------
Total Investment Companies 342
--------
Total (Cost--$117,316) (a) $123,428
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $124,783.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $6,112
Unrealized depreciation.................................................. --
------
Net unrealized appreciation.............................................. $6,112
======
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FHA Insured by Federal Housing Administration
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GSL Guaranteed Student Loans
MBIA Insured by Municipal Bond Insurance Association
VA Veterans Administration
</TABLE>
See notes to financial statements.
50
<PAGE> 523
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS (98.7%):
California (0.6%):
$ 1,000 Escondido Multifamily Housing
Revenue, 5.40%, 1/1/27, Callable
7/1/05 @101.5, FNMA............... $ 1,014
--------
Colorado (1.0%):
2,810 El Paso County, Single Family
Mortgage Revenue, Series A, 0.00%,
5/1/15, ETM....................... 1,028
1,890 Housing Finance Authority, Revenue,
0.00%, 9/1/14, ETM................ 724
--------
1,752
--------
Kansas (0.5%):
1,000 Kansas City, Single Family Mortgage
Revenue, Series 1983 A, 0.00%,
12/1/14, ETM...................... 378
1,390 Saline County, Single Family
Mortgage Revenue, Series 1983 A,
0.00%, 12/1/15, ETM............... 491
--------
869
--------
Massachusetts (0.7%):
1,000 State GO, 6.75, 8/1/09, Callable
8/1/01 @102, AMBAC................ 1,094
--------
Mississippi (0.6%):
3,000 Home Corp., Residual Revenue, 0.00%,
9/15/16, Callable 3/15/04 @41.6,
ETM............................... 906
--------
Missouri (0.7%):
1,000 State Health, 6.40%, 6/1/10, MBIA... 1,117
--------
Ohio (93.4%):
1,000 Adams County, GO, School District,
5.45%, 12/1/08, Callable 12/1/07
@102, MBIA........................ 1,039
1,000 Air Quality Development Authority,
Pollution Control Revenue, Ohio
Edison, 7.45%, 3/1/16, Callable
3/1/00 @102, FGIC................. 1,087
1,045 Akron Sewer Systems, 5.30%, 12/1/05,
MBIA.............................. 1,085
1,000 Akron Sewer Systems, 5.65%, 12/1/08,
Callable 12/1/06 @102, MBIA....... 1,055
820 Akron, Bath, Copley Ohio Hospital
Revenue, 4.40%, 1/1/00, AMBAC..... 821
1,000 Akron, Bath, Copley Ohio Hospital
Revenue, 7.45%, 11/15/20,
Prerefunded 11/15/00 @102, AMBAC.. 1,116
1,000 Allen County, Justice Center, 7.00%,
12/1/15, Prerefunded 12/1/01 @101,
AMBAC............................. 1,114
3,000 Bexley School District, GO, 6.50%,
12/1/16, Prerefunded 12/1/01
@102.............................. 3,294
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 Big Walnut Ohio School District, GO,
7.30%, 6/1/15, Prerefunded 6/1/01
@102, AMBAC....................... $ 1,122
725 Bowling Green State University,
5.65%, 6/1/11, Callable 6/1/06
@101, AMBAC....................... 749
1,000 Butler County, Hospital Facilities,
6.75%, 11/15/10, Callable 11/15/01
@102, FGIC........................ 1,088
750 Cincinnati, GO, 6.75%, 12/1/00...... 810
2,775 Clermont County, Waterworks, 6.63%,
12/1/15, Prerefunded 12/1/01 @102,
AMBAC............................. 3,073
4,500 Cleveland Public Power System,
6.40%, 11/15/06, Callable 11/15/04
@102, MBIA........................ 5,000
3,000 Cleveland Public Power System,
0.00%, 11/15/11, MBIA............. 1,403
2,000 Cleveland Waterworks, 5.50%, 1/1/13,
MBIA.............................. 2,062
1,850 Cleveland Waterworks, Series F-92B,
6.25%, 1/1/06, Callable 1/1/02
@102, AMBAC....................... 1,986
3,750 Cleveland Waterworks, Series F-92B,
6.50%, 1/1/11, Callable 1/1/02
@102, AMBAC....................... 4,068
50 Cleveland Waterworks, Series F-92B,
6.50%, 1/1/11, Prerefunded 1/1/02
@102, AMBAC....................... 55
1,000 Cleveland, GO, 6.88%, 7/1/09,
Prerefunded 7/1/99 @102, MBIA..... 1,071
500 Cleveland, GO, 7.50%, 8/1/07,
Prerefunded 2/1/03 @100, AMBAC.... 573
1,000 Cleveland, GO, 6.38%, 7/1/12,
Callable 7/1/02 @102, MBIA........ 1,086
1,225 Columbus Municipal Airport No.
30-E-U, GO, 6.20%, 4/15/04,
Callable 4/15/01 @100............. 1,295
1,000 Columbus Sewer Improvements, GO,
6.75%, 9/15/06, Callable 9/15/01
@100.............................. 1,097
</TABLE>
Continued
51
<PAGE> 524
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 2,285 Columbus Waterworks Enlargement No.
44, GO, 6.00%, 5/1/11, Callable
5/1/03 @102....................... $ 2,428
1,000 Columbus Waterworks Enlargement No.
44, GO, 6.00%, 5/1/12, Callable
5/1/03 @102....................... 1,060
1,000 Columbus, GO, 6.40%, 1/1/07,
Callable 1/1/02 @102.............. 1,088
1,000 Cuyahoga County, Hospital Revenues,
Series A, 5.50%, 1/15/10, Callable
1/15/06 @102, MBIA................ 1,024
1,000 Cuyahoga County, Jail Facilities,
GO, 7.00%, 10/1/13, Prerefunded
10/1/01 @102...................... 1,115
1,500 Cuyahoga County, Public
Improvements, GO, 6.70%, 10/1/10,
Prerefunded 10/1/99 @102.......... 1,609
1,000 Delaware County, Library District,
GO, 7.25%, 11/1/10, Prerefunded
11/1/00 @102...................... 1,113
1,000 Delaware County, Sewer, GO, 5.60%,
12/1/10, Callable 12/1/05 @101.... 1,019
1,000 Fairfield County, Hospital
Improvement Revenue,
Lancaster-Fairfield Community
Hospital, 7.10%, 6/15/21,
Prerefunded 6/15/01 @102, MBIA.... 1,115
500 Fairfield County, School District,
GO, 7.75%, 12/1/09, Callable
12/1/98 @102, AMBAC............... 536
1,290 Franklin County, Hospital Revenue,
Children's Hospital, 5.65%,
11/1/08, Callable 11/1/06 @101.... 1,354
1,065 Franklin County, Hospital Revenue,
Children's Hospital, 5.75%,
11/1/09, Callable 11/1/06 @101.... 1,117
800 Franklin County, Hospital Revenue,
Children's Hospital, 5.80%,
11/1/10, Callable 11/1/06 @101.... 836
2,000 Franklin County, Hospital Revenue,
Children's Hospital Project,
Series A, 6.50%, 5/1/07, Callable
11/1/02 @102...................... 2,158
1,000 Franklin County, Hospital Revenue,
Children's Hospital Project,
Series A, 6.60%, 11/1/11, Callable
11/1/01 @102...................... 1,102
1,000 Franklin County, Hospital Revenue,
Holy Cross Health, 7.65%, 6/1/10,
Prerefunded 6/1/00 @102, AMBAC.... 1,109
2,500 Franklin County, Hospital Revenue,
Holy Cross Health Systems, 4.15%,
6/1/16*........................... 2,500
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 Franklin County, Hospital Revenue,
Riverside United, Series B, 7.60%,
5/15/20, Prerefunded 5/15/00
@102.............................. $ 1,106
1,000 Greater Cleveland Regional
Transportation Authority, GO,
5.60%, 12/1/11, Callable 12/1/06
@101, FGIC........................ 1,030
1,600 Greene County, GO, 6.25%, 12/1/09,
Callable 12/1/02 @102, AMBAC...... 1,739
1,000 Greene County, Water System, 6.85%,
12/1/11, Callable 12/1/01 @102,
AMBAC............................. 1,101
1,500 Hamilton County Electric Systems,
6.13%, 10/15/08, Callable 10/15/02
@102, FGIC........................ 1,613
1,500 Hamilton County, Building
Improvement & Refunding, Museum
Center, GO, 6.50%, 12/1/09,
Callable 12/1/01 @102............. 1,629
1,500 Hamilton County, Hospital
Facilities, Bethesda Hospital,
Series A, 6.25%, 1/1/12, Callable
1/1/03 @102....................... 1,565
1,265 Hamilton County, Hospital
Facilities, Christ Hospital,
Series B, 6.63%, 1/1/06, Callable
1/1/01 @100, FGIC................. 1,343
380 Hamilton County, Sewer System,
6.30%, 12/1/01, Prerefunded 6/1/01
@102.............................. 412
1,000 Hamilton County, Sewer System
Refunding & Improvements, Series
A, 4.30%, 12/1/98, FGIC........... 1,005
1,000 Hamilton Waterworks Water Utility
Improvement, 6.40%, 10/15/07,
Callable 10/15/01 @102, MBIA...... 1,087
1,250 Housing Finance Agency, Mortgage,
Series A-1, 6.20%, 9/1/14,
Callable 3/1/05 @102, GNMA........ 1,301
1,000 Huron County, Correctional Facility,
Issue I, GO, 5.70%, 12/1/11,
Callable 12/1/07 @102, MBIA....... 1,044
1,000 Kent State University, 6.45%,
5/1/12, Callable 5/1/02 @102,
AMBAC............................. 1,087
3,000 Lakewood Sanitation Sewer System,
Special Obligation, 6.40%,
12/1/11, Callable 12/1/01 @102.... 3,220
1,000 Logan County School District, GO,
7.10%, 12/1/12, Prerefunded
12/1/01 @101, AMBAC............... 1,118
1,000 Lorain County, Hospital Revenue,
6.00%, 9/1/05, MBIA............... 1,082
</TABLE>
Continued
52
<PAGE> 525
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 Lorain County, Hospital Revenue,
5.63%, 9/1/12, Callable 9/1/07
@102, MBIA........................ $ 1,027
1,000 Marysville School District, GO,
7.20%, 12/1/10, Callable 12/1/00
@102, AMBAC....................... 1,110
2,500 Middleburg Heights Hospital, 5.70%,
8/15/10, Callable 8/15/08 @102,
FSA............................... 2,611
2,000 Montgomery County, Sisters of
Charity, Series A, 6.50%, 5/15/08,
Callable 5/15/01 @102, MBIA....... 2,150
1,000 North Royalton, GO, 7.50%, 12/1/11,
Callable 12/1/00 @102............. 1,106
1,000 Northeast Ohio Regional Sewer
District Wastewater, 6.50%,
11/15/08, Prerefunded 11/15/01
@101, AMBAC....................... 1,093
980 Ohio Capital Corp. for Housing,
5.60%, 1/1/07, Callable 7/1/03
@102, MBIA........................ 1,003
710 Ohio Housing Finance, 7.50%, 9/1/10,
Callable 9/1/00 @102, GNMA........ 751
1,805 Ohio State Natural Resources, GO,
4.70%, 4/1/03..................... 1,823
1,000 Ohio State University, University &
College Improvements, 5.50%,
12/1/03, Callable 12/1/02 @102.... 1,051
500 Olentangy Local School District, GO,
7.75%, 12/1/11, BIG............... 628
565 Olmstead Falls Ohio School District,
GO, 6.85%, 12/15/11, Callable
12/15/04 @102, FGIC............... 640
500 Orrville Electric Revenue, 7.50%,
12/1/10, Callable 12/1/98 @102,
AMBAC............................. 533
1,000 Ottawa County, GO, 7.00%, 9/1/11,
Callable 9/1/01 @102, AMBAC....... 1,102
1,000 Pickerington Local School District,
GO, 7.00%, 12/1/13, Prerefunded
12/1/00 @102, AMBAC............... 1,104
2,600 Portage County, Robinson Memorial
Hospital Project, 5.63%, 11/15/07,
Callable 11/15/04 @102, MBIA...... 2,741
2,220 Rocky River City School District,
School Improvements, GO, 6.90%,
12/1/11, Callable 2/1/00 @102..... 2,441
1,000 Saint Mary's Electric Systems
Mortgage, 7.15%, 12/1/10, Callable
2/1/00 @102, AMBAC................ 1,109
1,000 Sandusky City School District, GO,
7.30%, 12/1/10, Callable 12/1/00
@102.............................. 1,101
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 Shaker Heights City Schools, GO,
7.10%, 12/15/10................... $ 1,157
1,710 Springfield County, School District,
GO, 0.00%, 12/1/12, AMBAC......... 751
1,000 Springfield, GO, 6.88%, 9/1/06,
Callable 9/1/01 @102, AMBAC....... 1,100
1,000 State Building Authority, 7.35%,
4/1/09, Prerefunded 4/1/00 @102,
MBIA.............................. 1,098
2,000 State Building Authority, Adult
Correctional Building, Series A,
6.13%, 10/1/09, Callable 10/1/03
@102.............................. 2,141
1,000 State Building Authority, Adult
Correctional Building, Series A,
5.50%, 4/1/13, Callable 4/1/07
@101, AMBAC....................... 1,012
1,000 State Building Authority, Highway
Safety Building, 5.00%, 10/1/04,
AMBAC............................. 1,020
500 State Building Authority, Highway
Safety Building, 7.75% 10/1/08,
Prerefunded 10/1/98 @102.......... 533
1,000 State Building Authority, Highway
Safety Building, 5.38%, 10/1/09,
AMBAC............................. 1,022
1,000 State Building Authority, State
Correctional Facilities, Series A,
6.50%, 10/1/01.................... 1,082
1,165 State Building Authority, State
Facilities Transportation Building
Fund, Series A, 6.50%, 9/1/09,
Callable 9/1/04 @102, AMBAC....... 1,290
1,000 State Building Authority, State
Facilities, Administration
Building Funds, Series A, 5.75%,
10/1/06, Callable 10/1/04 @102,
MBIA.............................. 1,068
2,000 State Building Authority, State
Facilities, J. Rhodes, Series A,
6.38%, 6/1/07, Callable 6/1/01
@102.............................. 2,142
1,000 State Educational Loan Revenue,
Series A-1, AMT, 5.40%, 12/1/09,
Callable 6/1/07 @102, AMBAC....... 1,006
1,750 State Elementary & Secondary
Education, 5.63%, 12/1/06......... 1,852
2,510 State Fresh Water Development, GO,
5.80%, 6/1/11, Callable 6/1/05
@102, AMBAC....................... 2,618
1,000 State Higher Educational Facilities,
Case Western, 7.63%, 10/1/08,
Callable 10/1/97 @102............. 1,028
</TABLE>
Continued
53
<PAGE> 526
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 State Higher Educational Facilities,
Case Western, 7.13%, 10/1/14,
Callable 10/1/00 @102............. $ 1,094
1,000 State Higher Educational Facilities,
University of Dayton, 7.25%,
12/1/12, Callable 12/1/00 @102,
FGIC.............................. 1,099
1,000 State Liquor Profits Revenue, 6.85%,
9/1/00............................ 1,076
1,000 Strongsville, GO, 6.70%, 12/1/11,
Callable 12/1/06 @102............. 1,122
800 Toledo Sewer Revenue, 6.20%,
11/15/02, AMBAC................... 866
1,000 Toledo Sewer System Revenue, 7.38%,
11/15/10, Callable 11/15/98 @102,
MBIA.............................. 1,064
1,000 Toledo, GO, 5.63%, 12/1/11, Callable
12/1/06 @102, AMBAC............... 1,035
1,000 University of Akron, General
Receipts, 5.00%, 1/1/00, LOC:
AMBAC............................. 1,017
1,000 University of Cincinnati, 7.30%,
6/1/09, Prerefunded 6/1/99 @100... 1,058
1,000 University of Cincinnati,
Certificates of Participation,
University & College Improvements,
6.75%, 12/1/09, Callable 12/1/01
@102, MBIA........................ 1,094
1,000 University of Cincinnati, General
Receipts, 5.75%, 6/1/13, Callable
6/1/06 @101....................... 1,032
1,000 University of Cincinnati, General
Receipts, Health & Hospital
Improvements, 7.10%, 6/1/10,
Callable 6/1/99 @102.............. 1,073
1,000 University of Cincinnati, General
Receipts, University & College
Improvements, 7.00%, 6/1/11,
Prerefunded 6/1/01 @102........... 1,097
1,000 University of Cincinnati, Series R2,
Refund Bonds, 6.25%, 6/1/09,
Callable 12/1/02 @102............. 1,101
1,000 Water Development Authority,
Pollution Control Facilities,
5.50%, 12/1/09, Callable 6/1/05
@101, MBIA........................ 1,030
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,500 Water Development Authority, Water
Development Revenue, 7.00%,
12/1/09, Callable 6/1/00 @102,
ETM, AMBAC........................ $ 1,729
1,000 Westerville, Minerva Park & Blendon
Joint Township, Saint Ann's
Hospital, Series B, 6.80%,
9/15/06, Callable 9/15/01 @102,
AMBAC............................. 1,115
2,750 Westerville, Minerva Park & Blendon
Joint Township, Saint Ann's
Hospital, Series B, 7.00%,
9/15/12, Callable 9/15/01 @102,
AMBAC............................. 3,126
500 Westlake Ohio Safety, GO, 7.65%,
12/1/08, Callable 12/1/98 @102.... 535
500 Wood County, 7.88%, 12/1/13,
Prerefunded 12/1/98 @102, AMBAC... 536
1,000 Worthington City School District,
GO, 7.45%, 12/1/12, Prerefunded
12/1/99 @102, MBIA................ 1,094
--------
152,951
--------
Texas (0.5%):
2,500 Southeast Texas Housing Financial
Corp., 0.00%, 9/1/17, ETM, MBIA... 791
--------
Washington (0.7%):
1,000 State, Series A & AT-6, GO, 6.25%,
2/1/11............................ 1,109
--------
Total Municipal Bonds 161,603
--------
INVESTMENT COMPANIES (1.2%):
766 Fidelity Ohio Tax Free Money Market
Fund.............................. 766
1,116 The One Group Ohio Municipal Money
Market Fiduciary Class............ 1,116
--------
Total Investment Companies 1,882
--------
Total (Cost--$153,990) (a) $163,485
========
</TABLE>
Continued
54
<PAGE> 527
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
- ------------
Percentages indicated are based on net assets of $163,602.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $38. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $9,457
Unrealized depreciation.................................................. --
------
Net unrealized appreciation.............................................. $9,457
======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements.The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at June 30, 1997.
<TABLE>
<S> <C>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
LOC Letter of Credit
MBIA Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
55
<PAGE> 528
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS (98.9%):
Louisiana (98.9%):
$ 1,165 Ascension Parish, Gravity Drain,
Sales & Use Tax, 5.40%, 12/1/07,
Callable 12/1/06 @100, FGIC....... $ 1,211
1,230 Ascension Parish, Gravity Drain,
Sales & Use Tax, 5.50%, 12/1/08,
Callable 12/1/06 @100, FGIC....... 1,275
2,500 Bastrop, Industrial Development
Board, Pollution Control Revenue
Refunding, International Paper Co.
Project, 6.90%, 3/1/07, Callable
3/1/02 @102....................... 2,727
700 Baton Rouge, Public Improvements
Sales & Use Tax, 6.85%, 8/1/00,
Callable 8/1/99 @102, AMBAC....... 748
800 Baton Rouge, Public Improvements
Sales & Use Tax, 6.90%, 8/1/01,
Callable 8/1/99 @102, AMBAC....... 854
765 Baton Rouge, Public Improvements
Sales & Use Tax, 6.38%, 8/1/09,
Callable 8/1/01 @101.5, FSA....... 821
2,000 Baton Rouge, Public Improvements
Sales & Use Tax, Series A, 6.00%,
8/1/04, Callable 8/1/01 @101.5,
FSA............................... 2,122
700 Bossier City, Public Improvements
Sales & Use Tax, Revenue
Refunding, 5.05%, 11/01/11,
Callable 11/1/07 @100, FGIC....... 689
805 Bossier City, Public Improvements
Sales & Use Tax, Revenue
Refunding, Series ST, 6.20%,
11/1/07, Callable 11/1/01 @102,
AMBAC............................. 863
400 Bossier City, Public Improvements
Sales & Use Tax, Series ST-1989,
6.88%, 11/1/06, Callable 11/1/99
@101.5, FGIC...................... 430
400 Bossier City, Public Improvements
Sales & Use Tax, Series ST-1989,
6.88%, 11/1/07, Callable 11/1/99
@101.5, FGIC...................... 430
550 Bossier City, Public Improvements
Sales & Use Tax, Series ST-1989,
6.88%, 11/1/08, Callable 11/1/99
@101.5, FGIC...................... 591
1,415 Caddo Parish, GO, Refunding, 5.25%,
2/1/06, Callable 2/1/05 @100,
MBIA.............................. 1,453
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 750 Caddo Parish, GO, Refunding, 5.25%,
2/1/08, Callable 2/1/05 @100,
MBIA.............................. $ 761
470 Caddo Parish, Industrial
Developement Board, Wal-Mart
Stores, Inc. Project, 5.95%,
11/1/07, Callable 11/1/97
@101.5............................ 478
500 Calcasieu Parish, School District
#22, Ward 3, Series A, GO, 7.10%,
2/1/01, Callable 2/1/99 @100,
BIG............................... 521
1,500 De Soto Parish, Pollution Control
Revenue, International Paper Co.
Project--Series A, 5.05%,
12/1/02........................... 1,539
910 East Baton Rouge Parish, Sales & Use
Tax, 5.80%, 2/1/09, Callable
2/1/05 @101.5, FGIC............... 959
2,280 East Baton Rouge Parish, Sales & Use
Tax, Series A, 8.00%, 2/1/02,
FGIC.............................. 2,604
1,085 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.15%, 2/1/05,
Callable 2/1/03 @101.5............ 1,105
500 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.80%, 2/1/07,
Callable 2/1/05 @101.5, FGIC...... 534
1,000 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.10%, 2/1/07,
Callable 2/1/06 @101.5, FGIC...... 1,017
845 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.80%, 2/1/08,
Callable 2/1/05 @101.5, FGIC...... 896
1,280 East Baton Rouge, Mortgage Finance
Authority, Single Family Mortgage,
Series B, 5.45%, 10/1/03, GNMA.... 1,293
500 East Baton Rouge, Parish Sales & Use
Tax, 7.10%, 2/1/99, MBIA.......... 522
500 East Baton Rouge, Parish Sales & Use
Tax, 7.10%, 2/1/00, Callable
2/1/99 @101.5, MBIA............... 530
1,390 Greater Baton Rouge Parking
Authority, East Baton Rouge Parish
Revenue, 6.38%, 7/1/03, Callable
7/10/97 @100...................... 1,393
1,560 Houma Utilities Revenue, 6.13%,
1/1/07, Callable 1/1/02 @102,
FGIC.............................. 1,671
510 Housing Finance Agency, Mortgage
Revenue, Series D-2, AMT, 6.10%,
12/1/11, Callable 12/1/06 @102.... 514
665 Housing Finance Agency, Mortgage
Revenue, Single Family A-1, 5.70%,
6/1/15, Callable 6/1/05 @102...... 677
</TABLE>
Continued
56
<PAGE> 529
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,205 Iberia Home Mortgage Authority,
Single Family Mortgage Revenue
Refunding, 7.38%, 1/1/11, Callable
7/1/03 @103....................... $ 1,299
400 Jefferson Parish, Construction
Waterworks, District #2, 7.25%,
1/15/00, Callable 7/15/97 @100.... 406
2,180 Jefferson Parish, Drain Sales Tax
Revenue, 6.50%, 11/1/06, Callable
11/1/01 @100, AMBAC............... 2,341
315 Jefferson Parish, Home Mortgage
Authority, Single Family Mortgage
Revenue Refunding, Sub-Series B,
4.50%, 6/1/13, Callable 12/1/03
@102.............................. 312
500 Jefferson Parish, Refunding, GO,
7.10%, 9/1/97, FGIC............... 503
500 Jefferson Parish, Refunding, GO,
7.40%, 9/1/99, Callable 9/1/97
@100, FGIC........................ 503
250 Jefferson Parish, Refunding, GO,
7.70%, 9/1/02, Callable 9/1/97
@100, FGIC........................ 252
2,500 Jefferson Parish, School Board Sales
& Use Tax, Revenue Refunding,
6.05%, 2/1/02, MBIA............... 2,666
1,270 Jefferson Parish, School Board Sales
& Use Tax, Revenue Refunding,
6.15%, 2/1/03, Callable 2/1/02
@102, MBIA........................ 1,370
6,500 Jefferson Parish, School Board Sales
& Use Tax, Revenue Refunding,
6.25%, 2/1/08, Callable 2/1/02
@102, MBIA........................ 7,020
4,920 Jefferson, Sales Tax District
Special, Tax Revenue Refunding,
Series A, 6.75%, 12/1/06, Callable
12/1/02 @100, FGIC................ 5,389
880 Kenner, Sales & Use Tax Revenue
Refunding, 5.75%, 6/1/06, Callable
6/1/02 @103, FGIC................. 929
1,000 Lafayette Parish, Refunding, GO,
7.80%, 3/1/01, Callable 3/1/98
@102, FGIC........................ 1,043
750 Lafourche Parish, Hospital Service,
District #3, Hospital Revenue,
5.50%, 10/1/04, Callable 10/1/03
@102.............................. 754
650 Lafourche Parish, Water District #1,
Water Revenue Refunding, 5.63%,
1/1/01............................ 670
500 Lincoln Parish, School District #1,
Ruston Refunding, 6.20%, 3/1/03,
Callable 3/1/01 @100, MBIA........ 526
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,465 Lincoln Parish, School District #1,
Ruston Refunding, 6.40%, 3/1/05,
Callable 3/1/01 @100, MBIA........ $ 1,558
1,000 Louisiana State University &
Agriculture & Mechanical College,
University Revenues, 6.00%,
7/1/07, Callable 7/1/06 @102,
MBIA.............................. 1,081
1,120 Louisiana State University &
Agriculture & Mechanical College,
University Revenues, 5.50%,
7/1/13, Callable 7/1/06 @102,
MBIA.............................. 1,124
1,220 Monroe Parish, Special School
District, GO, 8.00%, 3/1/01,
MBIA.............................. 1,366
1,300 Monroe Parish, Special School
District, GO, 7.00%, 3/1/02,
MBIA.............................. 1,436
1,390 Monroe Parish, Special School
District, GO, 7.00%, 3/1/03,
MBIA.............................. 1,556
1,230 Monroe Parish, Special School
District, GO, 5.35%, 3/1/05,
FGIC.............................. 1,275
1,320 Monroe Parish, Special School
District, GO, 5.35%, 3/1/06,
Callable 3/1/05 @100, FGIC........ 1,364
550 New Orleans, GO, Public Improvement,
5.85%, 11/1/07, Callable 11/1/05
@100, FGIC........................ 583
1,000 New Orleans, GO, Refunding, 5.88%,
10/1/11, Callable 10/1/05 @101,
AMBAC............................. 1,039
3,250 New Orleans, GO, Refunding, 0.00%,
9/1/17, AMBAC..................... 1,042
1,000 Ouachita Parish, Hospital Service
District #1, Glenwood Regional
Medical Center, 5.70%, 5/15/16,
Callable 5/15/10 @100, FSA........ 1,015
2,525 Ouachita Parish, Hospital Service
District #1, Glenwood Regional
Medical Center, Health Care
Revenue, 7.50%, 7/1/06, Callable
7/1/01 @102....................... 2,845
2,000 Ouachita Parish, West School
District, Refunding, Series A,
6.50%, 3/1/03, Callable 3/1/01
@102, FSA......................... 2,182
2,695 Ouachita Parish, West School
District, Refunding, Series A, GO,
6.65%, 3/1/05, Callable 3/1/01
@102, FSA......................... 2,929
1,655 Ouachita Parish, West School
District, Refunding, Series A, GO,
6.70%, 3/1/06, Callable 3/1/01
@102, FSA......................... 1,799
1,440 Plaquemines Parish, GO, Refunding,
6.40%, 8/1/04, Callable 8/1/01
@102, AMBAC....................... 1,566
</TABLE>
Continued
57
<PAGE> 530
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 420 Plaquemines Parish, Sales & Use Tax,
6.70%, 12/1/08, Callable 12/1/01
@102.............................. $ 449
410 Plaquemines Parish, Sales & Use Tax,
6.70%, 12/1/09, Callable 12/1/01
@102.............................. 436
605 Plaquemines Parish, School Board,
Sales & Use Tax, 6.65%, 3/1/05,
Callable 3/1/02 @102.............. 658
2,280 Public Facilities Authority Revenue,
Alton Ochsner Medical Foundation,
Series A, 6.30%, 5/15/04, Callable
5/15/02 @102, MBIA................ 2,473
1,000 Public Facilities Authority Revenue,
Alton Ochsner Medical Project,
Series B, 5.75%, 5/15/11, Callable
5/15/02 @100, MBIA................ 1,020
1,000 Public Facilities Authority Revenue,
Indexed Caps, 5.88%, 2/15/11,
Callable 2/15/03 @102, FGIC....... 1,040
1,000 Public Facilities Authority Revenue,
Lafayette General Medical Center
Project, Hospital Revenue, 6.05%,
10/1/04, Callable 10/1/02 @102,
FSA............................... 1,075
1,960 Public Facilities Authority Revenue,
Loyola University, 6.60%, 4/1/05,
Callable 4/1/02 @102.............. 2,150
2,525 Public Facilities Authority Revenue,
Loyola University Project, 5.63%,
10/1/10, Callable 10/1/07 @102,
MBIA.............................. 2,615
500 Public Facilities Authority Revenue,
Loyola University Project, Series
A, 7.20%, 10/1/00, Callable
10/1/99 @102...................... 540
1,135 Public Facilities Authority Revenue,
Mary Bird Perkins Cancer Center,
5.50%, 1/1/04, FSA................ 1,182
5,000 Public Facilities Authority Revenue,
Multi-Family, Series A, 0.00%,
2/1/20, ETM....................... 1,371
500 Public Facilities Authority Revenue,
Our Lady of Lake Regional, Series
C, Healthcare Revenue, 5.70%,
12/1/04, Callable 12/1/01 @102,
MBIA.............................. 525
7,500 Public Facilities Authority Revenue,
Series B, 0.00%, 12/1/19, ETM..... 2,132
110 Public Facilities Authority Revenue,
Sisters of Mercy, 7.38%, 6/1/09,
Callable 6/1/99 @102.............. 118
2,145 Public Facilities Authority Revenue,
Tulane University, 6.25%, 7/15/06,
Callable 7/15/01 @102............. 2,286
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 735 Public Facilities Authority Revenue,
Tulane University, 5.55%, 10/1/07,
Callable 10/1/06 @102, AMBAC...... $ 775
1,605 Public Facilities Authority Revenue,
Tulane University, 5.75%, 10/1/09,
Callable 10/1/06 @102, AMBAC...... 1,693
300 Public Facilities Authority Revenue,
Tulane University, Series A,
7.50%, 5/15/00, Callable 5/15/98
@102.............................. 315
325 Public Facilities Authority Revenue,
Tulane University, Series A1,
5.80%, 2/15/04, Callable 2/15/03
@102, FGIC........................ 345
170 Public Facilities Authority Revenue,
Tulane University, Series B,
7.20%, 8/15/98, Callable 8/15/97
@102.............................. 174
300 Public Facilities Authority Revenue,
Tulane University, Series C,
7.20%, 8/15/98, Callable 8/15/97
@102.............................. 307
500 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 6.00%,
10/1/10, FSA...................... 534
500 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 7.20%,
10/1/97, FGIC..................... 504
1,235 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 6.85%,
10/1/05, Callable 10/1/02 @102.... 1,386
730 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 5.40%,
10/1/05, Callable 10/1/04 @102,
FGIC.............................. 757
1,715 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 5.50%,
10/1/06, Callable 10/1/04 @102,
FGIC.............................. 1,788
500 Rapides Parish, Consolidated School
District #62, GO, 7.25%, 4/1/00,
Callable 4/1/99 @100, MBIA........ 526
670 Rapides Parish, School District #11,
Rigolette--Series 1990, GO, 6.90%,
2/1/01, Callable 2/1/00 @100,
FGIC.............................. 711
</TABLE>
Continued
58
<PAGE> 531
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,475 Rapides Parish, School District #11,
Rigolette--Series 1990, GO, 6.95%,
2/1/02, Callable 2/1/00 @100,
FGIC.............................. $ 1,563
2,350 Saint Charles Parish, School
District #1, GO, 6.45%, 3/1/06,
Callable 3/1/02 @100, AMBAC....... 2,520
480 Shreveport, GO, 6.20%, 3/1/02,
Callable 3/1/01 @100, AMBAC....... 507
500 Shreveport, GO, 6.70%, 2/1/03,
Prerefunded 2/1/00 @100, AMBAC.... 530
480 Shreveport, GO, 5.90%, 2/1/07,
Callable 2/1/03 @100.............. 501
930 Shreveport, Water & Sewer Revenue,
Series A, 7.75%, 12/1/02, FGIC.... 1,073
500 Shreveport, Water & Sewer Revenue,
Series A, 6.25%, 12/1/03, FGIC.... 546
1,000 South Port Community, Port Revenue
Refunding, Cargill, Inc. Project,
5.85%, 4/1/17, Callable 4/1/07
@102.............................. 1,016
750 St. Charles Parish, Public
Improvements Sales Tax, Refunding,
6.60%, 11/1/07, Callable 11/1/99
@102.............................. 795
870 St. John Baptist Parish, School
District #1, GO, 6.25%, 3/1/05,
Callable 3/1/02 @100.............. 914
750 St. Landry Parish, Consolidated
School District #1, GO, 6.10%,
5/1/07, Callable 5/1/01 @100,
MBIA.............................. 783
1,815 St. Tammany Parish, Hospital
Service, District #1, Hospital
Revenue, 6.30%, 7/1/07, Callable
7/1/02 @102....................... 1,914
300 St. Tammany Parish, Refunding, GO,
7.40%, 3/1/98, FGIC............... 307
1,000 St. Tammany Parish, Sales & Use Tax,
District #3, Series A, 6.50%,
12/1/02, Callable 12/1/99 @102,
FGIC.............................. 1,066
1,000 St. Tammany Parish, Sales & Use Tax,
District #3, Series A, 6.50%,
12/1/03, Callable 12/1/99 @102,
FGIC.............................. 1,069
750 St. Tammany Parish, Sales & Use Tax,
District #3, Series A, 6.50%,
12/1/05, Callable 12/1/99 @102,
FGIC.............................. 799
400 St. Tammany Parish, School District
#12, GO, 6.50%, 3/1/04, Callable
3/1/01 @100, FGIC................. 424
1,665 Stadium & Exposition District, Hotel
Occupancy, Tax & Stadium Revenue,
5.65%, 7/1/07, Callable 7/1/04
@102, FGIC........................ 1,758
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 3,020 State Energy & Power Authority,
Power Project Revenue Refunding--
Rodemacher Unit #2, 6.75%, 1/1/08,
Callable 1/1/01 @102, FGIC........ $ 3,276
800 State Gas & Fuels Tax Revenue,
Series A, 7.20%, 11/15/99......... 850
1,500 State Gas & Fuels Tax Revenue,
Series A, 7.25%, 11/15/04,
Callable 11/15/99 @102............ 1,619
2,750 State GO, 7.10%, 9/1/03, Callable
9/1/00 @102, FSA.................. 3,022
4,000 State GO, Refunding, Series A,
6.00%, 8/1/04, FGIC............... 4,316
2,875 State GO, Refunding, Series A,
5.80%, 08/01/10, MBIA............. 3,070
3,000 State GO, Refunding, Series B,
5.63%, 8/1/13, MBIA............... 3,116
3,000 State GO, Series A, 6.50%, 4/15/06,
FGIC.............................. 3,356
430 State GO, Series A, 6.00%, 5/1/08,
Callable 5/1/04 @102, AMBAC....... 461
500 State GO, Series A, 6.10%, 5/1/11,
Callable 5/1/04 @102, AMBAC....... 530
400 State Offshore Terminal Authority,
Deepwater Port Revenue, Refunding,
1st Stage, Series B, 6.00%,
9/1/01............................ 418
600 State Offshore Terminal Authority,
Deepwater Port Revenue, Refunding,
1st Stage, Series B, 6.10%,
9/1/02............................ 634
1,325 State Offshore Terminal Authority,
Deepwater Port Revenue, Refunding,
1st Stage, Series B, 6.25%,
9/1/04............................ 1,424
150 Sulphur Public Improvements, Sales &
Use Tax, Series B, 6.00%, 3/1/00,
Callable 9/1/97 @100, MBIA........ 150
615 Sulphur Public Improvements, Sales &
Use Tax, Series B, 6.00%, 3/1/01,
Callable 9/1/97 @100, MBIA........ 617
1,435 Tangipahoa Parish, Consolidated
School District #1, Refunding, GO,
6.15%, 12/1/07, Callable 12/1/02
@100.............................. 1,521
1,250 Tangipahoa Parish, Hospital Service
District #1, Hospital Revenue
Refunding, 6.13%, 2/1/14, Callable
2/1/04 @102, AMBAC................ 1,309
1,285 Terrebonne Parish, Hospital Service
District #1, Hospital Revenue
Refunding, Terrebonne General
Medical Center Project, 7.40%,
4/1/03, Callable 4/1/98 @102,
BIG............................... 1,339
</TABLE>
Continued
59
<PAGE> 532
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 500 Terrebonne Parish, Waterworks
District #1, Water Revenue, 5.75%,
11/1/08, Callable 11/1/03 @102,
FGIC.............................. $ 527
690 Terrebonne Parish, Waterworks
District #1, Water Revenue
Refunding, 5.70%, 11/1/06,
Callable 11/1/03 @102, FGIC....... 732
555 Vermilion Parish, Hospital Service,
District #2, Health Care Revenue
Refunding, Series A, 6.35%,
5/1/00, MBIA...................... 585
--------
Total Municipal Bonds 163,813
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (0.2%):
$ 339 The One Group Municipal Money Market
Fund, Fiduciary Class............. $ 339
--------
Total Investment Companies 339
--------
Total (Cost--$157,802) (a) $164,152
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $165,671.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $6,355
Unrealized depreciation.................................................. (5)
------
Net unrealized appreciation.............................................. $6,350
======
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FSA Insured by Federal Security Assurance
GO General Obligation
GNMA Government National Mortgage Association
MBIA Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
60
<PAGE> 533
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
MUNICIPAL BONDS (98.5%):
Arizona (0.5%):
$ 500 Flagstaff, GO, 8.50%, 7/1/97, FGIC... $ 500
-------
Hawaii (0.4%):
400 Hawaii State, GO, Series B, 8.13%,
2/1/00............................. 436
-------
Ohio (0.9%):
500 Columbus, GO, 8.13%, 5/1/04.......... 602
250 Public Community Facilities, Higher
Education Cap, Series II-B, 5.38%,
11/1/00, AMBAC..................... 259
-------
861
-------
Puerto Rico (1.1%):
1,000 Puerto Rico Industrial Tourist
Educational, Medical and
Environmental Control Facilities,
Auxilio Mutuo Hospital Obligation
Group, 5.80%, 7/1/06, Callable
1/1/05 @102, MBIA.................. 1,077
-------
Rhode Island (0.2%):
200 State Construction Capital
Development, GO, Series B, 6.00%,
5/15/98............................ 204
-------
Virginia (0.2%):
200 State Public School Authority
Revenue, Series A, 6.30%, 8/1/01... 215
-------
West Virginia (95.2%):
515 Berkeley County, Building Community,
Hospital Revenue, City Hospital
Project, 5.25%, 11/1/97............ 517
200 Berkeley County, Building Community,
Hospital Revenue, City Hospital
Project, 5.40%, 11/1/98............ 203
1,000 Berkeley County, Building Community,
Hospital Revenue, City Hospital
Project, 6.50%, 11/1/09, Callable
11/1/02 @102....................... 1,057
1,000 Berkeley County, Education Board, GO,
5.50%, 4/1/01...................... 1,036
800 Berkeley County, Education Board, GO,
5.55%, 4/1/02...................... 833
900 Berkeley County, Education Board, GO,
5.60%, 4/1/03...................... 942
500 Berkeley County, Education Board, GO,
5.00%, 6/1/08, Callable 6/1/05
@100, FGIC......................... 501
1,525 Brooke Pleasants Tyler Wetzed
Counties, Single Family Mortgage
Revenue, 7.40%, 8/15/10, ETM....... 1,824
225 Cabell County, Education Board, GO,
6.10%, 5/1/99, MBIA................ 233
1,000 Cabell County, Education Board, GO,
4.20%, 5/1/99...................... 998
150 Cabell County, Education Board, GO,
6.20%, 5/1/00, MBIA................ 158
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 1,000 Cabell County, Education Board, GO,
5.00%, 5/1/00...................... $ 1,016
1,670 Cabell County, Education Board, GO,
6.60%, 5/1/04, MBIA................ 1,861
1,500 Cabell County, Education Board, GO,
6.00%, 5/1/06, MBIA................ 1,630
100 Charles Town Residential Mortgage,
Revenue, Series A, 5.40%, 9/1/02... 103
100 Charles Town Residential Mortgage,
Revenue, Series A, 5.55%, 3/1/03... 103
105 Charles Town Residential Mortgage,
Revenue, Series A, 5.70%, 9/1/04,
Callable 3/1/03 @102............... 109
1,555 Charleston Building Community,
Parking Facility Revenue, Capital
Appreciation, 0.00%, 12/1/17....... 414
1,570 Charleston Building Community,
Parking Facility Revenue, Capital
Appreciation, 0.00%, 12/1/18....... 392
1,570 Charleston Building Community,
Parking Facility Revenue, Capital
Appreciation, 0.00%, 12/1/19....... 367
1,000 Charleston Building Community,
Parking Facility Revenue,
Charleston Town Center, 6.00%,
12/1/10............................ 1,009
1,010 Charleston Parking Revenue, Series B,
6.75%, 6/1/08, Callable 12/1/04
@102............................... 1,129
500 Clarksburg Water Revenue, Asset
Guaranty, 5.00%, 9/1/97............ 501
790 Fairmont Waterworks, 5.30%, 7/1/09,
Callable 7/1/07 @102, MBIA......... 799
925 Fairmont Waterworks, 5.50%, 7/1/12,
Callable 7/1/07 @102, MBIA......... 937
2,500 Harrison County, Board of Education,
GO, 6.40%, 5/1/07, FGIC............ 2,805
2,000 Harrison County, Community Special
Obligation, Series A, 6.25%,
5/15/10, ETM....................... 2,210
1,500 Harrison County, Education Board, GO,
6.30%, 5/1/05, FGIC................ 1,652
95 Huntington Residential Mortgage
Revenue Refunding, 6.30%, 9/1/98... 98
735 Jackson County, Residential Mortgage
Revenue, 7.38%, 6/1/10, Callable
12/1/97 @100, FGIC, ETM............ 863
1,000 Kanawha County, Community Building
Revenue, Charleston Hospital,
7.50%, 11/1/08, Prerefunded 11/1/99
@102, AMBAC........................ 1,092
</TABLE>
Continued
61
<PAGE> 534
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 2,910 Kanawha Mercer Nicholas Counties
Single Family Mortgage Revenue,
0.00%, 2/1/15, Prerefunded 2/1/14
@89.8.............................. $ 1,051
4,435 Kanawha-Putnam County, Single Family
Mortgage, Series A, 0.00%, 12/1/16,
AMBAC, ETM......................... 1,497
1,696 Keyser Housing Corp. Mortgage
Revenue, 7.25%, 4/1/21, Callable
7/24/97 @101.5, FHA................ 1,722
265 Marion County, Single Family Mortgage
Revenue, 7.05%, 8/1/98, FGIC,
ETM................................ 274
1,065 Marion County, Single Family Mortgage
Revenue, 7.38%, 8/1/11, FGIC,
ETM................................ 1,265
150 Marshall County, Special Obligation,
5.60%, 5/15/98, ETM................ 152
500 Marshall County, Special Obligation,
6.50%, 5/15/10, ETM................ 555
1,000 Monongalia County, Board of
Education, GO, 7.00%, 4/1/03,
MBIA............................... 1,124
440 Monongalia County, Board of
Education, GO, 7.00%, 4/1/04,
MBIA............................... 500
300 Monongalia County, Board of
Education, GO, 7.00%, 4/1/05,
MBIA............................... 344
610 Morgantown Waterworks & Sewer System,
4.40%, 10/1/97, FGIC............... 611
1,295 Parkersburg Waterworks & Sewer System
Revenue, 5.50%, 3/1/10, Callable
9/1/06 @102, FSA................... 1,331
1,335 Parkersburg Waterworks & Sewer System
Revenue, 5.50%, 9/1/10, Callable
9/1/06 @102, FSA................... 1,373
2,610 Pleasants County, Pollution Control
Revenue, Monongahela Power, 6.38%,
11/1/07, Callable 7/24/97 @100..... 2,612
1,000 Pleasants County, Pollution Control
Revenue, Potomac Power, 6.15%,
5/1/15, Callable 5/1/05 @102,
MBIA............................... 1,057
1,750 Pleasants County, Pollution Control
Revenue, Potomac Power, 6.15%,
5/1/15, Callable 5/1/05 @102,
AMBAC.............................. 1,845
1,000 Pleasants County, Pollution Control
Revenue, West Penn Power, 6.15%,
5/1/15, Callable 5/1/05 @102,
AMBAC.............................. 1,057
200 Raleigh Fayette & Nicholas Counties,
Special Obligation, 5.40%,
8/1/97............................. 200
1,000 School Building Authority Revenue
Capital Improvement, 6.00%, 7/1/98,
MBIA............................... 1,021
1,500 School Building Authority Revenue
Capital Improvement, 5.25%, 7/1/99,
MBIA............................... 1,533
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 1,750 School Building Authority Revenue
Capital Improvement, 6.25%, 7/1/01,
MBIA............................... $ 1,873
1,000 School Building Authority Revenue
Capital Improvement, 5.50%, 7/1/11,
Callable 7/1/07 @102, AMBAC........ 1,020
800 School Building Authority Revenue
Capital Improvement, Series B,
6.80%, 7/1/00, MBIA................ 858
1,000 School Building Authority Revenue
Capital Improvement, Series B,
6.90%, 7/1/02, Callable 7/1/00
@102, MBIA......................... 1,090
500 School Building Authority Revenue
Capital Improvement, Series B,
6.95%, 7/1/03, Prerefunded 7/1/00
@102, MBIA......................... 546
200 School Building Authority Revenue
Capital Improvement, Series B,
6.75%, 7/1/06, MBIA................ 228
1,000 School Building Authority Revenue
Capital Improvement, Series B,
6.00%, 7/1/12, Callable 7/1/02
@100, MBIA......................... 1,044
500 State Building Common Lease Revenue,
6.70%, 7/1/02, Callable 7/1/00
@102, MBIA......................... 544
1,000 State Building, Series A, 5.25%,
7/1/08, Callable 7/1/07 @102,
MBIA............................... 1,020
1,000 State Building, Series A, 5.25%,
7/1/09, Callable 7/1/07 @102,
MBIA............................... 1,009
1,000 State College Revenues, 5.10%,
4/1/99, AMBAC...................... 1,017
250 State GO, 5.25%, 3/1/01, Callable
7/24/97 @100....................... 250
200 State GO, 5.70%, 6/1/01, Callable
7/24/97 @100....................... 201
1,200 State GO, 6.10%, 6/1/03, Callable
7/24/97 @101....................... 1,213
1,085 State GO, Series A, 5.00%, 2/1/98.... 1,092
250 State GO, Series A, 5.20%, 2/1/99.... 254
300 State GO, Series A, 5.30%, 2/1/00.... 308
600 State GO, Series A, 5.40%, 2/1/01.... 621
2,500 State GO, Series A, 5.50%, 2/1/02.... 2,607
1,000 State GO, Series B, AMT, 5.80%,
11/1/11, Callable 11/1/06 @102,
FGIC............................... 1,051
1,000 State GO, Series B, AMT, 5.85%,
11/1/12, Callable 11/1/06 @102,
FGIC............................... 1,051
200 State Hospital Finance Authority,
Hospital Revenue, 6.80%, 8/1/97,
FSA................................ 200
</TABLE>
Continued
62
<PAGE> 535
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 100 State Hospital Finance Authority,
Hospital Revenue, 6.80%, 8/1/98,
FSA................................ $ 103
625 State Hospital Finance Authority,
Hospital Revenue, 5.50%, 1/1/02,
MBIA............................... 650
500 State Hospital Finance Authority,
Hospital Revenue, 5.70%, 1/1/04,
Callable 1/1/02 @102, MBIA......... 527
500 State Hospital Finance Authority,
Hospital Revenue, 7.00%, 8/1/04,
Callable 8/1/99 @102, FSA.......... 532
2,350 State Hospital Finance Authority,
Hospital Revenue, 5.10%, 6/1/06,
Callable 6/1/03 @102, MBIA......... 2,386
1,000 State Hospital Finance Authority,
Hospital Revenue, 5.13%, 9/1/06,
Callable 9/1/05 @102, MBIA......... 1,019
1,000 State Hospital Finance Authority,
Hospital Revenue, 7.00%, 8/1/09,
Callable 8/1/99 @102, FSA.......... 1,065
150 State Housing Development, 6.60%,
11/1/97, FHA....................... 151
140 State Housing Development, 5.50%,
11/1/98, FHA....................... 143
450 State Housing Development, 7.00%,
5/1/99, Callable 11/1/97 @102,
FHA................................ 462
200 State Housing Development, 6.90%,
7/1/99, FHA........................ 201
190 State Housing Development, 6.30%,
11/1/03, Callable 5/1/02 @103,
FHA................................ 201
195 State Housing Development, 6.40%,
5/1/04, Callable 5/1/02 @103,
FHA................................ 206
205 State Housing Development, 6.40%,
11/1/04, Callable 5/1/02 @103,
FHA................................ 217
500 State Housing Development, 7.38%,
11/1/05, Callable 11/1/97 @102,
FHA................................ 514
245 State Housing Development, 6.75%,
11/1/10, Callable 5/1/02 @103,
FHA................................ 258
315 State Housing Development, 6.75%,
5/1/11, Callable 5/1/02 @103,
FHA................................ 331
1,000 State Housing Development, 7.40%,
11/1/11, Callable 11/1/97 @102,
FHA................................ 1,029
320 State Housing Development, 6.75%,
11/1/11, Callable 5/1/02 @103,
FHA................................ 336
1,000 State Housing Development, 7.40%,
11/1/13, Callable 11/1/97 @102,
FHA................................ 1,029
500 State Housing Development, 7.40%,
11/1/13, Callable 11/1/97 @102,
FHA, AMBAC......................... 513
1,000 State Housing Development, 5.80%,
5/1/17, Callable 5/1/07 @102....... 1,008
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 25 State Housing Development Fund,
Single Family Mortgage, 6.13%,
7/1/13, Callable 7/1/97 @100....... $ 25
1,500 State University Revenue, 5.75%,
4/1/03, AMBAC...................... 1,592
1,500 State University Revenue, 5.75%,
4/1/04, Callable 4/1/03 @102,
AMBAC.............................. 1,597
1,000 State University Revenue, 6.00%,
4/1/07, Callable 4/1/03 @102,
AMBAC.............................. 1,073
1,000 State University Revenue, 6.00%,
4/1/12, Callable 4/1/03 @102,
AMBAC.............................. 1,049
130 State Water Development Authority
Revenue, Loan Program II, Series A,
6.90%, 11/1/01..................... 141
160 State Water Development Authority
Revenue, Loan Program II, Series A,
7.10%, 11/1/04, Callable 11/1/01
@102............................... 177
2,000 State Water Development Authority
Revenue, Loan Program, Series A,
7.00%, 11/1/11, Callable 11/1/01
@102, FSA.......................... 2,200
100 State Water Development Authority
Revenue, Series A, 7.30%,
11/1/99............................ 106
100 State Water Development Authortiy
Revenue, Series A, 7.40%,
11/1/00............................ 109
225 University Dormitory Revenue, Series
A, 5.60%, 5/1/99, MBIA............. 231
750 University Revenues, State University
System, Marshall University
Library, 5.60%, 4/1/11, Callable
4/1/06 @101, AMBAC................. 772
1,000 Weirton Municipal Hospital Building
Community Revenue, 5.10%, 12/1/98,
AMBAC.............................. 1,016
1,000 Wheeling Waterworks & Sewer System
Revenue, Refunding, 5.40%, 6/1/11,
Callable 6/1/07 @100, FGIC......... 1,008
1,200 Wheeling Waterworks & Sewer System
Revenue, Series C, 6.60%, 6/1/12,
Prerefunded 6/1/02 @100, FGIC...... 1,313
-------
92,903
-------
Total Municipal Bonds 96,196
-------
INVESTMENT COMPANIES (3.3%):
3,241 The One Group Municipal Money Market
Fund, Fiduciary Class.............. 3,241
-------
Total Investment Companies 3,241
-------
Total (Cost--$94,924) (a) $99,437
=======
</TABLE>
Continued
63
<PAGE> 536
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
- ------------
Percentages indicated are based on net assets of $97,692.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $4,513
Unrealized depreciation.................................................. --
------
Net unrealized appreciation.............................................. $4,513
======
</TABLE>
AMBAC Insured by AMBAC Indemnity Corp.
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FHA Insured by Federal Housing Authority
FSA Insured by Federal Security Assurance
GO General Obligation
MBIA Insured by Municipal Bond Insurance Association
See notes to financial statements.
64
<PAGE> 537
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS (99.1%):
Arizona (99.1%):
$ 1,175 Apache County, Public Finance Corp.,
Certificates of Participation,
5.25%, 5/1/04, Callable 5/1/00
@102.............................. $ 1,190
500 Apache County, Public Finance Corp.,
Certificates of Participation,
5.50%, 5/1/10, Callable 5/1/00
@102.............................. 507
1,000 Arizona State University Revenues
Refunding System, Series A, 5.60%,
7/1/05, Callable 7/1/02 @101...... 1,043
1,000 Arizona State University Revenues
System, 6.90%, 7/1/04, Callable
7/1/02 @101, AMBAC................ 1,112
1,315 Arizona State University Revenues
System, 7.00%, 7/1/06, Prerefunded
7/1/01 @102....................... 1,464
1,950 Arizona State University Revenues,
Series A, 5.85%, 7/1/08, Callable
7/1/02 @101....................... 2,037
1,820 Arizona State University Revenues,
Series A, 5.90%, 7/1/09, Callable
7/1/02 @101....................... 1,896
650 Bullhead City, Municipal Property
Corp., Municipal Facilities
Revenue, 7.20%, 7/1/10,
Prerefunded 7/1/00 @101, FGIC..... 710
725 Casa Grande, Excise Tax Revenue,
5.90%, 4/1/09, Callable 4/1/04
@100, FGIC........................ 761
750 Central Arizona Water Conservation
District, Contract Revenue, 7.15%,
11/1/99........................... 798
6,290 Central Arizona Water Conservation
District, Contract Revenue, 7.00%,
11/1/03, Prerefunded 11/1/00
@102.............................. 6,929
1,000 Central Arizona Water Conservation
District, Contract Revenue, 7.65%,
11/1/09, Prerefunded 11/1/00
@102.............................. 1,122
3,300 Central Arizona Water Conservation
District, Contract Revenue, 7.13%,
11/1/11, Prerefunded 11/1/00
@102.............................. 3,649
2,875 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project, 4.75%,
11/1/07, Callable 5/1/04 @102,
MBIA.............................. 2,860
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,460 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project - Series
A, 5.20%, 11/1/03................. $ 1,504
4,000 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project - Series
A, 5.40%, 11/1/05................. 4,157
4,750 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project - Series
A, 5.40%, 11/1/06................. 4,946
4,175 Central Arizona Water Conservation
District, Contract Revenue, Series
B, Power Sales Co., 6.50%,
11/1/11, Prerefunded 5/1/01
@102.............................. 4,560
625 Coconino & Yavapai Counties Arizona,
School District #9, Sedona Oak
Creek Project of 1992-C, GO,
5.60%, 7/1/06, Callable 7/1/02
@101, FGIC........................ 653
1,000 Coconino & Yavapai Counties Arizona,
School District #9, Sedona Oak
Creek Project of 1992-D, GO,
5.20%, 7/1/01, FGIC............... 1,030
905 Coconino County, Arizona University,
School District #001, Flagstaff,
GO, 5.70%, 7/1/01, Callable 7/1/00
@101, AMBAC....................... 947
2,400 Coconino County, Arizona University,
School District #001, Flagstaff,
GO, 5.50%, 7/1/08, Callable 7/1/05
@101, AMBAC....................... 2,492
2,500 East Valley Institute of Technology,
District #401, Project of 1994,
Series B, GO, 6.00%, 7/1/05,
AMBAC............................. 2,698
1,000 East Valley Institute of Technology,
District #401, Series A, GO,
6.00%, 7/1/04, Callable 7/1/00
@101, AMBAC....................... 1,046
740 Flagstaff Street & Highway User
Revenue, 6.90%, 7/1/04,
Prerefunded 7/1/98 @102........... 776
870 Flagstaff, GO, 4.60%, 7/1/04,
FGIC.............................. 868
1,000 Gilbert Improvement District #011,
GO, 7.60%, 1/1/04, Callable 1/1/98
@102.5, FGIC...................... 1,044
1,000 Glendale Municipal Property Corp.,
Refunding, 7.00%, 7/1/05, Callable
7/1/99 @101, MBIA................. 1,058
1,000 Glendale Municipal Property Corp.,
Refunding, 7.00%, 7/1/09, Callable
7/1/99 @101, MBIA................. 1,058
</TABLE>
Continued
65
<PAGE> 538
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 4,000 Glendale University High School,
District #205, Projects of 1993 -
Series A, GO, 5.30%, 7/1/07,
Callable 7/1/03 @101.............. $ 4,114
2,900 Glendale University High School,
District #205, Projects of 1993 -
Series B, GO, 5.45%, 7/1/09,
Callable 7/1/05 @101, FGIC........ 2,990
2,000 Glendale, GO, 5.05%, 7/1/02, FGIC... 2,057
2,000 Maricopa County, Community College
District, 5.00%, 7/1/13, Callable
7/1/06 @101....................... 1,941
1,570 Maricopa County, Community College
District, Building Revenue, 5.10%,
7/15/05, MBIA..................... 1,610
1,000 Maricopa County, Community College
District, Series A, 6.00%, 7/1/07,
Callable 7/1/03 @101.............. 1,068
500 Maricopa County, Industrial
Development Authority, Hospital
Facility Revenue, St. Joseph's
Hospital & Medical Centers
Project, 6.20%, 11/1/11, Putable
11/1/97 @100, ETM................. 505
1,000 Maricopa County, School District
#001, Phoenix Elementary, GO,
5.50%, 7/1/10, Callable 7/1/07
@101, MBIA........................ 1,030
850 Maricopa County, School District
#006, Washington Elementary,
Series A, GO, 5.75%, 7/1/05,
Callable 7/1/02 @101, AMBAC....... 896
900 Maricopa County, School District
#006, Washington Elementary,
Series A, GO, 5.75%, 7/1/06,
Callable 7/1/02 @101, AMBAC....... 946
2,000 Maricopa County, School District
#038, Madison Elementary Project
of 1995 - Series B, GO, 5.80%,
7/1/15, Callable 7/1/06 @101,
MBIA.............................. 2,076
1,015 Maricopa County, School District
#038, Madison Elementary
Refunding, GO, 5.30%, 7/1/08,
Callable 7/1/03 @101, AMBAC....... 1,039
2,000 Maricopa County, School District
#097, Deer Valley Project
1986 - Series D, GO, 6.90%,
7/1/01, Prerefunded 7/1/00 @101,
MBIA.............................. 2,167
1,000 Maricopa County, School District
#097, Deer Valley Project of
1986 - Series F, GO, 5.90%,
7/1/03, Callable 7/1/02 @101,
FGIC.............................. 1,070
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 750 Maricopa County, School District
#097, Deer Valley Project of
1996 - Series C, GO, 5.35%,
7/1/09, Callable 7/1/07 @100,
FSA............................... $ 763
2,000 Maricopa County, School District
#210, Phoenix Refunding, GO,
5.25%, 7/1/04, Callable 7/1/03
@101.............................. 2,076
2,000 Maricopa County, School District
#210, Project of 1995 - Series B,
GO, 5.38%, 7/1/13................. 2,003
1,200 Maricopa County, School District
#210, Series A, GO, 5.60%, 7/1/13,
Callable 7/1/05 @101.............. 1,229
2,250 Maricopa County, School District
#210, Series D, GO, 6.70%, 7/1/03,
Prerefunded 7/1/01 @101........... 2,452
1,000 Maricopa County, School District
#210, Series E, GO, 7.10%,
7/1/03............................ 1,135
2,000 Maricopa County, School District
#210, Series E, GO, 6.20%, 7/1/06,
Prerefunded 7/1/02 @101........... 2,174
1,440 Maricopa County, School District
#28, Kyrene Elementary, Series G,
GO, 6.75%, 7/1/99, ETM............ 1,516
1,250 Maricopa County, School District #4,
GO, 5.25%, 7/1/03, FGIC........... 1,299
2,000 Maricopa County, School District #4,
GO, 5.50%, 7/1/09, Callable 7/1/05
@102, FGIC........................ 2,071
2,500 Maricopa County, School District #4,
GO, 5.00%, 7/1/10, Callable 7/1/06
@101, FGIC........................ 2,468
750 Maricopa County, School District #4,
GO, 5.65%, 7/1/11, Callable 7/1/05
@102, FGIC........................ 777
1,000 Maricopa County, School District
#48, Scottsdale Refunding, GO,
5.20%, 7/1/06, Callable 7/1/03
@101.............................. 1,033
1,475 Maricopa County, School District
#48, Scottsdale Refunding, GO,
4.90%, 7/1/06, Callable 7/1/02
@101.............................. 1,492
1,000 Maricopa County, School District
#48, Scottsdale Refunding, GO,
5.25%, 7/1/08, Callable 7/1/03
@101.............................. 1,025
1,500 Maricopa County, School District
#48, Scottsdale Refunding, GO,
6.75%, 7/1/09, Prerefunded 7/1/01
@101.............................. 1,644
2,000 Maricopa County, School District
#48, Scottsdale Refunding, Series
B, GO, 6.10%, 7/1/02.............. 2,154
</TABLE>
Continued
66
<PAGE> 539
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,000 Maricopa County, School District
#48, Scottsdale Refunding, Series
B, GO, 6.30%, 7/1/04.............. $ 1,104
2,000 Maricopa County, School District
#48, Scottsdale School
Improvements, GO, 7.50%, 7/1/04,
Prerefunded 7/1/97 @103........... 2,060
2,500 Maricopa County, School District
#48, Scottsdale School
Improvements, GO, 5.00%, 7/1/14,
Callable 7/1/04 @101.............. 2,410
3,100 Maricopa County, School District
#69, Paradise Valley Refunding,
GO, 5.80%, 7/1/09, AMBAC.......... 3,335
2,400 Maricopa County, School District
#69, Paradise Valley Refunding,
GO, 5.00%, 7/1/09, Callable 7/1/03
@102, AMBAC....................... 2,392
1,000 Maricopa County, School District
#69, Paradise Valley Refunding,
GO, 6.35%, 7/1/10, MBIA........... 1,125
2,000 Maricopa County, School District
#69, Paradise Valley, Series B,
GO, 6.50%, 7/1/08, Prerefunded
7/1/01 @100....................... 2,157
1,000 Maricopa County, School District
#80, Chandler Projects of
1995 - Series C, GO, 5.10%,
7/1/08, FGIC...................... 1,014
1,000 Maricopa County, School District
#80, Chandler, GO, 5.80%, 7/1/08,
Callable 7/1/05 @101, FGIC........ 1,064
920 Maricopa County, School District #9,
Wickenburg, GO, 5.50%, 7/1/13,
Callable 7/1/07 @100, AMBAC....... 928
1,625 Mesa, GO, 6.00%, 7/1/02, AMBAC...... 1,739
1,000 Mesa, GO, 5.70%, 7/1/03, FGIC....... 1,062
725 Mesa, GO, 5.00%, 7/1/03, MBIA....... 743
2,040 Mesa, Project of 1987, GO, 9.00%,
7/1/01, ETM, MBIA................. 2,384
2,000 Mesa, Project of 1987, GO, 5.70%,
7/1/08, Callable 7/1/03 @101.5,
MBIA.............................. 2,096
2,000 Mesa, Utility System Revenue, 5.38%,
7/1/12, Callable 7/1/05 @101,
FGIC.............................. 2,015
1,205 Mohave County, Elementary School
District #16, GO, 5.25%, 7/1/09,
Callable 7/1/07 @100, MBIA........ 1,219
1,200 Mohave County, School District # 1,
Lake Havasu Refunding, GO, 5.20%,
7/1/09, Callable 7/1/03 @101,
AMBAC............................. 1,211
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,000 Northern Arizona University,
Revenues, 7.50%, 6/1/03,
Prerefunded 6/1/99 @100........... $ 1,063
2,750 Northern Arizona University,
Revenues, 6.40%, 6/1/07, Callable
6/1/02 @101, FGIC................. 2,979
2,000 Northern Arizona University,
Revenues, 7.50%, 6/1/08,
Prerefunded 6/1/99 @100........... 2,125
1,215 Northern Arizona University,
Revenues, Series A, 5.60%, 6/1/05,
Callable 6/1/02 @102, AMBAC....... 1,274
1,000 Oro Valley Municipal Property Corp.,
Municipal Water System Revenue,
Canada Hills, 5.45%, 7/1/14,
Callable 7/1/08 @101, MBIA........ 1,009
2,000 Phoenix Civic Improvement Corp.,
Water System Revenue, 5.63%,
7/1/09, Callable 7/1/06 @100...... 2,080
1,320 Phoenix Street & Highway User
Revenue, 6.10%, 7/1/01, ETM....... 1,406
725 Phoenix Street & Highway User
Revenue, 6.25%, 7/1/06, Callable
7/1/02 @102....................... 784
2,000 Phoenix Street & Highway User
Revenue, 6.50%, 7/1/09, ETM....... 2,169
1,255 Phoenix Street & Highway User
Revenue, Series A, 5.80%, 7/1/05,
Callable 7/1/02 @102, FGIC........ 1,332
3,000 Phoenix, GO, 6.50%, 7/1/11,
Prerefunded 7/1/99 @102........... 3,192
2,450 Phoenix, GO, 6.38%, 7/1/13, Callable
7/1/02 @102....................... 2,649
1,125 Phoenix, GO, Series A, 5.10%,
7/1/04............................ 1,161
2,500 Phoenix, GO, Series A, 5.20%,
7/1/05............................ 2,590
1,000 Phoenix, GO, Series A, 5.40%,
7/1/07............................ 1,051
1,000 Pima County, Arizona College
District, Certificates of
Participation, Series B, 6.00%,
7/1/07, Callable 7/1/01 @101,
AMBAC............................. 1,049
725 Pima County, GO, 5.60%, 7/1/07,
Callable 7/1/03 @101.............. 758
555 Pima County, GO, 6.20%, 7/1/08,
Callable 7/1/02 @101.............. 590
1,500 Pima County, Industrial Development
Authority, HealthPartners - Series
A, 5.30%, 4/1/07, MBIA............ 1,547
1,000 Pima County, Industrial Development
Authority, Single Family Mortgage
Revenue Refunding, Series B, AMT,
6.15%, 11/1/23, Callable 5/1/07
@102, GNMA........................ 1,075
</TABLE>
Continued
67
<PAGE> 540
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,165 Pima County, Industrial Development
Authority, Single Family Mortgage
Revenue, Series A, 6.40%, 8/1/11,
Callable 8/1/05 @102.............. $ 1,215
315 Pima County, Industrial Development
Authority, Single Family Mortgage
Revenue, Series A, 7.63%, 2/1/12,
Callable 2/1/01 @101.............. 330
1,585 Pima County, Sewer Revenue, Series
A, 4.90%, 7/1/08, Callable 7/1/04
@102, FGIC........................ 1,572
1,000 Pima County, Union School District
#1, Project of 1989 - Series G,
GO, 5.00%, 7/1/06, Callable 7/1/05
@101, MBIA........................ 1,013
2,205 Pima County, Union School District
#1, Project of 1989 - Series G,
GO, 5.00%, 7/1/07, Callable 7/1/05
@101, MBIA........................ 2,235
1,000 Pima County, Union School District
#1, Series B, GO, 7.20%, 7/1/09,
Prerefunded 7/1/00 @101........... 1,091
1,500 Pima County, Union School District
#1, Series C, GO, 6.88%, 7/1/10,
Prerefunded 7/1/01 @101, MBIA..... 1,652
2,000 Pima County, Union School District
#1, Tucson School Improvements,
Series D, GO, 6.10%, 7/1/11,
Callable 7/1/02 @102, FGIC........ 2,110
1,200 Pinal County, School District #004,
Casa Grande Elementary School
Improvement, GO, 6.00%, 7/1/04,
Callable 7/1/01 @101, AMBAC....... 1,271
1,270 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series A, 5.40%,
1/1/04............................ 1,325
2,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series A, 5.63%,
1/1/06............................ 2,118
1,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series A, 6.50%,
1/1/07, Callable 1/1/01 @102...... 1,078
5,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series B, 5.05%,
1/1/06............................ 5,095
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 3,250 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series B, 5.20%,
1/1/08............................ $ 3,339
2,500 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series B, 5.38%,
1/1/09, Callable 1/1/03 @102...... 2,546
2,200 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series C, 4.70%,
1/1/06............................ 2,186
3,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series D, 6.00%,
1/1/13, Callable 1/1/02 @102...... 3,128
2,085 Scottsdale Municipal Property Corp.,
Excise Tax Revenue, 5.38%,
7/1/05............................ 2,172
1,000 Scottsdale Municipal Property Corp.,
Lease Revenue Refunding, Excise
Tax Revenue, 6.38%, 5/1/05,
Callable 11/1/02 @100............. 1,074
1,900 Scottsdale Project of 1989, Series
E, GO, 5.50%, 7/1/14, Callable
7/1/02 @101....................... 1,916
1,065 Scottsdale Street & Highway User
Revenue, 5.50%, 7/1/07............ 1,118
2,200 Scottsdale, GO, 6.90%, 7/1/06,
Prerefunded 7/1/00 @102........... 2,401
1,700 Scottsdale, GO, 5.25%, 7/1/06....... 1,770
1,100 Scottsdale, GO, 6.90%, 7/1/07,
Prerefunded 7/1/00 @102........... 1,201
500 Scottsdale, GO, 5.50%, 7/1/09....... 525
850 Scottsdale, GO, 5.00%, 7/1/09,
Callable 7/1/03 @101.............. 852
1,615 Scottsdale, GO, Series A, 4.80%,
7/1/08, Callable 7/1/03 @101...... 1,605
750 Scottsdale, GO, Series B, 6.00%,
7/1/09, Prerefunded 7/1/01 @101... 801
2,500 State Certificates of Participation,
6.63%, 9/1/08, Callable 9/1/01
@102, FSA......................... 2,714
1,000 State Municipal Financing Program,
Certificates of Participation,
Series 20, 7.70%, 8/1/10, ETM,
BIG............................... 1,214
1,000 State Municipal Financing Program,
Certificates of Participation,
Series 27, 7.00%, 8/1/04, Callable
8/1/98 @101, BIG.................. 1,038
1,250 State Power Authority Resource
Revenue Refunding, Hoover Uprating
Project, 4.80%, 10/1/01, MBIA..... 1,277
</TABLE>
Continued
68
<PAGE> 541
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 2,035 State Power Authority Resource
Revenue Refunding, Hoover Uprating
Project, 5.40%, 10/1/07, Callable
10/1/03 @102, MBIA................ $ 2,111
2,000 State Transportation Board Excise
Tax Revenue, Maricopa County
Regional Area Road Fund - A,
7.60%, 7/1/05, Prerefunded 7/1/98
@102, FGIC........................ 2,113
2,000 State Transportation Board Highway
Revenue, 7.00%, 7/1/06,
Prerefunded 7/1/00 @101........... 2,173
3,000 State Transportation Board Highway
Revenue, 5.25%, 7/1/07, Callable
7/1/03 @102....................... 3,098
1,000 State Transportation Board Highway
Revenue, Sub-Series B, 6.50%,
7/1/08, Prerefunded 7/1/02
@101.5............................ 1,106
1,000 State Transportation Board Revenue,
Sub-Series A, 6.50%, 7/1/11,
Prerefunded 7/1/01 @101.5......... 1,092
1,635 Tempe, GO, 5.00%, 7/1/10, Callable
7/1/06 @101....................... 1,614
1,000 Tempe, GO, Series A, 5.10%,
7/1/05............................ 1,025
580 Tempe, GO, Series B, 6.00%, 7/1/06,
Callable 7/1/02 @101.............. 616
2,235 Tempe, Union High School District
#213, Project of 1989 - Series B,
GO, 5.90%, 7/1/04, Callable 7/1/01
@101.............................. 2,351
1,000 Tucson Street & Highway User
Revenue, 5.30%, 7/1/05, Callable
7/1/03 @102, MBIA................. 1,035
2,000 Tucson Water Revenue Refunding,
Series A, 5.75%, 7/1/12, Callable
7/1/02 @102, MBIA, IBC............ 2,053
700 University of Arizona, Foundation
Certificates of Participation,
Series 8, 4.90%, 8/1/09, MBIA..... 693
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,000 University of Arizona, University
Revenues, 6.25%, 6/1/11, Callable
6/1/02 @102....................... $ 1,072
2,215 University of Arizona, University
Revenues, Series A, 7.00%, 6/1/10,
Prerefunded 6/1/00 @102........... 2,419
1,100 Yavapai County, Industrial
Development Authority, Hospital
Facility Revenue, Yavapai Regional
Medical Center - Series A, 5.13%,
12/1/13, Callable 6/1/07 @102,
FSA............................... 1,073
1,750 Yuma County, GO, 6.13%, 7/1/12,
Callable 7/1/03 @101, AMBAC....... 1,845
1,305 Yuma County, GO, Elementary School
District #1, 5.25%, 7/1/10,
Callable 7/1/07 @101, MBIA........ 1,306
1,000 Yuma County, Industrial Development
Authority, Hospital Revenue
Refunding, Yuma Regional Medical
Center, 5.50%, 8/1/09, Callable
8/1/07 @102, MBIA................. 1,021
1,000 Yuma County, Municipal Property
Corp. Revenue, Series A, 5.20%,
7/1/09, Callable 7/1/03 @101,
AMBAC............................. 1,005
1,575 Yuma County, Union High School,
District #70, GO, 5.00%, 7/1/06,
Callable 7/1/02 @101, FGIC........ 1,597
--------
Total Municipal Bonds 255,076
--------
INVESTMENT COMPANIES (0.3%):
693 The One Group Municipal Money Market
Fund, Fiduciary Class............. 693
--------
Total Investment Companies 693
--------
Total (Cost--$243,140) (a) $255,769
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $257,255.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $12,666
Unrealized depreciation.................................................. (37)
-------
Net unrealized appreciation.............................................. $12,629
=======
</TABLE>
AMBAC Insured by AMBAC Indemnity Corp.
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
MBIA Insured by Municipal Bond Insurance Association
See notes to financial statements.
69
<PAGE> 542
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
INTERMEDIATE MUNICIPAL KENTUCKY OHIO
TAX-FREE BOND INCOME MUNICIPAL BOND MUNICIPAL BOND
FUND FUND FUND FUND
-------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost $449,354; $476,532;
$117,316; $153,990; respectively)................. $465,462 $486,211 $123,428 $163,485
Interest receivable................................. 6,636 7,610 1,969 1,699
Receivable for capital shares issued................ 30 759 9 98
Prepaid expenses and other assets................... 1 2 -- --
-------- -------- -------- --------
TOTAL ASSETS........................................ 472,129 494,582 125,406 165,282
-------- -------- -------- --------
LIABILITIES:
Dividends payable................................... 1,861 2,059 526 688
Payable to brokers for investments purchased........ 7,115 5,442 -- 820
Payable for capital shares redeemed................. 20 109 -- 48
Accrued expenses and other payables:
Investment advisory fees........................ 146 138 37 41
Administration fees............................. 64 67 17 23
12b-1 fees...................................... 4 34 3 14
Other........................................... 66 69 40 46
-------- -------- -------- --------
TOTAL LIABILITIES................................... 9,276 7,918 623 1,680
-------- -------- -------- --------
NET ASSETS:
Capital............................................. 444,793 485,576 120,470 158,243
Undistributed net investment income................. 233 18 -- 5
Accumulated undistributed net realized gains
(losses) from investment transactions............. 1,719 (8,609) (1,799) (4,141)
Net unrealized appreciation from investments........ 16,108 9,679 6,112 9,495
-------- -------- -------- --------
NET ASSETS.......................................... $462,853 $486,664 $124,783 $163,602
======== ======== ======== ========
NET ASSETS:
Fiduciary....................................... $451,089 $408,577 $116,830 $133,172
Class A......................................... 8,457 41,829 5,554 16,114
Class B......................................... 3,307 36,258 2,399 14,316
-------- -------- -------- --------
Total........................................... $462,853 $486,664 $124,783 $163,602
======== ======== ======== ========
OUTSTANDING UNITS OF BENEFICIAL INTEREST (SHARES):
Fiduciary....................................... 41,315 41,518 11,450 12,245
Class A......................................... 775 4,237 544 1,478
Class B......................................... 303 3,686 236 1,304
-------- -------- -------- --------
Total........................................... 42,393 49,441 12,230 15,027
======== ======== ======== ========
Net Asset Value:
Fiduciary
Offering and redemption price per share..... $ 10.92 $ 9.84 $ 10.20 $ 10.88
======== ======== ======== ========
Class A
Redemption price per share.................. $ 10.91 $ 9.87 $ 10.21 $ 10.91
======== ======== ======== ========
Maximum sales charge........................ 4.50% 4.50% 4.50% 4.50%
======== ======== ======== ========
Maximum offering price per share
(100%/(100%-maximum sales charge) of net
asset value adjusted to nearest cent)..... $ 11.42 $ 10.34 $ 10.69 $ 11.42
======== ======== ======== ========
Class B
Offering price per share (a)................ $ 10.93 $ 9.84 $ 10.15 $ 10.98
======== ======== ======== ========
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
70
<PAGE> 543
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
LOUISIANA WEST VIRGINIA ARIZONA
MUNICIPAL BOND MUNICIPAL BOND MUNICIPAL BOND
FUND FUND FUND
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost $157,802; $94,924; $243,140;
respectively)............................................... $164,152 $ 99,437 $255,769
Interest receivable........................................... 2,996 1,350 5,879
Receivable for capital shares issued.......................... -- 4 --
Prepaid expenses and other assets............................. -- 3 3
-------- -------- --------
TOTAL ASSETS.................................................. 167,148 100,794 261,651
-------- -------- --------
LIABILITIES:
Dividends payable............................................. 663 402 1,073
Payable to brokers for investments purchased.................. 689 2,622 3,051
Payable for capital shares redeemed........................... -- -- 60
Accrued expenses and other payables:
Investment advisory fees.................................. 51 23 72
Administration fees....................................... 23 11 26
12b-1 fees................................................ 13 -- --
Other..................................................... 38 44 114
-------- -------- --------
TOTAL LIABILITIES............................................. 1,477 3,102 4,396
-------- -------- --------
NET ASSETS:
Capital....................................................... 159,996 93,207 243,644
Undistributed net investment income........................... -- -- --
Accumulated undistributed net realized gains (losses) from
investment transactions..................................... (675) (28) 982
Net unrealized appreciation from investments.................. 6,350 4,513 12,629
-------- -------- --------
NET ASSETS.................................................... $165,671 $ 97,692 $257,255
======== ======== ========
NET ASSETS:
Fiduciary................................................. $113,338 $ 96,270 $255,755
Class A................................................... 48,498 808 1,500
Class B................................................... 3,835 614 --(b)
-------- -------- --------
Total......................................................... $165,671 $ 97,692 $257,255
======== ======== ========
OUTSTANDING UNITS OF BENEFICIAL INTEREST (SHARES):
Fiduciary................................................. 11,221 9,567 25,425
Class A................................................... 4,802 80 150
Class B................................................... 380 61 --(b)
-------- -------- --------
Total......................................................... 16,403 9,708 25,575
======== ======== ========
Net Asset Value:
Fiduciary
Offering and redemption price per share............... $ 10.10 $ 10.06 $ 10.06
======== ======== ========
Class A
Redemption price per share............................ $ 10.10 $ 10.15 $ 9.99
======== ======== ========
Maximum sales charge.................................. 4.50% 4.50% 4.50%
======== ======== ========
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest
cent)............................................... $ 10.58 $ 10.63 $ 10.46
======== ======== ========
Class B
Offering price per share (a).......................... $ 10.10 $ 10.12 $ 10.09
======== ======== ========
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
(b) Amount is less than $1,000.
See notes to financial statements.
71
<PAGE> 544
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERMEDIATE MUNICIPAL KENTUCKY OHIO
TAX-FREE BOND INCOME MUNICIPAL BOND MUNICIPAL BOND
FUND FUND FUND FUND
-------------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................ $ 18,815 $ 22,398 $ 4,351 $ 7,389
Dividend income........................ 73 95 54 120
-------- -------- -------- --------
TOTAL INCOME........................... 18,888 22,493 4,405 7,509
-------- -------- -------- --------
EXPENSES:
Investment advisory fees............... 2,012 1,703 348 781
Administration fees.................... 554 626 128 215
12b-1 fees (Class A)................... 24 111 26 57
12b-1 fees (Class B)................... 26 294 20 119
Custodian and accounting fees.......... 46 65 7 21
Legal and audit fees................... 15 12 2 6
Organization costs..................... -- 1 -- --
Trustees' fees and expenses............ 3 4 1 1
Transfer agent fees.................... 24 45 30 36
Registration and filing fees........... 36 60 9 21
Printing costs......................... 31 34 7 12
Other.................................. 2 2 -- 1
-------- -------- -------- --------
Total expenses before waivers.......... 2,773 2,957 578 1,270
Less waivers........................... (786) (466) (87) (422)
-------- -------- -------- --------
NET EXPENSES........................... 1,987 2,491 491 848
-------- -------- -------- --------
Net Investment Income.................. 16,901 20,002 3,914 6,661
-------- -------- -------- --------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from
investment transactions.............. 1,738 (530) 16 (175)
Net change in unrealized appreciation
(depreciation) from investments...... 5,870 7,608 1,197 2,389
-------- -------- -------- --------
Net realized/unrealized gains from
investments.......................... 7,608 7,078 1,213 2,214
-------- -------- -------- --------
Change in net assets resulting from
operations........................... $ 24,509 $ 27,080 $ 5,127 $ 8,875
======== ======== ======== ========
</TABLE>
See notes to financial statements.
72
<PAGE> 545
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
LOUISIANA WEST VIRGINIA ARIZONA
MUNICIPAL BOND MUNICIPAL BOND MUNICIPAL BOND
FUND FUND (a) FUND (a)
<S> <C> <C> <C>
---------------- ---------------- ----------------
INVESTMENT INCOME:
Interest income................................ $ 9,906 $2,316 $6,541
Dividend income................................ 36 45 29
-------- ------ ------
TOTAL INCOME................................... 9,942 2,361 6,570
-------- ------ ------
EXPENSES:
Investment advisory fees....................... 1,077 188 517
Administration fees............................ 297 69 190
12b-1 fees (Class A)........................... 176 1 1
12b-1 fees (Class B)........................... 36 1 --
Custodian and accounting fees.................. 30 9 23
Legal and audit fees........................... 12 6 10
Trustees' fees and expenses.................... 3 2 2
Transfer agent fees............................ 62 9 6
Registration and filing fees................... 12 30 81
Printing costs................................. 17 9 24
Other.......................................... 1 1 2
-------- ------ ------
Less waivers................................... (448) (77) (176)
-------- ------ ------
NET EXPENSES................................... 1,275 248 680
-------- ------ ------
Net Investment Income.......................... 8,667 2,113 5,890
-------- ------ ------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment
transactions................................. (79) (28) 982
Net change in unrealized appreciation
(depreciation) from investments.............. 3,224 627 511
-------- ------ ------
Net realized/unrealized gains from
investments.................................. 3,145 599 1,493
-------- ------ ------
Change in net assets resulting from
operations................................... $ 11,812 $2,712 $7,383
======== ====== ======
</TABLE>
- ------------
(a) For the period from January 20, 1997 to June 30, 1997.
See notes to financial statements.
73
<PAGE> 546
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERMEDIATE MUNICIPAL KENTUCKY
TAX-FREE BOND INCOME MUNICIPAL BOND
FUND FUND FUND
-------------------- -------------------- --------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income........................ $ 16,901 $11,312 $20,002 $13,782 $ 3,914 $ 1,845
Net realized gains (losses) from investment
transactions............................... 1,738 1,432 (530) (2,505) 16 (36)
Net change in unrealized appreciation
(depreciation) from investments............ 5,870 (248) 7,608 1,176 1,197 571
-------- -------- -------- -------- -------- -------
Change in net assets resulting from operations... 24,509 12,496 27,080 12,453 5,127 2,380
-------- -------- -------- -------- -------- -------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income................... (16,473) (10,698) (17,054) (12,119) (3,488) (1,450)
From net realized gains from investment
transactions............................... (414) (468) -- -- -- --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income................... (322) (328) (1,627) (996) (346) (374)
From net realized gains from investment
transactions............................... (11) (17) -- -- -- --
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income................... (106) (64) (1,321) (666) (80) (21)
From net realized gains from investment
transactions............................... (4) (3) -- -- -- --
-------- -------- -------- -------- -------- -------
Change in net assets from shareholder
distributions.................................. (17,330) (11,578) (20,002) (13,781) (3,914) (1,845)
-------- -------- -------- -------- -------- -------
CAPITAL TRANSACTIONS:
Proceeds from shares issued.................. 103,061 79,285 194,651 135,163 19,089 7,868
Proceeds from shares issued in conversion.... 182,568 -- 55,269 -- 78,683 --
Dividends reinvested......................... 603 1,603 2,256 1,920 244 224
Cost of shares redeemed...................... (56,820) (73,503) (62,696) (51,353) (14,381) (10,109)
-------- -------- -------- -------- -------- -------
Change in net assets from share transactions..... 229,412 7,385 189,480 85,730 83,635 (2,017)
-------- -------- -------- -------- -------- -------
Change in net assets............................. 236,591 8,303 196,558 84,402 84,848 (1,482)
NET ASSETS:
Beginning of period.......................... 226,262 217,959 290,106 205,704 39,935 41,417
-------- -------- -------- -------- -------- -------
End of period................................ $462,853 $226,262 $486,664 $290,106 $124,783 $39,935
======== ======== ======== ======== ======== =======
SHARE TRANSACTIONS:
Issued....................................... 9,528 7,384 19,945 13,875 1,892 779
Issued in conversion......................... 16,858 -- 5,680 -- 7,752 --
Reinvested................................... 56 148 231 197 24 23
Redeemed..................................... (5,252) (6,824) (6,436) (5,278) (1,415) (997)
-------- -------- -------- -------- -------- -------
Change in shares................................. 21,190 708 19,420 8,794 8,253 (195)
======== ======== ======== ======== ======== =======
Undistributed net investment income included in
net assets:
End of period................................ $ 233 $ 233 $ 18 $ 20 $ -- $ --
======== ======== ======== ======== ======== =======
</TABLE>
See notes to financial statements.
74
<PAGE> 547
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
OHIO LOUISIANA
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND(A)
-------------------- ----------------------------------------
YEAR YEAR YEAR SEVEN MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, NOVEMBER 30,
1997 1996 1997 1996 1995
-------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income........................ $ 6,661 $ 5,010 $ 8,667 $ 5,578 $ 10,058
Net realized losses from investment
transactions............................... (175) (253) (79) (146) (11)
Net change in unrealized appreciation
(depreciation) from investments............ 2,389 483 3,224 (3,198) 14,487
-------- -------- -------- -------- --------
Change in net assets resulting from operations... 8,875 5,240 11,812 2,234 24,534
-------- -------- -------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS (B):
From net investment income................... (5,336) (4,102) (6,174) (1,732) --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income................... (810) (670) (2,349) (3,782) (10,014)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income................... (515) (238) (144) (64) (44)
-------- -------- -------- -------- --------
Change in net assets from shareholder
distributions.................................. (6,661) (5,010) (8,667) (5,578) (10,058)
-------- -------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued.................. 39,896 28,462 10,148 13,459 27,568
Proceeds from shares issued in conversion.... 39,137 -- -- -- --
Dividends reinvested......................... 1,160 890 1,612 929 1,980
Cost of shares redeemed...................... (24,777) (18,818) (41,977) (26,535) (32,814)
-------- -------- -------- -------- --------
Change in net assets from share transactions..... 55,416 10,534 (30,217) (12,147) (3,266)
-------- -------- -------- -------- --------
Change in net assets............................. 57,630 10,764 (27,072) (15,491) 11,210
NET ASSETS:
Beginning of period.......................... 105,972 95,208 192,743 208,234 197,024
-------- -------- -------- -------- --------
End of period................................ $163,602 $105,972 $165,671 $192,743 $208,234
======== ======== ======== ======== ========
SHARE TRANSACTIONS:
Issued....................................... 3,691 2,628 1,013 870 2,610
Issued in conversion......................... 3,617 -- -- -- --
Issued in restatement of net asset value
(c)........................................ -- -- -- 1,261 --
Reinvested................................... 107 82 161 89 189
Redeemed..................................... (2,289) (1,744) (4,190) (2,146) (3,138)
-------- -------- -------- -------- --------
Change in shares................................. 5,126 966 (3,016) 74 (339)
======== ======== ======== ======== ========
Undistributed net investment income included in
net assets:
End of period................................ $ 5 $ 8 $ -- $ -- $ --
======== ======== ======== ======== ========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Louisiana Tax-Free
Fund became the Louisiana Municipal Bond Fund. Changes in net assets for the
periods prior to March 26, 1996 represent the Paragon Louisiana Tax-Free
Fund.
(b) Fiduciary Shares of the Louisiana Municipal Bond Fund commenced offering on
March 26, 1996 upon conversion of certain Class A Shares to Fiduciary
Shares.
(c) Pursuant to its reorganization as a fund of The One Group, the Louisiana
Municipal Bond Fund issued additional shares at the close of business March
25, 1996 as a result of restatement of the net asset values of Class A
Shares from $10.67 to $10.00 and Class B Shares from $10.70 to $10.00.
See notes to financial statements.
75
<PAGE> 548
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
WEST VIRGINIA ARIZONA
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND
---------------- ----------------
JANUARY 20, 1997 JANUARY 20, 1997
THROUGH THROUGH
JUNE 30, JUNE 30,
1997(A) 1997(A)
---------------- ----------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income......................................... $ 2,113 $ 5,890
Net realized gains (losses) from investment transactions...... (28) 982
Net change in unrealized appreciation (depreciation) from
investments.................................................. 627 511
-------- --------
Change in net assets resulting from operations..................... 2,712 7,383
-------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income.................................... (2,097) (5,879)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.................................... (11) (11)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.................................... (5) --(b)
-------- --------
Change in net assets from shareholder distributions................ (2,113) (5,890)
-------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................................... 10,842 11,134
Proceeds from shares issued in conversion..................... 91,179 263,882
Dividends reinvested.......................................... 9 5
Cost of shares redeemed....................................... (4,937) (19,259)
-------- --------
Change in net assets from share transactions....................... 97,093 255,762
-------- --------
Change in net assets............................................... 97,692 257,255
NET ASSETS:
Beginning of period........................................... -- --
-------- --------
End of period................................................. $ 97,692 $257,255
======== ========
SHARE TRANSACTIONS:
Issued........................................................ 1,081 1,116
Issued in conversion.......................................... 9,118 26,388
Reinvested.................................................... 1 1
Redeemed...................................................... (492) (1,930)
-------- --------
Change in shares................................................... 9,708 25,575
======== ========
Undistributed net investment income included in net assets:
End of period................................................. $ -- $ --
======== ========
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Amount less than $1,000.
See notes to financial statements.
76
<PAGE> 549
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Intermediate Tax-Free
Bond Fund, the Municipal Income Fund, the Kentucky Municipal Bond Fund, the
Ohio Municipal Bond Fund, the Louisiana Municipal Bond Fund, the Arizona
Municipal Bond Fund, and the West Virginia Municipal Bond Fund (individually
a "Fund", collectively the "Funds") only. The Funds are each offered in
Fiduciary Class, Class A and Class B Shares. Class A Shares are subject to
initial sales charges, imposed at the time of purchase, in accordance with
the Funds' prospectuses. Certain redemptions of Class B Shares are subject to
contingent deferred sales charges in accordance with the Funds' prospectuses.
Each Fund is a non-diversified mutual fund, except for the Intermediate
Tax-Free Bond and the Municipal Income Fund, which are diversified.
The Trust entered into an Agreement and Plan of Reorganization (the
"Agreement") with the Paragon Portfolio ("Paragon"), a Massachusetts business
trust. Pursuant to the Agreement all of the assets and liabilities of each
Paragon Fund transferred to a fund of The One Group in exchange for shares of
the corresponding fund of The One Group. Subsequent to the reorganization,
the fiscal period end changed from November 30 to June 30 for the Louisiana
Municipal Bond Fund. Therefore, the prior period statement of changes in net
assets for that Fund presents the changes in net assets for the seven months
ended June 30, 1996.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---------------------------------- ------------------------------------------------------------
<S> <C>
Intermediate Tax-Free Bond Fund Current income exempt from Federal income taxes consistent
with prudent investment management and the preservation of
capital.
Municipal Income Fund Current income exempt from Federal income taxes.
Kentucky Municipal Bond Fund Current income both consistent with the preservation of
principal and exempt from Federal income tax and Kentucky
personal income tax.
Ohio Municipal Bond Fund Current income both consistent with the preservation of
principal and exempt from Federal income tax and Ohio
personal income tax.
Louisiana Municipal Bond Fund Current income both consistent with the preservation of
principal and exempt from Federal income tax and Louisiana
income tax.
Arizona Municipal Bond Fund Current income both consistent with the preservation of
principal and exempt from Federal income tax and Arizona
personal income tax.
West Virginia Municipal Bond Fund Current income both consistent with the preservation of
principal and exempt from Federal income tax and West
Virginia personal income tax.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
Continued
77
<PAGE> 550
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
SECURITY VALUATION
Corporate debt securities and debt securities of U.S. issuers (other than
short-term investments maturing in 60 days or less), including municipal
securities, are valued on the basis of valuations provided by dealers or by
an independent pricing service approved by the Board of Trustees. Short-term
investments maturing in 60 days or less are valued at amortized cost, which
approximates market value. 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. Investments for
which there are no such quotations or valuations are valued at fair value as
determined in good faith by Banc One Investment Advisors Corporation (the
"Advisor") under the direction of the Board of Trustees.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that the
Fund's investment advisor has determined are creditworthy. Each repurchase
agreement is recorded at cost. The Fund requires that the securities
purchased in a repurchase agreement transaction be transferred to the
custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a counterparty default. The seller, under the
repurchase agreement, is required to maintain the value of the securities
held at not less than the repurchase price, including accrued interest.
Repurchase agreements are considered to be loans by a fund under the 1940
Act.
WRITTEN OPTIONS
The Funds may write covered call or put options for which premiums received
are recorded as liabilities and are subsequently adjusted to the current
value of the options written. Premiums received from writing options which
expire are treated as realized gains. Premiums received from writing options,
which are either exercised or closed, are offset against the proceeds
received or amount paid on the transaction to determine realized gains or
losses.
FUTURES CONTRACTS
The Funds may enter into futures contracts for the delayed delivery of
securities at a fixed price at some future date or for the change in the
value of a specified financial index over a predetermined time period. Cash
or securities are deposited with brokers in order to maintain a position.
Subsequent payments made or received by the Fund based on the daily change in
the market value of the position are recorded as unrealized appreciation or
depreciation until the contract is closed out, at which time the appreciation
or depreciation is realized.
INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked either
directly or inversely to changes in foreign currencies, interest rates,
commodities, indices or other reference instruments. Indexed securities may
be more volatile than the referenced instrument itself, but any loss is
limited to the amount of the original investment.
MORTGAGE ROLLS
The Funds may enter into mortgage "dollar rolls" in which the Fund sells
mortgage-backed securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar securities
Continued
78
<PAGE> 551
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
on a specified future date. During the roll period, the Fund forgoes
principal and interest paid on the mortgage-backed securities. The Fund is
compensated by fee income or the difference between the current sales price
and the lower forward price for the future purchase.
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities in
which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn interest on securities lent while simultaneously seeking to
earn interest on the investment of collateral. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines established
by the Board of Trustees and when, in the judgement of the Advisor, the
consideration which can be earned currently from such securities loans
justifies the attendant risk. Loans are subject to termination by the Funds
or the borrower at any time, and are, therefore, not considered to be
illiquid investments. As of June 30, 1997 the Funds had no securities on
loan.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net realized
gains or losses from sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on
the accrual basis. Dividends are recorded on the ex-dividend date. Interest
income, including any discount or premium, is accrued as earned using the
effective interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that Fund,
while the expenses which are attributable to more than one fund of the Trust
are allocated among the respective Funds. Each class of shares bears its
pro-rata portion of expenses attributable to its series, except that each
class separately bears expenses related specifically to that class, such as
distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly for
the Funds. Net realized capital gains, if any, are distributed at least
annually. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments for mortgage-backed securities, expiring capital loss
carryforwards, and deferrals of certain losses. Permanent book and tax basis
differences have been reclassified among the components of net assets.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated investment
company by complying with the provisions available to certain
Continued
79
<PAGE> 552
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
investment companies as defined in applicable sections of the Internal
Revenue Code, and to make distributions from net investment income and from
net realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more classes. The Trust is registered to offer forty
series and five classes of shares: Fiduciary, Class A, Class B, Class C and
Service. Currently, the Trust consists of thirty three active Funds and not
all Funds can issue all classes of shares. As of June 30, 1997, there were no
shareholders in Class C or Service Class of the Funds. Shareholders are
entitled to one vote for each full share held and will vote in the aggregate
and not by class or series, except as otherwise expressly required by law or
when the Board of Trustees has determined that the matter to be voted on
affects only the interest of shareholders of a particular class or series.
The following is a summary of transactions in Fund shares for the periods
ended June 30, 1997 and June 30, 1996:
Continued
80
<PAGE> 553
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERMEDIATE TAX-FREE MUNICIPAL INCOME KENTUCKY MUNICIPAL
BOND FUND FUND BOND FUND
---------------------------- ---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued.... $ 98,433 $ 73,620 $155,470 $100,593 $ 17,564 $ 6,010
Proceeds from shares issued in
conversion................... 182,568 -- 55,269 -- 78,683 --
Dividends reinvested........... 267 1,311 198 835 11 30
Cost of shares redeemed........ (54,356) (69,859) (49,425) (45,206) (10,777) (8,690)
-------- -------- -------- -------- -------- --------
Change in net assets from
Fiduciary Share
transactions................. $226,912 $ 5,072 $161,512 $ 56,222 $ 85,481 $ (2,650)
======== ======== ======== ======== ======== ========
CLASS A SHARES:
Proceeds from shares issued.... $ 2,964 $ 4,157 $ 24,091 $ 18,884 $ 425 $ 475
Dividends reinvested........... 245 246 1,160 699 191 186
Cost of shares redeemed........ (1,518) (3,426) (9,801) (5,106) (3,370) (1,412)
-------- -------- -------- -------- -------- --------
Change in net assets from Class
A Share transactions......... $ 1,691 $ 977 $ 15,450 $ 14,477 $ (2,754) $ (751)
======== ======== ======== ======== ======== ========
CLASS B SHARES:
Proceeds from shares issued.... $ 1,664 $ 1,508 $ 15,090 $ 15,686 $ 1,100 $ 1,383
Dividends reinvested........... 91 46 898 386 42 8
Cost of shares redeemed........ (946) (218) (3,470) (1,041) (234) (7)
-------- -------- -------- -------- -------- --------
Change in net assets from Class
B Share transactions......... $ 809 $ 1,336 $ 12,518 $ 15,031 $ 908 $ 1,384
======== ======== ======== ======== ======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued......................... 9,103 6,859 15,939 10,330 1,740 593
Issued in conversion........... 16,858 -- 5,680 -- 7,752 --
Reinvested..................... 25 121 20 86 1 4
Redeemed....................... (5,024) (6,488) (5,078) (4,649) (1,061) (856)
-------- -------- -------- -------- -------- --------
Change in Fiduciary Shares..... 20,962 492 16,561 5,767 8,432 (259)
======== ======== ======== ======== ======== ========
CLASS A SHARES:
Issued......................... 272 387 2,459 1,933 42 48
Reinvested..................... 23 22 119 72 19 18
Redeemed....................... (141) (316) (1,002) (522) (331) (140)
-------- -------- -------- -------- -------- --------
Change in Class A Shares....... 154 93 1,576 1,483 (270) (74)
======== ======== ======== ======== ======== ========
CLASS B SHARES:
Issued......................... 153 138 1,547 1,612 110 138
Reinvested..................... 8 5 92 40 4 1
Redeemed....................... (87) (20) (356) (108) (23) (1)
-------- -------- -------- -------- -------- --------
Change in Class B Shares....... 74 123 1,283 1,544 91 138
======== ======== ======== ======== ======== ========
</TABLE>
Continued
81
<PAGE> 554
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
OHIO MUNICIPAL LOUISIANA MUNICIPAL
BOND FUND BOND FUND (a)
-------------------- ------------------------------------------
YEAR YEAR YEAR SEVEN MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, NOVEMBER 30,
1997 1996 1997 1996 1995
-------- -------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued........................... $ 28,385 $ 16,537 $ 5,386 $ 6,255
Proceeds issued in conversion......................... 39,137 -- -- --
Proceeds from shares issued in conversion from Class A
Shares.............................................. -- -- -- 137,607(b)
Dividends reinvested.................................. 93 245 -- --
Cost of shares redeemed............................... (16,829) (16,421) (30,290) (6,804)
-------- -------- -------- ----------
Change in net assets from Fiduciary Share
transactions........................................ $ 50,786 $ 361 $(24,904) $ 137,058
======== ======== ======== ==========
CLASS A SHARES:
Proceeds from shares issued........................... $ 5,044 $ 5,812 $ 4,042 $ 5,814 $ 25,634
Dividends reinvested.................................. 675 479 1,510 889 1,948
Cost of shares redeemed............................... (6,371) (1,813) (11,414) (19,453) (32,701)
Cost of shares redeemed in conversion to Fiduciary
Shares.............................................. -- -- -- (137,607)(b) --
-------- -------- -------- ---------- --------
Change in net assets from Class A Share
transactions........................................ $ (652) $ 4,478 $ (5,862) $ (150,357) $ (5,119)
======== ======== ======== ========== ========
CLASS B SHARES:
Proceeds from shares issued........................... $ 6,467 $ 6,113 $ 720 $ 1,390 $ 1,934
Dividends reinvested.................................. 392 166 102 40 31
Cost of shares redeemed............................... (1,577) (584) (273) (278) (112)
-------- -------- -------- ---------- --------
Change in net assets from Class B Share
transactions........................................ $ 5,282 $ 5,695 $ 549 $ 1,152 $ 1,853
======== ======== ======== ========== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued................................................ 2,635 1,528 538 195
Issued in conversion.................................. 3,617 -- -- --
Issued in conversion from Class A Shares.............. -- -- -- 13,761(b)
Reinvested............................................ 9 23 -- --
Redeemed.............................................. (1,556) (1,523) (3,023) (250)
-------- -------- -------- ----------
Change in Fiduciary Shares............................ 4,705 28 (2,485) 13,706
======== ======== ======== ==========
CLASS A SHARES:
Issued................................................ 464 539 403 545 2,426
Issued in restatement of net asset value (c).......... -- -- -- 1,239 --
Reinvested............................................ 62 44 151 85 186
Redeemed.............................................. (588) (167) (1,140) (1,869) (3,127)
Redeemed in conversion to Fiduciary Shares............ -- -- -- (13,761)(b) --
-------- -------- -------- ---------- --------
Change in Class A Shares.............................. (62) 416 (586) (13,761) (515)
======== ======== ======== ========== ========
CLASS B SHARES:
Issued................................................ 592 561 72 130 183
Issued in restatement of net asset value (c).......... -- -- -- 22 --
Reinvested............................................ 36 15 10 4 3
Redeemed.............................................. (145) (54) (27) (27) (10)
-------- -------- -------- ---------- --------
Change in Class B Shares.............................. 483 522 55 129 176
======== ======== ======== ========== ========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Louisiana Tax-Free
Fund became the Louisiana Municipal Bond Fund. Capital and share
transactions for the periods prior to March 26, 1996 represent the Paragon
Louisiana Tax-Free Fund.
(b) Fiduciary Shares of the Louisiana Municipal Bond Fund commenced offering on
March 26, 1996 upon conversion of certain Class A Shares to Fiduciary
Shares.
(c) Pursuant to reorganization as a fund of The One Group, the Louisiana
Municipal Bond Fund issued additional shares at the close of business March
26, 1996 as a result of restatement of the net asset values of Class A
Shares from $10.67 to $10.00 and Class B Shares from $10.70 to $10.00.
Continued
82
<PAGE> 555
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
WEST VIRGINIA ARIZONA
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND
---------------- ----------------
JANUARY 20, 1997 JANUARY 20, 1997
THROUGH THROUGH
JUNE 30, JUNE 30,
1997 (a) 1997 (a)
---------------- ----------------
<S> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued..................................... $ 9,442 $ 9,187
Proceeds from shares issued in conversion....................... 91,179 263,882
Dividends reinvested............................................ --(b) --
Cost of shares redeemed......................................... (4,937) (18,791)
-------- --------
Change in net assets from Fiduciary Share transactions.......... $ 95,684 $254,278
======== ========
CLASS A SHARES:
Proceeds from shares issued..................................... $ 795 $ 1,947
Dividends reinvested............................................ 7 5
Cost of shares redeemed......................................... -- (468)
-------- --------
Change in net assets from Class A Share transactions......... $ 802 $ 1,484
======== ========
CLASS B SHARES:
Proceeds from shares issued..................................... $ 605 $ --(b)
Dividends reinvested............................................ 2 --
Cost of shares redeemed......................................... -- --
-------- --------
Change in net assets from Class B Share transactions............ $ 607 $ --(b)
======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.......................................................... 941 920
Issued in conversion............................................ 9,118 26,388
Reinvested...................................................... 1 --
Redeemed........................................................ (492) (1,883)
-------- --------
Change in Fiduciary Shares...................................... 9,568 25,425
======== ========
CLASS A SHARES:
Issued.......................................................... 79 196
Reinvested...................................................... -- 1
Redeemed........................................................ -- (47)
-------- --------
Change in Class A Shares........................................ 79 150
======== ========
CLASS B SHARES:
Issued.......................................................... 61 --(b)
Reinvested...................................................... -- --
Redeemed........................................................ -- --
-------- --------
Change in Class B Shares........................................ 61 --(b)
======== ========
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Amount is less than 1,000.
Continued
83
<PAGE> 556
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor are parties to an investment advisory agreement
under which the Advisor is entitled to receive an annual fee, computed daily
and paid monthly, equal to the following percentages of the Funds' average
net assets: 0.60% of the Intermediate Tax-Free Bond Fund, the Ohio Municipal
Bond Fund and the Louisiana Municipal Bond Fund; and 0.45% of the Municipal
Income Fund, the Kentucky Municipal Bond Fund, the Arizona Municipal Bond
Fund and the West Virginia Municipal Bond Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administrative agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly, at an annual rate of 0.20% on
the first $1.5 billion of Trust net assets (excluding the Investor Growth
Fund, the Investor Growth & Income Fund, the Investor Conservative Fund , and
the Investor Balanced Fund, the "Investor Funds" and the Treasury Only Money
Market Fund and the Government Money Market Fund, the "Institutional Money
Market Funds"); 0.18% on the next $0.5 billion of Trust net assets (excluding
the Investor Funds and the Institutional Money Market Funds); and 0.16% of
Trust net assets (excluding the Investor Funds and the Institutional Money
Market Funds) over $2 billion. The Advisor also serves as Sub-Administrator
to each fund of the Trust, pursuant to an agreement between the Administrator
and the Advisor. Pursuant to this agreement, the Advisor performs many of the
Administrator's duties, for which the Advisor receives a fee paid by the
Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A and Class B Shares are subject to distribution and
shareholder services plans (the "Plans") pursuant to Rule 12b-1 under the
1940 Act. As provided in the Plans, the Trust will pay the Distributor a fee
of 0.35% of the average daily net assets of Class A Shares of each of the
Funds and 1.00% of the average daily net assets of the Class B Shares of each
of the Funds. Currently, the Distributor has voluntarily agreed to limit
payments under the Plans to 0.25% and 0.90% of average daily net assets of
the Class A Shares and Class B Shares, respectively, of each Fund. Up to
0.25% of the fees payable under the Plans may be used as compensation for
shareholder services by the Distributor and/or financial institutions and
intermediaries. Fees paid under the Plans may be applied by the Distributor
toward (i) compensation for its services in connection with distribution
assistance or provision of shareholder services; or (ii) payments to
financial institutions and intermediaries such as banks (including affiliates
of the Advisor), brokers, dealers and other institutions, including the
Distributor's affiliates and subsidiaries as compensation for services or
reimbursement of expenses incurred in connection with distribution assistance
or provision of shareholder services. Fiduciary Class Shares of each Fund are
offered without distribution fees. For the period ended June 30, 1997, the
Distributor received $1,156,585 from commissions earned on sales of Class A
Shares and redemptions of Class B Shares, of which the Distributor reallowed
$1,140,301 to affiliated broker/dealers of the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
84
<PAGE> 557
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees. For the period ended June 30, 1997, fees in
the following amounts were waived (amounts in thousands):
<TABLE>
<CAPTION>
12B-1 FEES
INVESTMENT WAIVED
ADVISORY FEES ADMINISTRATION --------------------
WAIVED FEES WAIVED CLASS A CLASS B
------------- --------------- -------- --------
<S> <C> <C> <C> <C>
Intermediate Tax-Free Bond Fund............. $ 777 $-- $ 6 $ 3
Municipal Income Fund....................... 388 17 32 29
Kentucky Municipal Bond Fund................ 78 -- 7 2
Ohio Municipal Bond Fund.................... 392 2 16 12
Louisiana Municipal Bond Fund............... 394 -- 50 4
West Virginia Municipal Bond Fund........... 67 10 -- --
Arizona Municipal Bond Fund................. 126 50 -- --
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the period
ended June 30, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
PURCHASES SALES
--------- --------
<S> <C> <C>
Intermediate Tax-Free Bond Fund....................... $508,298 $286,186
Municipal Income Fund................................. 396,026 229,213
Kentucky Municipal Bond Fund.......................... 87,698 10,214
Ohio Municipal Bond Fund.............................. 64,127 9,362
Louisiana Municipal Bond Fund......................... 30,718 58,974
West Virginia Municipal Bond Fund..................... 11,420 5,670
Arizona Municipal Bond Fund........................... 14,524 20,446
</TABLE>
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as written options, futures,
structured notes and indexed securities involves risk in excess of the
amounts reflected in the Statement of Assets and Liabilities. The face or
contract amounts reflect the extent of the involvement the Funds have in the
particular class of instrument. Risks associated with these instruments
include an imperfect correlation between the movements in the price of the
instruments and the price of the underlying securities and interest rates, an
illiquid secondary market for the instruments or inability of counterparties
to perform under the terms of the contract. The Funds enter into these
contracts primarily as a means to hedge against adverse fluctuation in
securities.
7. CONCENTRATION OF CREDIT RISK:
The Kentucky, Ohio, Louisiana, Arizona and West Virginia Municipal Bond Funds
invest in primarily debt obligations issued by the respective States and
their political subdivisions, agencies and public authorities to obtain funds
for various public purposes. The Funds are more susceptible to economic and
political factors adversely affecting issuers of the state's specific
municipal securities than are municipal bond funds that are not concentrated
in these issuers to the same extent.
8. REORGANIZATION:
The Trust entered an Agreement and Plan of Reorganization ("Reorganization")
with Paragon pursuant to which all of the assets and liabilities of each
Paragon Fund transferred to a fund of the One Group in exchange for shares of
the corresponding fund of the One Group. The Paragon Louisiana Tax-Free Fund
transferred its assets
Continued
85
<PAGE> 558
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
and liabilities to the One Group Louisiana Municipal Bond Fund. The
Reorganization, which qualified as tax-free exchange for Federal income tax
purposes, was completed on March 25, 1996 following approval by shareholders
of Paragon at a special shareholder meeting. The following is a summary of
shares outstanding, net assets, net asset value per share and unrealized
appreciation immediately before and after the Reorganization (amounts in
thousands except net asset value):
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
-------------------------- --------------
PARAGON LOUISIANA LOUISIANA
LOUISIANA MUNICIPAL MUNICIPAL
TAX-FREE FUND BOND FUND BOND
------------- --------- --------------
<S> <C> <C> <C>
Shares.................................................... 18,757 -- 20,018*
Net Assets................................................ $ 200,185 -- $200,185
Net Asset Value:
Fiduciary............................................... -- $ 10.00*
Class A................................................. $ 10.67 -- 10.00*
Class B................................................. 10.70 -- 10.00*
Unrealized Appreciation................................... $ 4,349 -- $ 4,349
</TABLE>
- ------------
* Pursuant to its reorganization as a fund of the One Group, the Fund issued
additional shares at the close of business March 25, 1996 as a result of
the restatement of the net asset values of Class A Shares from $10.67 to
$10.00 and Class B Shares from $10.70 to $10.00.
9. FEDERAL TAX INFORMATION (UNAUDITED):
The accompanying table below details distributions from long-term capital
gains for the following funds for the period ended June 30, 1997 (amounts in
thousands):
<TABLE>
<CAPTION>
DISTRIBUTIONS
-------------
<S> <C>
Intermediate Tax Free Bond Fund............................................... $ 226
</TABLE>
At June 30, 1997, the following Funds have capital loss carryforwards which
are available to offset future capital gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYFORWARD EXPIRES
------------ -------
<S> <C> <C>
Municipal Income Fund................................................ 6,340 2005
Municipal Income Fund................................................ 2,195 2002
Kentucky Municipal Bond Fund......................................... 483 2004
Kentucky Municipal Bond Fund......................................... 1,316 2003
Ohio Municipal Bond Fund............................................. 217 2005
Ohio Municipal Bond Fund............................................. 1,463 2004
Ohio Municipal Bond Fund............................................. 2,319 2003
Louisiana Municipal Bond Fund........................................ 45 2005
Louisiana Municipal Bond Fund........................................ 268 2004
Louisiana Municipal Bond Fund........................................ 48 2003
Louisiana Municipal Bond Fund........................................ 281 2002
</TABLE>
Continued
86
<PAGE> 559
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occuring on the first day of the following fiscal
year. The following deferred losses will be treated as arising on the first
day of the fiscal year ended June 30, 1998 (amounts in thousands):
<TABLE>
<CAPTION>
POST-OCTOBER
CAPITAL LOSSES
--------------
<S> <C>
Ohio Municipal Bond Fund..................................................... $104
Louisiana Municipal Bond Fund................................................ 33
West Virginia Municipal Bond Fund............................................ 28
</TABLE>
The Funds designate the following exempt-interest dividends for the taxable
year ended June 30, 1997 (amounts in thousands):
<TABLE>
<CAPTION>
TAX-EXEMPT
DISTRIBUTION
-----------
<S> <C>
Intermediate Tax Free Bond Fund............................................... $15,864
Municipal Income Fund......................................................... 19,189
Kentucky Municipal Bond Fund.................................................. 3,448
Ohio Municipal Bond Fund...................................................... 6,384
Louisiana Municipal Bond Fund................................................. 8,717
West Virginia Municipal Bond Fund............................................. 1,682
Arizona Municipal Bond Fund................................................... 4,663
</TABLE>
10. CONVERSION OF COMMON TRUST FUNDS:
On January 20, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following
is a summary of shares issued, net assets converted, net asset value per
share issued and unrealized appreciation of assets acquired as of the
conversion date (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
NET ASSET
NET ASSETS VALUE PER UNREALIZED
SHARES CONVERTED SHARE ISSUED APPRECIATION
------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Intermediate Tax-Free Bond Fund...................... 16,858 $182,568 $10.83 $ 7,412
Municipal Income Fund................................ 5,680 55,269 9.73 1,784
Kentucky Municipal Bond Fund......................... 7,752 78,683 10.15 4,545
Ohio Municipal Bond Fund............................. 3,617 39,137 10.82 2,826
West Virginia Municipal Bond Fund.................... 9,118 91,179 10.00 3,886
Arizona Municipal Bond Fund.......................... 26,388 263,882 10.00 12,118
</TABLE>
Continued
87
<PAGE> 560
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
--------------------------------------------------------
FIDUCIARY
--------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 10.67 $ 10.64 $ 10.49 $ 11.15 $ 10.69
-------- -------- -------- -------- --------
Investment Activities:
Net investment income.................................... 0.54 0.52 0.54 0.52 0.53
Net realized and unrealized gains (losses) from
investments............................................ 0.27 0.04 0.15 (0.52) 0.49
-------- -------- -------- -------- --------
Total from Investment Activities....................... 0.81 0.56 0.69 0.00 1.02
-------- -------- -------- -------- --------
Distributions:
Net investment income.................................... (0.54) (0.51) (0.54) (0.53) (0.52)
In excess of net investment income....................... -- -- -- (0.01) --
Net realized gains....................................... (0.02) (0.02) -- (0.01) (0.04)
In excess of net realized gains.......................... -- -- -- (0.11) --
-------- -------- -------- -------- --------
Total Distributions.................................... (0.56) (0.53) (0.54) (0.66) (0.56)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD............................. $ 10.92 $ 10.67 $ 10.64 $ 10.49 $ 11.15
======== ======== ======== ======== ========
Total Return............................................... 7.76% 5.39% 6.75% (0.11)% 9.79%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $451,089 $217,201 $211,229 $182,611 $166,489
Ratio of expenses to average net assets.................. 0.58% 0.54% 0.53% 0.48% 0.54%
Ratio of net investment income to average net assets..... 5.05% 4.87% 5.17% 4.78% 4.93%
Ratio of expenses to average net assets*................. 0.81% 0.87% 0.88% 0.84% 0.94%
Ratio of net investment income to average net assets*.... 4.82% 4.54% 4.82% 4.42% 4.53%
Portfolio turnover (a)................................... 86.89% 111.58% 199.76% 105.98% 31.99%
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
88
<PAGE> 561
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
-------------------------------------------------
CLASS A
-------------------------------------------------
YEARS ENDED JUNE 30,
-------------------------------------------------
1997 1996 1995 1994 1993
------ ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............................. $10.67 $ 10.63 $ 10.48 $ 11.14 $10.69
------ ------- ------- ------- ------
Investment Activities:
Net investment income........................................... 0.51 0.50 0.51 0.50 0.55
Net realized and unrealized gains (losses) from investments..... 0.26 0.05 0.15 (0.52) 0.44
------ ------- ------- ------- ------
Total from Investment Activities.............................. 0.77 0.55 0.66 (0.02) 0.99
------ ------- ------- ------- ------
Distributions:
Net investment income........................................... (0.51) (0.49) (0.49) (0.52) (0.50)
In excess of net investment income.............................. -- -- (0.02) (0.01) --
Net realized gains.............................................. (0.02) (0.02) -- -- (0.04)
In excess of net realized gains................................. -- -- -- (0.11) --
------ ------- ------- ------- ------
Total Distributions........................................... (0.53) (0.51) (0.51) (0.64) (0.54)
------ ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD.................................... $10.91 $ 10.67 $ 10.63 $ 10.48 $11.14
====== ======= ======= ======= ======
Total Return (Excludes Sales Charge).............................. 7.39% 5.28% 6.49% (0.33)% 9.47%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................... $8,457 $ 6,622 $ 5,614 $ 5,556 $5,480
Ratio of expenses to average net assets......................... 0.83% 0.79% 0.78% 0.73% 0.71%
Ratio of net investment income to average net assets............ 4.75% 4.62% 4.91% 4.57% 4.77%
Ratio of expenses to average net assets*........................ 1.15% 1.22% 1.23% 1.19% 1.27%
Ratio of net investment income to average net assets*........... 4.43% 4.19% 4.46% 4.11% 4.21%
Portfolio turnover (a).......................................... 86.89% 111.58% 199.76% 105.98% 31.99%
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
89
<PAGE> 562
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
----------------------------------------
CLASS B
----------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------
1997 1996 1995 1994(a)
------ ------- ------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...................................... $10.68 $ 10.65 $ 10.50 $ 11.18
------ ------- ------- -------
Investment Activities:
Net investment income................................................... 0.45 0.43 0.46 0.17
Net realized and unrealized gains (losses) from investments............. 0.27 0.04 0.14 (0.67)
------ ------- ------- ------
Total from Investment Activities...................................... 0.72 0.47 0.60 (0.50)
------ ------- ------- ------
Distributions:
Net investment income................................................... (0.45) (0.42) (0.45) (0.17)
Net realized gains...................................................... (0.02) (0.02) -- --
In excess of net realized gains......................................... -- -- -- (0.01)
------ ------- ------- -------
Total Distributions................................................... (0.47) (0.44) (0.45) (0.18)
------ ------- ------- -------
NET ASSET VALUE, END OF PERIOD............................................ $10.93 $ 10.68 $ 10.65 $ 10.50
====== ======= ======= =======
Total Return (Excludes Sales Charge)...................................... 6.82% 4.48% 5.89% (4.48)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................... $3,307 $ 2,439 $ 1,116 $ 549
Ratio of expenses to average net assets................................. 1.47% 1.44% 1.43% 1.40% (c)
Ratio of net investment income to average net assets.................... 4.09% 3.97% 4.29% 4.08% (c)
Ratio of expenses to average net assets*................................ 1.78% 1.87% 1.88% 1.85% (c)
Ratio of net investment income to average net assets*................... 3.78% 3.54% 3.84% 3.63% (c)
Portfolio turnover (d).................................................. 86.89% 111.58% 199.76% 105.98%
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
90
<PAGE> 563
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
--------------------------------------------------------
FIDUCIARY
--------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993(a)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.66 $ 9.69 $ 9.66 $ 10.11 $ 10.00
-------- -------- -------- -------- -------
Investment Activities:
Net investment income..................................... 0.53 0.56 0.57 0.56 0.19
Net realized and unrealized gains (losses) from
investments............................................. 0.18 (0.03) 0.03 (0.42) 0.11
-------- -------- -------- -------- -------
Total from Investment Activities........................ 0.71 0.53 0.60 0.14 0.30
-------- -------- -------- -------- -------
Distributions:
Net investment income..................................... (0.53) (0.56) (0.57) (0.56) (0.19)
In excess of net realized gains........................... -- -- -- (0.03) --
-------- -------- -------- -------- -------
Total Distributions..................................... (0.53) (0.56) (0.57) (0.59) (0.19)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 9.84 $ 9.66 $ 9.69 $ 9.66 $ 10.11
======== ======== ======== ======== =======
Total Return................................................ 7.49% 5.54% 6.46% 1.36% 5.18% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $408,577 $241,115 $185,916 $152,763 $40,777
Ratio of expenses to average net assets................... 0.57% 0.56% 0.56% 0.54% 0.54% (b)
Ratio of net investment income to average net assets...... 5.38% 5.70% 6.02% 5.61% 5.66% (b)
Ratio of expenses to average net assets*.................. 0.68% 0.76% 0.74% 0.71% 1.01% (b)
Ratio of net investment income to average net assets*..... 5.27% 5.50% 5.84% 5.44% 5.19% (b)
Portfolio turnover (c).................................... 62.83% 83.17% 66.02% 101.48% 66.12%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on February 9, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
91
<PAGE> 564
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
----------------------------------------------------
CLASS A
----------------------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 9.69 $ 9.72 $ 9.67 $ 10.12 $10.06
------- ------- ------- ------- -------
Investment Activities:
Net investment income......................................... 0.51 0.55 0.55 0.55 0.19
Net realized and unrealized gains (losses) from investments... 0.18 (0.04) 0.05 (0.43) 0.05
------- ------- ------- ------- -------
Total from Investment Activities............................ 0.69 0.51 0.60 0.12 0.24
------- ------- ------- ------- -------
Distributions:
Net investment income......................................... (0.51) (0.54) (0.55) (0.54) (0.18)
In excess of net realized gains............................... -- -- -- (0.03) --
------- ------- ------- ------- -------
Total Distributions......................................... (0.51) (0.54) (0.55) (0.57) (0.18)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.................................. $ 9.87 $ 9.69 $ 9.72 $ 9.67 $10.12
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)............................ 7.24% 5.35% 6.21% 1.34% 6.86%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................. $41,829 $25,787 $11,462 $10,725 $4,106
Ratio of expenses to average net assets....................... 0.82% 0.81% 0.81% 0.79% 0.80%(b)
Ratio of net investment income to average net assets.......... 5.13% 5.45% 5.76% 5.44% 5.71%(b)
Ratio of expenses to average net assets*...................... 1.03% 1.11% 1.09% 1.06% 1.36%(b)
Ratio of net investment income to average net assets*......... 4.92% 5.15% 5.48% 5.17% 5.15%(b)
Portfolio turnover (c)........................................ 62.83% 83.17% 66.02% 101.48% 66.12%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on February 23, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
92
<PAGE> 565
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
----------------------------------------
CLASS B
----------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------
1997 1996 1995 1994(a)
------- ------- ------ --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...................................... $ 9.66 $ 9.69 $ 9.62 $10.10
------- ------- ------ -------
Investment Activities:
Net investment income................................................... 0.44 0.47 0.49 0.24
Net realized and unrealized gains (losses) from investments............. 0.18 (0.03) 0.07 (0.48)
------- ------- ------ -------
Total from Investment Activities...................................... 0.62 0.44 0.56 (0.24)
------- ------- ------ -------
Distributions:
Net investment income................................................... (0.44) (0.47) (0.49) (0.24)
------- ------- ------ -------
Total Distributions................................................... (0.44) (0.47) (0.49) (0.24)
------- ------- ------ -------
NET ASSET VALUE, END OF PERIOD............................................ $ 9.84 $ 9.66 $ 9.69 $ 9.62
======= ======= ====== =======
Total Return (Excludes Sales Charge)...................................... 6.55% 4.65% 5.58% (1.98)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................... $36,258 $23,204 $8,326 $4,855
Ratio of expenses to average net assets................................. 1.47% 1.46% 1.46% 1.41%(c)
Ratio of net investment income to average net assets.................... 4.48% 4.80% 5.14% 4.95%(c)
Ratio of expenses to average net assets*................................ 1.67% 1.76% 1.74% 1.62%(c)
Ratio of net investment income to average net assets*................... 4.28% 4.50% 4.86% 4.74%(c)
Portfolio turnover (d).................................................. 62.83% 83.17% 66.02% 101.48%
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
93
<PAGE> 566
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The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KENTUCKY MUNICIPAL BOND FUND
--------------------------------------------------------------------
FIDUCIARY
-----------------------------------
YEAR YEAR JANUARY 20, FEBRUARY 1, MARCH 12,
ENDED ENDED 1995 TO 1994, TO 1993, TO
JUNE 30, JUNE 30, JUNE 30, JANUARY 19, JANUARY 31,
1997 1996 1995(a) 1995(b) 1994(b)(c)
-------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 10.04 $ 9.92 $ 9.49 $ 10.45 $ 10.00
Investment Activities:
Net investment income.......................... 0.50 0.50 0.20 0.41 0.36
Net realized and unrealized gains (losses) from
investments.................................. 0.16 0.12 0.43 (0.95) 0.43
-------- ------- ------- -------- -------
Total from Investment Activities............. 0.66 0.62 0.63 (0.54) 0.79
-------- ------- ------- -------- -------
Distributions:
Net investment income.......................... (0.50) (0.50) (0.20) (0.42) (0.34)
-------- ------- ------- -------- -------
Total Distributions.......................... (0.50) (0.50) (0.20) (0.42) (0.34)
-------- ------- ------- -------- -------
NET ASSET VALUE, END OF PERIOD................... $ 10.20 $ 10.04 $ 9.92 $ 9.49 $ 10.45
======== ======= ======= ======== =======
Total Return..................................... 6.74% 6.35% 6.56%(d) (5.17)%(d) 8.05%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).............. $116,830 $30,300 $32,520 $ 41,953 $64,663
Ratio of expenses to average net assets........ 0.59% 0.68% 0.65%(e) 1.03%(e) 0.70%(e)
Ratio of net investment income to average
net assets................................... 5.12% 4.60% 4.70%(e) 4.27%(e) 4.19%(e)
Ratio of expenses to average net assets*....... 0.72% 1.02% 0.97%(e) 1.05%(e) 0.91%(e)
Ratio of net investment income to average
net assets*.................................. 4.99% 4.26% 4.38%(e) 4.25%(e) 3.98%(e)
Portfolio turnover (f)......................... 13.30% 16.78% 19.75% 10.00% 5.00%
</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) Period from date reorganized as a fund of The One Group.
(b) Prior to reorganizing as a fund of The One Group, the Fund offered only one
class of shares.
(c) Period from commencement of operations.
(d) Not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
See notes to financial statements.
94
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KENTUCKY MUNICIPAL BOND FUND
-----------------------------------
CLASS A
-----------------------------------
YEAR YEAR JANUARY 20,
ENDED ENDED 1995 TO
JUNE 30, JUNE 30, JUNE 30,
1997 1996 1995(a)
-------- -------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......................................... $10.05 $ 9.93 $ 9.49
------ ------ -------
Investment Activities:
Net investment income....................................................... 0.48 0.44 0.19
Net realized and unrealized gains from investments.......................... 0.16 0.12 0.44
------ ------ -------
Total from Investment Activities.......................................... 0.64 0.56 0.63
------ ------ -------
Distributions:
Net investment income....................................................... (0.48) (0.44) (0.19)
------ ------ -------
Total Distributions....................................................... (0.48) (0.44) (0.19)
------ ------ -------
NET ASSET VALUE, END OF PERIOD................................................ $10.21 $10.05 $ 9.93
====== ====== =======
Total Return (Excludes Sales Charge).......................................... 6.46% 5.70% 5.66%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................................... $5,554 $8,178 $ 8,818
Ratio of expenses to average net assets..................................... 0.84% 0.93% 0.90%(c)
Ratio of net investment income to average net assets........................ 4.66% 4.35% 4.44%(c)
Ratio of expenses to average net assets*.................................... 1.04% 1.37% 1.33%(c)
Ratio of net investment income to average net assets*....................... 4.46% 3.91% 4.01%(c)
Portfolio turnover (d)...................................................... 13.30% 16.78% 19.75%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
95
<PAGE> 568
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The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KENTUCKY MUNICIPAL BOND FUND
-----------------------------------
CLASS B
-----------------------------------
YEAR YEAR MARCH 16,
ENDED ENDED 1995 TO
JUNE 30, JUNE 30, JUNE 30,
1997 1996 1995(a)
-------- -------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......................................... $ 9.99 $ 9.87 $ 9.75
------ ------ -------
Investment Activities:
Net investment income....................................................... 0.41 0.38 0.14
Net realized and unrealized gains from investments.......................... 0.16 0.13 0.12
------ ------ -------
Total from Investment Activities.......................................... 0.57 0.51 0.26
------ ------ -------
Distributions:
Net investment income....................................................... (0.41) (0.39) (0.14)
------ ------ -------
Total Distributions....................................................... (0.41) (0.39) (0.14)
------ ------ -------
NET ASSET VALUE, END OF PERIOD................................................ $10.15 $ 9.99 $ 9.87
====== ====== =======
Total Return (Excludes Sales Charge).......................................... 5.81% 5.16% 2.63%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................................... $2,399 $1,457 $ 79
Ratio of expenses to average net assets..................................... 1.47% 1.58% 1.58%(c)
Ratio of net investment income to average net assets........................ 4.05% 3.70% 3.89%(c)
Ratio of expenses to average net assets*.................................... 1.70% 2.02% 2.21%(c)
Ratio of net investment income to average net assets*....................... 3.82% 3.26% 3.25%(c)
Portfolio turnover (d)...................................................... 13.30% 16.78% 19.75%
</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 Shares commenced offering on March 16, 1995.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
96
<PAGE> 569
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
----------------------------------------------------
FIDUCIARY
----------------------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------------------
1997 1996 1995 1994 1993
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.......................................... $ 10.69 $ 10.65 $ 10.58 $ 11.11 $ 10.48
-------- ------- ------- ------- -------
Investment Activities:
Net investment income........................................ 0.56 0.56 0.55 0.51 0.54
Net realized and unrealized gains (losses) from
investments................................................ 0.19 0.04 0.07 (0.50) 0.62
-------- ------- ------- ------- -------
Total from Investment Activities........................... 0.75 0.60 0.62 0.01 1.16
-------- ------- ------- ------- -------
Distributions:
Net investment income........................................ (0.56) (0.56) (0.55) (0.52) (0.53)
In excess of net realized gains.............................. -- -- -- (0.02) --
-------- ------- ------- ------- -------
Total Distributions........................................ (0.56) (0.56) (0.55) (0.54) (0.53)
-------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD................................................ $ 10.88 $ 10.69 $ 10.65 $ 10.58 $ 11.11
======== ======= ======= ======= =======
Total Return................................................... 7.22% 5.69% 6.07% 0.07% 11.43%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................ $133,172 $80,611 $79,993 $93,261 $74,792
Ratio of expenses to average net assets...................... 0.54% 0.57% 0.58% 0.53% 0.55%
Ratio of net investment income to average net assets......... 5.24% 5.17% 5.29% 4.76% 5.14%
Ratio of expenses to average net assets*..................... 0.84% 0.95% 0.91% 0.86% 0.94%
Ratio of net investment income to average net assets*........ 4.94% 4.79% 4.96% 4.43% 4.75%
Portfolio turnover (a)....................................... 7.45% 24.61% 77.69% 16.77% 26.67%
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
97
<PAGE> 570
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The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
---------------------------------------------------
CLASS A
---------------------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................... $ 10.72 $ 10.68 $ 10.61 $ 11.13 $ 10.48
------- ------- ------- ------- -------
Investment Activities:
Net investment income......................................... 0.54 0.55 0.53 0.50 0.52
Net realized and unrealized gains (losses) from investments... 0.19 0.03 0.07 (0.48) 0.64
------- ------- ------- ------- -------
Total from Investment Activities............................ 0.73 0.58 0.60 0.02 1.16
------- ------- ------- ------- -------
Distributions:
Net investment income......................................... (0.54) (0.54) (0.51) (0.50) (0.51)
In excess of net investment income............................ -- -- (0.02) (0.02) --
In excess of net realized gains............................... -- -- -- (0.02) --
------- ------- ------- ------- -------
Total Distributions......................................... (0.54) (0.54) (0.53) (0.54) (0.51)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD................................................. $ 10.91 $ 10.72 $ 10.68 $ 10.61 $ 11.13
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)............................ 6.95% 5.44% 5.79% (0.05)% 11.40%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................. $16,114 $16,507 $12,006 $14,883 $13,092
Ratio of expenses to average net assets....................... 0.79% 0.82% 0.82% 0.78% 0.77%
Ratio of net investment income to average net assets.......... 4.96% 4.92% 5.01% 4.63% 4.85%
Ratio of expenses to average net assets*...................... 1.19% 1.30% 1.25% 1.21% 1.25%
Ratio of net investment income to average net assets*......... 4.56% 4.44% 4.58% 4.20% 4.37%
Portfolio turnover (a)........................................ 7.45% 24.61% 77.69% 16.77% 26.67%
</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) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
98
<PAGE> 571
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The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
--------------------------------------
CLASS B
--------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------
1997 1996 1995 1994(a)
------- ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................................... $ 10.79 $10.75 $10.68 $11.31
------- ------ ------ ------
Investment Activities:
Net investment income..................................................... 0.47 0.48 0.43 0.17
Net realized and unrealized gains (losses) from investments............... 0.19 0.03 0.07 (0.62)
------- ------ ------ ------
Total from Investment Activities........................................ 0.66 0.51 0.50 (0.45)
------- ------ ------ ------
Distributions:
Net investment income..................................................... (0.47) (0.47) (0.43) (0.17)
In excess of net investment income........................................ -- -- -- (0.01)
------- ------ ------ ------
Total Distributions..................................................... (0.47) (0.47) (0.43) (0.18)
------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD............................................................. $ 10.98 $10.79 $10.75 $10.68
======= ====== ====== ======
Total Return (Excludes Sales Charge)........................................ 6.26% 4.79% 5.17% (4.02)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................................... $14,316 $8,854 $3,209 $2,043
Ratio of expenses to average net assets................................... 1.44% 1.47% 1.48% 1.28% (c)
Ratio of net investment income to average net assets...................... 4.33% 4.27% 4.40% 4.23% (c)
Ratio of expenses to average net assets*.................................. 1.84% 1.95% 1.91% 1.68% (c)
Ratio of net investment income to average net assets*..................... 3.93% 3.79% 3.97% 3.83% (c)
Portfolio turnover (d).................................................... 7.45% 24.61% 77.69% 16.77%
</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 Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
99
<PAGE> 572
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The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOUISIANA MUNICIPAL BOND FUND
-------------------------------
FIDUCIARY
-------------------------------
YEAR MARCH 26, 1996
ENDED THROUGH
JUNE 30, JUNE 30,
1997 1996(a)
----------- ----------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................................... $ 9.93 $ 10.00
--------- --------
Investment Activities:
Net investment income......................................................... 0.49 0.13
Net realized and unrealized gains (losses) from investments................... 0.17 (0.07)
--------- --------
Total from Investment Activities............................................ 0.66 0.06
--------- --------
Distributions:
Net investment income......................................................... (0.49) (0.13)
--------- --------
Total Distributions......................................................... (0.49) (0.13)
--------- --------
NET ASSET VALUE,
END OF PERIOD................................................................. $ 10.10 $ 9.93
========= ========
Total Return.................................................................... 6.81% 0.90%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................................. $ 113,338 $136,041
Ratio of expenses to average net assets....................................... 0.62% 0.71%(d)
Ratio of net investment income to average net assets.......................... 4.91% 4.76%(d)
Ratio of expenses to average net assets*...................................... 0.84% 0.86%(d)
Ratio of net investment income to average net assets*......................... 4.69% 4.61%(d)
Portfolio turnover (e)........................................................ 17.39% 16.72%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Not annualized.
(c) Represents total return for Class A Shares from December 1, 1995 through
March 25, 1996 plus total return for Fiduciary Shares for the period March
26, 1996 through June 30, 1996.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
100
<PAGE> 573
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOUISIANA MUNICIPAL BOND FUND
------------------------------------------------------------------------
CLASS A
------------------------------------------------------------------------
YEAR SEVEN MONTHS
ENDED ENDED YEARS ENDED NOVEMBER 30,
JUNE 30, JUNE 30, --------------------------------------------
1997 1996(a) 1995 1994 1993 1992
-------- ------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................ $ 9.93 $ 10.09 $ 9.38 $ 10.27 $ 9.92 $ 9.73
------- -------- -------- -------- -------- --------
Investment Activities:
Net investment income...................... 0.47 0.24 0.50 0.49 0.52 0.55
Net realized and unrealized gains (losses)
from investments......................... 0.17 (0.16) 0.71 (0.79) 0.42 0.26
------- -------- -------- -------- -------- --------
Total from Investment Activities......... 0.64 0.08 1.21 (0.30) 0.94 0.82
------- -------- -------- -------- -------- --------
Distributions:
Net investment income...................... (0.47) (0.24) (0.50) (0.49) (0.52) (0.55)
Net realized gains......................... -- -- -- (0.10) (0.07) (0.07)
------- -------- -------- -------- -------- --------
Total Distributions...................... (0.47) (0.24) (0.50) (0.59) (0.59) (0.62)
------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD.............................. $ 10.10 $ 9.93 $ 10.09 $ 9.38 $ 10.27 $ 9.92
======= ======== ======== ======== ======== ========
Total Return (Excludes Sales Charge)......... 6.55% 0.84%(b) 13.11% (2.97)% 9.65% 8.64%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......... $48,498 $ 53,479 $206,119 $196,820 $196,534 $135,692
Ratio of expenses to average net assets.... 0.87% 0.69%(c) 0.62% 0.65% 0.62% 0.58%
Ratio of net investment income to average
net assets............................... 4.66% 4.71%(c) 5.07% 4.97% 5.07% 5.70%
Ratio of expenses to average net assets*... 1.19% 0.86%(c) 0.77% 0.80% 0.78% 0.83%
Ratio of net investment income to average
net assets*.............................. 4.34% 4.54%(c) 4.92% 4.82% 4.91% 5.45%
Portfolio turnover (d)..................... 17.39% 16.72% 28.00% 24.00% 25.00% 32.00%
</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) Upon reorganizing as a fund of The One Group, the Paragon Louisiana Tax-Free
Fund became the Louisiana Municipal Bond Fund. Financial highlights for the
periods prior to March 26, 1996 represents the Paragon Louisiana Tax-Free
Fund. The per share data for the periods prior to March 26, 1996 have been
restated to reflect the impact of restatement of net asset value from $10.67
to $10.00 effective March 26, 1996.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
101
<PAGE> 574
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOUISIANA MUNICIPAL BOND FUND
---------------------------------------------------------
CLASS B
---------------------------------------------------------
YEAR SEVEN MONTHS YEAR SEPTEMBER 16,
ENDED ENDED ENDED 1994 THROUGH
JUNE 30, JUNE 30, NOVEMBER 30, NOVEMBER 30,
1997 1996(a) 1995 1994(b)
-------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................... $ 9.93 $10.09 $ 9.36 $ 9.73
------ ------ ------ -------
Investment Activities:
Net investment income................................. 0.40 0.21 0.42 0.08
Net realized and unrealized gains (losses)
from investments.................................... 0.17 (0.16) 0.73 (0.37)
------ ------ ------ -------
Total from Investment Activities.................... 0.57 0.05 1.15 (0.29)
------ ------ ------ -------
Distributions:
Net investment income................................. (0.40) (0.21) (0.42) (0.08)
------ ------ ------ -------
Total Distributions................................. (0.40) (0.21) (0.42) (0.08)
------ ------ ------ -------
NET ASSET VALUE,
END OF PERIOD......................................... $10.10 $ 9.93 $10.09 $ 9.36
====== ====== ====== =======
Total Return (Excludes Sales Charge).................... 5.87% 0.48%(c) 12.52% 2.94%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..................... $3,835 $3,223 $2,115 $ 204
Ratio of expenses to average net assets............... 1.51% 1.50%(d) 1.37% 1.41%(d)
Ratio of net investment income to average net
assets.............................................. 4.02% 3.98%(d) 4.27% 4.45%(d)
Ratio of expenses to average net assets*.............. 1.85% 1.70%(d) 1.52% 1.56%(d)
Ratio of net investment income to average net
assets*............................................. 3.68% 3.78%(d) 4.12% 4.30%(d)
Portfolio turnover (e)................................ 17.39% 16.72% 28.00% 24.00%
</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) Upon reorganizing as a fund of The One Group, the Paragon Louisiana Tax-Free
Fund became the Louisiana Municipal Bond Fund. Financial highlights for the
periods prior to March 26, 1996 represents the Paragon Louisiana Tax-Free
Fund. The per share data for the periods prior to March 26, 1996 have been
restated to reflect the impact of restatement of net asset value from $10.70
to $10.00 effective March 26, 1996.
(b) Class B Shares commenced offering on September 16, 1994.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
102
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
WEST VIRGINIA
MUNICIPAL BOND FUND
-------------------
FIDUCIARY
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(a)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
-------
Investment Activities:
Net investment income.................................................................. 0.22
Net realized and unrealized gains from investments..................................... 0.06
-------
Total from Investment Activities..................................................... 0.28
-------
Distributions:
Net investment income.................................................................. (0.22)
-------
Total Distributions.................................................................. (0.22)
-------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 10.06
=======
Total Return............................................................................. 2.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $96,270
Ratio of expenses to average net assets................................................ 0.59%(c)
Ratio of net investment income to average net assets................................... 5.04%(c)
Ratio of expenses to average net assets*............................................... 0.67%(c)
Ratio of net investment income to average net assets*.................................. 4.96%(c)
Portfolio turnover (d)................................................................. 6.21%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
103
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
WEST VIRGINIA
MUNICIPAL BOND FUND
-------------------
CLASS A
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(a)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
-------
Investment Activities:
Net investment income.................................................................. 0.16
Net realized and unrealized gains from investments..................................... 0.15
-------
Total from Investment Activities..................................................... 0.31
-------
Distributions:
Net investment income.................................................................. (0.16)
-------
Total Distributions.................................................................. (0.16)
-------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 10.15
=======
Total Return (Excludes Sales Charge)..................................................... 3.08%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $ 808
Ratio of expenses to average net assets................................................ 0.84%(c)
Ratio of net investment income to average net assets................................... 4.94%(c)
Ratio of expenses to average net assets*............................................... 0.97%(c)
Ratio of net investment income to average net assets*.................................. 4.81%(c)
Portfolio turnover (d)................................................................. 6.21%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
104
<PAGE> 577
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
WEST VIRGINIA
MUNICIPAL BOND FUND
-------------------
CLASS B
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(a)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
-------
Investment Activities:
Net investment income.................................................................. 0.14
Net realized and unrealized gains from investments..................................... 0.12
-------
Total from Investment Activities..................................................... 0.26
-------
Distributions:
Net investment income.................................................................. (0.14)
-------
Total Distributions.................................................................. (0.14)
-------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 10.12
=======
Total Return (Excludes Sales Charge)..................................................... 2.64%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $ 614
Ratio of expenses to average net assets................................................ 1.49%(c)
Ratio of net investment income to average net assets................................... 4.08%(c)
Ratio of expenses to average net assets*............................................... 1.62%(c)
Ratio of net investment income to average net assets*.................................. 3.95%(c)
Portfolio turnover (d)................................................................. 6.21%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
105
<PAGE> 578
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ARIZONA
MUNICIPAL BOND FUND
-------------------
FIDUCIARY
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(a)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
---------
Investment Activities:
Net investment income.................................................................. 0.23
Net realized and unrealized gains from investments..................................... 0.06
---------
Total from Investment Activities..................................................... 0.29
---------
Distributions:
Net investment income.................................................................. (0.23)
---------
Total Distributions.................................................................. (0.23)
---------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 10.06
=========
Total Return............................................................................. 2.90%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $ 255,755
Ratio of expenses to average net assets................................................ 0.59%(c)
Ratio of net investment income to average net assets................................... 5.09%(c)
Ratio of expenses to average net assets*............................................... 0.66%(c)
Ratio of net investment income to average net assets*.................................. 5.02%(c)
Portfolio turnover (d)................................................................. 5.66%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
106
<PAGE> 579
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ARIZONA
MUNICIPAL BOND FUND
-------------------
CLASS A
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(A)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
-------
Investment Activities:
Net investment income.................................................................. 0.15
Net realized and unrealized gains (losses) from investments............................ (0.01)
-------
Total from Investment Activities..................................................... 0.14
-------
Distributions:
Net investment income.................................................................. (0.15)
-------
Total Distributions.................................................................. (0.15)
-------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 9.99
=======
Total Return (Excludes Sales Charge)..................................................... 1.40%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $ 1,500
Ratio of expenses to average net assets................................................ 0.85%(c)
Ratio of net investment income to average net assets................................... 4.90%(c)
Ratio of expenses to average net assets*............................................... 0.96%(c)
Ratio of net investment income to average net assets*.................................. 4.79%(c)
Portfolio turnover (d)................................................................. 5.66%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
107
<PAGE> 580
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ARIZONA
MUNICIPAL BOND FUND
-------------------
CLASS B
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(a)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
-------
Investment Activities:
Net realized and unrealized gains from investments..................................... 0.09
-------
Total from Investment Activities..................................................... 0.09
-------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 10.09
=======
Total Return (Excludes Sales Charge)..................................................... 0.90%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $ --(c)
Ratio of expenses to average net assets................................................ --(d)
Ratio of net investment income to average net assets................................... --(d)
Ratio of expenses to average net assets*............................................... --(d)
Ratio of net investment income to average net assets*.................................. --(d)
Portfolio turnover (e)................................................................. 5.66%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Amount is less than $1,000.
(d) Since net assets are less than $1,000, ratios have not been presented.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
108
<PAGE> 581
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
Intermediate Tax-Free Bond Fund, the Municipal Income Fund , the Kentucky
Municipal Bond Fund, the Ohio Municipal Bond Fund, the Louisiana Municipal Bond
Fund, the West Virginia Municipal Bond Fund and the Arizona Municipal Bond Fund
(seven series of The One Group Family of Mutual Funds), including the schedules
of portfolio investments, as of June 30, 1997, and the related statements of
operations, statements of changes in net assets and the financial highlights for
each period presented except as noted in the next paragraph. These financial
statements and financial highlights are the responsibility of The One Group
Family of Mutual Funds' management. Our responsibility is to express an opinion
on these financial statements and the financial highlights based on our audits.
The Kentucky Municipal Bond Fund's financial highlights for the period from
February 1, 1994 to January 19, 1995 and the period from March 12, 1993
(commencement of operations) to January 31, 1994 were audited by other auditors
whose report dated April 6, 1995 expressed an unqualified opinion on those
financial statements and financial highlights. The Louisiana Municipal Bond
Fund's statement of changes in net assets for the year ended November 30, 1995
and the financial highlights for each of the four years in the period ended
November 30, 1995 were audited by other auditors, whose report dated January 19,
1996 expressed an unqualified opinion on those financial statements and
financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above, except as noted in the second paragraph present fairly, in all material
respects, the financial position of the Intermediate Tax-Free Bond Fund, the
Municipal Income Fund, the Kentucky Municipal Bond Fund, the Ohio Municipal Bond
Fund, the Louisiana Municipal Bond Fund, the West Virginia Municipal Bond Fund
and the Arizona Municipal Bond Fund as of June 30, 1997, the results of their
operations, the changes in their net assets and the financial highlights for the
periods indicated herein, in conformity with generally accepted accounting
principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
109
<PAGE> 582
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
U.S. Treasury Securities Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (21.4%):
U.S. Treasury Bills (3.7%):
$ 50,000 11/20/97 (b)........................ $ 48,959
55,000 3/5/98 (b).......................... 52,977
---------
101,936
---------
U.S. Treasury Notes (17.7%):
50,000 5.88%, 9/2/97 (b)................... 50,014
75,000 5.88%, 9/2/97....................... 75,057
25,000 5.75%, 9/30/97 (b).................. 25,001
25,000 8.75%, 10/15/97..................... 25,230
25,000 5.63%, 10/31/97 (b)................. 25,013
165,000 7.38%, 11/15/97 (b)................. 166,053
75,000 6.00%, 11/30/97 (b)................. 75,127
50,000 6.00%, 12/31/97 (b)................. 50,068
---------
491,563
---------
Total U.S. Treasury Obligations 593,499
---------
REPURCHASE AGREEMENTS (78.8%):
112,000 Aubrey G. Lanston & Co., 5.90%,
7/1/97 (Collateralized by $116,678
various U.S. Treasury Securities,
0.00% - 5.50%, 12/4/97 - 2/28/99,
market value - $114,242).......... 112,000
100,000 Barclays De Zoette Wedd, 5.90%,
7/1/97 (Collateralized by $70,382
various U.S. Treasury Securities,
8.75% - 11.25%, 2/15/15 - 5/15/17,
market-value $102,001)............ 100,000
100,000 CIBC/Wood Gundy, 5.95%, 7/1/97
(Collateralized by $100,000
various U.S. Treasury Notes,
11.13% - 12.50%,
8/15/03 - 8/15/14, market
value - $103,207)................. 100,000
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
REPURCHASE AGREEMENTS, CONTINUED:
$ 675,000 Deutsche, Morgan, Grenfell, 5.90%,
7/1/97 (Collateralized by $679,813
various U.S. Treasury Securities,
0.00% - 12.00%, 2/15/98 - 2/15/20,
market value - $688,501).......... $ 675,000
100,000 Donaldson, Lufkin & Jenerette,
5.90%, 7/1/97 (Collateralized by
$105,411 U.S. Treasury Notes,
5.88%, 11/15/05, market
value - $102,000)................. 100,000
105,000 Goldman Sachs, 5.88%, 7/1/97
(Collateralized by $105,162
various U.S. Treasury Securities,
6.63%, 5/15/07 - 2/15/27, market
value - $107,101)................. 105,000
113,989 HSBC, 5.90%, 7/1/97 (Collateralized
by $112,125 various U.S. Treasury
Notes, 5.50% - 8.50%,
7/15/97 - 5/15/07, market
value - $116,274)................. 113,989
675,000 J. P. Morgan & Co., Inc., 6.00%,
7/1/97 (Collateralized by
$1,061,927 various U.S. Treasury
Securities, 0.00% - 8.13%,
4/30/01 - 8/15/23, market
value - $688,500)................. 675,000
100,000 Lehman Brothers Holdings, Inc.,
6.00%, 7/1/97 (Collateralized by
$175,617 various U.S. Treasury
Securities, 0.00% - 11.75%,
11/15/97 - 11/15/14, market
value - $102,001)................. 100,000
105,000 Prudential Securities, Inc., 5.90%,
7/1/97 (Collateralized by cash in
the amount of $105,000)........... 105,000
---------
Total Repurchase Agreements 2,185,989
---------
Total (Amortized Cost--$2,779,488) (a) $2,779,488
=========
</TABLE>
- ------------
Percentages indicated are based on net assets of $2,773,589.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
(b) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
8
<PAGE> 583
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Prime Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
COMMERCIAL PAPER (65.9%):
Automotive (5.2%):
$ 43,885 American Honda Finance Corp., 5.63%,
7/28/97........................... $ 43,700
42,000 General Motors Acceptance Corp.,
5.42%, 7/22/97.................... 41,867
41,210 General Motors Acceptance Corp.,
5.43%, 7/30/97.................... 41,030
25,000 General Motors Acceptance Corp.,
5.86%, 10/10/97................... 24,589
---------
151,186
---------
Banking (8.1%):
50,000 Banco Nacional de Comercio Exterior,
S.N.C., 5.55%, 9/17/97............ 49,399
25,000 Banco Nacional de Comercio Exterior,
S.N.C., 5.64%, 12/1/97............ 24,401
25,000 Banco Rio de la Plata S.A., 5.44%,
10/27/97.......................... 24,554
38,000 Banco Rio de la Plata S.A., 5.36%,
10/31/97.......................... 37,310
50,000 Bankers Trust New York Corp., 5.42%,
7/15/97........................... 49,894
25,000 Bankers Trust New York Corp., 6.11%,
3/25/98........................... 24,993
22,500 Galicia Funding Corp., 5.58%,
9/16/97........................... 22,231
---------
232,782
---------
Brokerage Services (3.9%):
50,000 Lehman Brothers Holdings, Inc.,
5.64%, 7/9/97..................... 49,938
19,991 Sumitomo Bank Capital Markets,
5.68%, 7/14/97.................... 19,950
42,000 Sumitomo Bank Capital Markets,
5.68%, 7/18/97.................... 41,887
---------
111,775
---------
Computer Software (4.3%):
13,000 CSC Enterprises, 5.57%, 7/7/97...... 12,988
30,500 CSC Enterprises, 5.65%, 7/11/97..... 30,452
23,500 CSC Enterprises, 5.63%, 7/21/97..... 23,426
30,000 CSC Enterprises, 5.61%, 8/12/97..... 29,804
15,000 CSC Enterprises, 5.60%, 8/19/97..... 14,886
13,550 CSC Enterprises, 5.62%, 9/11/97..... 13,398
---------
124,954
---------
Construction (2.5%):
25,000 Cemex, S.A. de C.V., 5.65%,
8/6/97............................ 24,859
15,000 Cemex, S.A. de C.V., 5.59%,
8/19/97........................... 14,886
14,000 Cemex, S.A. de C.V., 5.59%,
8/20/97........................... 13,891
20,000 Cemex, S.A. de C.V., 5.59%,
8/21/97........................... 19,842
---------
73,478
---------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
COMMERCIAL PAPER, CONTINUED:
Financial Services (25.3%):
$ 18,413 Banner Receivables Corp., 5.69%,
7/2/97............................ $ 18,410
46,297 Banner Receivables Corp., 5.68%,
8/4/97............................ 46,049
45,797 Banner Receivables Corp., 5.75%,
8/14/97........................... 45,475
32,499 Banner Receivables Corp., 5.68%,
9/5/97............................ 32,161
50,000 Broadway Capital, 5.73%, 7/31/97.... 49,761
33,206 Broadway Capital, 5.72%, 8/5/97..... 33,021
31,765 Broadway Capital, 5.67%, 9/2/97..... 31,450
50,000 Corporate Receivables Corp., 5.62%,
7/3/97............................ 49,984
50,000 CXC, Inc., 5.62%, 7/8/97............ 49,945
30,375 Falcon Asset Securitization Corp.,
5.62%, 7/21/97.................... 30,280
40,755 Gotham Funding Corp., 5.43%,
7/17/97........................... 40,657
25,000 Gotham Funding Corp., 5.72%,
7/18/97........................... 24,932
25,000 Gotham Funding Corp., 5.47%,
7/24/97........................... 24,913
37,553 Gotham Funding Corp., 5.70%,
8/1/97............................ 37,369
25,000 Gotham Funding Corp., 5.67%,
8/5/97............................ 24,862
65,000 Old Line Funding Corp., 5.62%,
7/1/97............................ 64,999
26,500 Old Line Funding Corp., 5.67%,
7/14/97........................... 26,446
25,000 WCP Funding, Inc., 5.66%, 7/2/97.... 24,996
25,000 WCP Funding, Inc., 5.63%, 7/7/97.... 24,977
25,000 WCP Funding, Inc., 5.63%, 7/10/97... 24,965
25,000 WCP Funding, Inc., 5.58%, 7/25/97... 24,907
---------
730,559
---------
Gas & Electric Utility (2.8%):
32,382 AES Shady Point, Inc., 5.60%,
7/18/97........................... 32,296
20,991 Cogentrix of Richmond, Inc., 5.64%,
7/10/97........................... 20,961
27,762 Cogentrix of Richmond, Inc., 5.65%,
7/16/97........................... 27,697
---------
80,954
---------
Industrial Goods & Services (2.1%):
12,000 Akzo Nobel, Inc., 5.63%, 8/7/97..... 11,931
10,000 Akzo Nobel, Inc., 5.62%, 8/29/97.... 9,908
10,000 Hosokawa Micron International, Inc.,
5.70%, 7/8/97..................... 9,989
10,000 Hosokawa Micron International, Inc.,
5.65%, 8/15/97.................... 9,929
19,500 Hosokawa Micron International, Inc.,
5.71%, 8/26/97.................... 19,327
---------
61,084
---------
</TABLE>
Continued
9
<PAGE> 584
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Prime Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
COMMERCIAL PAPER, CONTINUED:
Leasing (1.0%):
$ 29,400 International Lease Finance Corp.,
5.27%, 7/14/97.................... $ 29,344
---------
Office Equipment & Services (1.5%):
20,000 Xerox Mexicana SA de CV, 5.57%,
7/7/97............................ 19,981
24,500 Xerox Mexicana SA de CV, 5.59%,
7/24/97........................... 24,413
---------
44,394
---------
Oil & Gas Exploration (1.6%):
25,000 Pemex Capital, Inc., 5.71%,
9/11/97........................... 24,714
23,000 Petroleo Brasileiro SA, Series C,
5.68%, 10/2/97.................... 22,663
---------
47,377
---------
Printing & Publishing (0.8%):
22,000 Tribune Co., 5.70%, 7/29/97......... 21,902
---------
Real Estate (6.8%):
19,264 75 State Street Capital Corp.,
5.64%,
7/16/97........................... 19,219
25,140 75 State Street Capital Corp.,
5.65%,
7/22/97........................... 25,057
50,000 75 State Street Capital Corp.,
5.63%,
7/23/97........................... 49,828
31,802 75 State Street Capital Corp.,
5.64%,
7/25/97........................... 31,682
20,000 75 State Street Capital Corp.,
5.67%,
7/29/97........................... 19,912
25,000 Countrywide Home Loans, 5.67%,
8/11/97........................... 24,839
10,000 SRD Finance, Inc., 5.63%, 7/17/97... 9,975
17,000 SRD Finance, Inc., 5.64%, 7/17/97... 16,957
---------
197,469
---------
Total Commercial Paper 1,907,258
---------
CORPORATE NOTES & BONDS (4.6%):
Banking (0.9%):
25,000 PNC Bank N.A., 6.05%, 5/28/98....... 24,978
---------
Brokerage Services (1.4%):
25,000 Bear Stearns Co., Inc., 6.30%,
4/16/98........................... 25,000
15,000 Credit Suisse First Boston, 6.12%,
3/31/98........................... 14,987
---------
39,987
---------
Computer Hardware (2.3%):
43,500 IBM Credit Corp., 5.75%, 1/20/98.... 43,494
25,000 IBM Credit Corp., 6.07%, 5/19/98.... 25,000
---------
68,494
---------
Total Corporate Notes & Bonds 133,459
---------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ----------
FUNDING AGREEMENTS (11.0%):
$ 50,000 Allstate Life Insurance Co., 5.90%,
8/29/97*.......................... $ 50,000
150,000 General American Life Insurance Co.,
5.89%, 2/19/98*................... 150,001
60,000 Peoples Security Life Insurance Co.,
5.86%, 4/22/97*................... 60,000
60,000 Providian Life & Health Insurance
Co., 5.84%, 11/1/98*.............. 60,000
---------
Total Funding Agreements 320,001
---------
U.S. GOVERNMENT AGENCY SECURITIES (1.7%):
Student Loan Marketing Assoc. (1.7%):
50,000 5.26%, 9/28/98*..................... 50,000
---------
Total U.S. Government Agency Securities 50,000
---------
YANKEE & EURODOLLAR (11.5%):
Banking (11.5%):
50,000 ABN Amro Bank NV, 6.27%, 4/17/98.... 49,989
50,000 Bank of Nova Scotia - SCIOTABANK,
5.95%, 6/30/98.................... 49,971
22,000 Deutsche Bank A.G., 6.20%, 4/8/98... 22,016
23,500 Dresdner Bank A.G., 5.85%,
2/13/98........................... 23,502
12,000 Rabobank Nederland, 5.75%, 2/3/98... 11,978
25,000 Royal Bank of Canada, 6.08%,
5/20/98........................... 24,994
25,000 Royal Bank Of Canada, 6.05%,
6/8/98............................ 24,989
50,000 Societe Generale, 6.10%, 9/10/97.... 50,031
50,000 Societe Generale, 5.85%, 3/3/98..... 49,990
25,000 Societe Generale, 6.18%, 5/6/98..... 24,994
---------
Total Yankee & Eurodollar 332,454
---------
REPURCHASE AGREEMENTS (4.1%):
119,096 Prudential Securities, 6.05%, 7/1/97
(Collateralized by $142,576
various U.S. Government
Securities, 0.00% - 6.62%,
1/13/98 - 7/1/34, market
value - $122,496)................. 119,096
---------
Total Repurchase Agreements 119,096
---------
Total (Amortized Cost--$2,862,268) (a) $2,862,268
=========
</TABLE>
- ------------
Percentages indicated are based on net assets of $2,897,032.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based upon an index of market rates. The
rate reflected on the Schedule of Portfolio Investments is the rate in effect
at June 30, 1997.
See notes to financial statements.
10
<PAGE> 585
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ --------
<S> <C> <C>
ANTICIPATION NOTES (8.3%):
Michigan (3.9%):
$20,000 State Municipal Bond Authority,
Series A, 4.50%, 7/3/97........... $ 20,001
--------
Ohio (0.3%):
1,750 Richland County, Clear Fork Valley
Local School District, BAN, 4.20%,
9/25/97........................... 1,753
--------
Puerto Rico (2.5%):
13,000 Commonwealth of Puerto Rico, Trans-
Series 97A, 4.00%, 7/30/97........ 13,007
--------
Texas (1.6%):
8,000 State Tax & Revenue, 4.75%,
8/29/97........................... 8,015
--------
Total Anticipation Notes 42,776
--------
DAILY DEMAND NOTES (7.3%):
Alabama (1.0%):
1,400 Phenix City, IDR for Mead, AMT,
4.15%, 3/1/31, LOC: Bayerische
Landesbank*....................... 1,400
3,800 Phenix City, IDR for Mead, Series
93-A, AMT, 4.15%, 6/1/28, LOC:
Toronto Dominion Bank*............ 3,800
--------
5,200
--------
Idaho (1.8%):
9,345 Health Facility Authority Revenue,
St. Lukes Regional Medical Center
Project, 4.10%, 5/1/22, LOC:
Credit Suisse*.................... 9,345
--------
New York (1.0%):
1,000 New York City Municipal Water
Finance, 5.50%, 6/15/25, FGIC*.... 1,000
1,900 New York City, GO, Series B, 5.50%,
10/1/20, FGIC*.................... 1,900
2,100 New York City, GO, Series B, 5.50%,
10/1/22, FGIC*.................... 2,100
--------
5,000
--------
North Dakota (0.8%):
4,300 Grand Forks Health Care Revenue,
United Hospital Obligation Group,
Series 96A, 4.15%, 12/1/25, LOC:
LaSalle National Bank*............ 4,300
--------
Ohio (0.1%):
600 State Air Quality Development
Authority, Cincinnati Gas &
Electric, 5.50%, 12/1/15, LOC:
J.P. Morgan*...................... 600
--------
Texas (2.6%):
10,515 Brazos River Authority, PCR, Texas
Utilities Electric Co. Project,
AMT, 5.55%, 6/1/30, AMBAC*........ 10,515
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ --------
DAILY DEMAND NOTES, CONTINUED:
Texas, continued:
$ 2,500 Brazos River Authority, PCR, Texas
Utilities Electric Co., Series B,
AMT, 5.55%, 6/1/30, LOC: Union
Bank of Switzerland*.............. $ 2,500
100 Grapevine Industrial Development
Corp., Multiple Mode Revenue
Bonds, Series A4, 4.10%, 12/1/24,
LOC: Morgan Guaranty*............. 100
300 North Central Health Facility
Development Corp. Revenue,
Presbyterian Medical Center,
Series D, 4.10%, 12/1/15, MBIA*... 300
--------
13,415
--------
Total Daily Demand Notes 37,860
--------
MONTHLY DEMAND NOTES (3.0%):
Arizona (0.4%):
2,000 Chandler Industrial Development
Authority, Parsons Municipal
Project, 4.10%, 12/15/09, LOC:
National Westminister*............ 2,000
--------
Indiana (2.6%):
13,700 Gary Environmental Improvement
Revenue, U.S. Steel Corp. Project,
4.10%, 7/15/02, LOC: Bank of Nova
Scotia*........................... 13,700
--------
Total Monthly Demand Notes..................... 15,700
--------
MUNICIPAL NOTES (4.7%):
Colorado (2.0%):
10,000 State General Fund Series A, 4.50%,
6/26/98........................... 10,063
--------
Idaho (0.5%):
2,500 State Tansportation, 4.63%,
6/30/98........................... 2,518
--------
Wisconsin (2.2%):
11,405 Green Bay, Area Public School
District, 3.84%, 2/2/98........... 11,407
--------
Total Municipal Notes.......................... 23,988
--------
PUT BONDS (7.1%):
Arizona (0.7%):
3,600 Cochise County, PCR, Arizona
Electric Power Corp., Series A,
AMT, 3.50%, 9/1/24................ 3,600
--------
Connecticut (0.9%):
4,500 Special Assessment, Compensation
Unemployment Revenue Bonds
(CURBS), 3.90%, 11/15/01, FGIC.... 4,500
--------
</TABLE>
Continued
11
<PAGE> 586
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
PUT BONDS, CONTINUED:
Georgia (0.8%):
$ 4,000 Burke County Development Authority,
Oglethorpe Power, Series A, 3.60%,
12/1/97, AMBAC.................... $ 4,000
--------
Missouri (0.8%):
4,175 State Environmental Improvement &
Energy, Union Electric Co., Series
B, 3.95%, 6/1/14, LOC: Union Bank
of Switzerland.................... 4,175
--------
North Dakota (0.4%):
2,200 Mercer County, Solid Waste Disposal
Revenue, National Rural Utility
Power Project, Series U, 3.80%,
12/1/97........................... 2,200
--------
Ohio (2.1%):
11,000 Housing Finance Agency, Series 1997
A-2, AMT, 3.65%, 3/2/98........... 11,000
--------
Oregon (0.9%):
4,500 Oregon Housing & Community, Series
96-R, AMT, 3.65%, 12/11/97........ 4,500
--------
Wyoming (0.5%):
2,500 Uinta County, PCR, Amoco Standard
Oil Co., 3.90%, 12/1/12........... 2,500
--------
Total Put Bonds 36,475
--------
TAX FREE COMMERCIAL PAPER (7.7%):
Alabama (1.1%):
5,500 Phenix City, Industrial Development,
Environmental Improvement Revenue,
Mead, 3.80%, 7/7/97, LOC: ABN
AMRO.............................. 5,500
--------
Arizona (0.6%):
3,100 Mesa, Municipal Development Corp.,
Series A, 3.70%, 9/9/97, LOC: West
Deutche Landes Bank............... 3,100
--------
Michigan (1.0%):
5,080 State Building Authority, 3.80%,
9/4/97, LOC: Canadian Imperial
Commerce Bank..................... 5,080
--------
Ohio (1.5%):
2,100 Air Quality Development Authority,
CEI Co., Series B, 3.85%, 8/1/97,
FGIC.............................. 2,100
5,500 Water Development Authority, CEI
Co., 3.80%, 8/13/97, FGIC......... 5,500
--------
7,600
--------
Texas (2.6%):
5,000 Brazos River Authority, PCR, Texas
Utilities, 3.85%, 10/30/97,
LOC: CIBC......................... 5,000
5,900 Public Financing Authority, GO,
3.63%, 8/14/97.................... 5,900
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ --------
TAX FREE COMMERCIAL PAPER, CONTINUED:
Texas, continued:
$ 3,100 Public Financing Authority, GO,
Series 93A, 3.20%, 8/11/97........ $ 3,100
--------
14,000
--------
West Virginia (0.9%):
4,500 State Public Authority Energy
Revenue, Morgantown Assoc.
Project, AMT, 3.85%, 3/1/17, LOC:
Swiss Bank........................ 4,500
--------
Total Tax Free Commercial Paper 39,780
--------
WEEKLY DEMAND NOTES (63.6%):
Alaska (0.9%):
4,500 Anchorage, Higher Education Revenue,
Alaska Pacific University, 4.25%,
7/1/17, LOC: Seattle-First
National Bank*.................... 4,500
--------
Arkansas (1.6%):
8,100 Clark County, Solid Waste Disposal
Revenue, Reynolds Metals Co.
Project, AMT, 4.20%, 8/1/22, LOC:
Trust Co. Bank*................... 8,100
--------
Colorado (1.9%):
3,000 Housing Finance Authority, Pool I,
Series B, Coventry Village, 4.15%,
10/15/16, FNMA*................... 3,000
2,500 Student Obligation Bond Authority,
90-A, AMT, 4.25%, 9/1/24,
Sallie Mae*....................... 2,500
4,400 Student Obligation Bond Authority,
AMT, 4.25%, 7/1/20, Sallie Mae*... 4,400
--------
9,900
--------
Florida (1.9%):
10,000 State Housing Finance Authority,
Woodlands Apt. Project 85S, 4.15%,
12/1/17, LOC: Citibank*........... 10,000
--------
Georgia (2.1%):
7,000 De Kalb Private Hospital Authority
Revenue, Egleston Children's
Hospital, Series A, 4.20%, 3/1/24,
LOC: SunTrust Bank*............... 7,000
3,735 Gwinnett County Housing Authority,
Herrington Woods Apts., Series
96A, AMT, 4.25%, 9/15/26, LOC:
KeyBank*.......................... 3,735
--------
10,735
--------
Illinois (9.4%):
11,300 Chicago O'Hare International Airport
Revenue, Second Lien, Series B,
AMT, 4.20%, 1/1/18, LOC: Societe
Generale*......................... 11,300
</TABLE>
Continued
12
<PAGE> 587
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Illinois, continued:
$ 3,700 Development Authority, Presbyterian
Home Lake Forrest Place Project,
4.15%, 9/1/31, LOC: LaSalle
National Bank*.................... $ 3,700
5,200 Development Finance Authority
Revenue, Aurora Central Catholic
High School, 4.15%, 4/1/24, LOC:
Northern Trust*................... 5,200
4,500 Development Finance Authority
Revenue, Roosevelt University
Project, 4.15%, 4/1/25, LOC:
American National Bank*........... 4,500
5,900 Development Finance Authority
Revenue, Special Facility, Little
City Foundation, 4.15%, 2/1/19,
LOC: LaSalle National Bank*....... 5,900
1,625 Development Finance Authority
Revenue, St. Paul's House Project,
4.15%, 2/1/25, LOC: LaSalle
National Bank*.................... 1,625
3,000 Health Facilities Authority Revenue,
Washington & Jane Smith Home,
4.25%, 7/1/26, LOC: Comerica
Bank*............................. 3,000
7,640 Jacksonville Industrial Project
Revenue, AGI Inc. Project, AMT,
4.40%, 2/1/26, LOC: Bank of
America*.......................... 7,640
1,230 Lombard IDR, Chicago Roll Co.
Project, 4.75%, 2/1/10, LOC:
American National Bank*........... 1,230
2,000 Orland Hills Multi-Family Mortgage
Revenue, 88th Avenue Project,
4.15%, 12/1/04, LOC: LaSalle
National Bank*.................... 2,000
2,500 Regional Transport Authority Trust
Receipts, 4.30%, 6/1/25, LOC:
Societe Generale*................. 2,500
--------
48,595
--------
Indiana (8.2%):
4,000 City of Madison, IDR, Series 1997,
Century Tube Corp. Project,
4.40%, 3/1/07, LOC: Bank of
Tokyo-Mitsubishi, Ltd.*........... 4,000
14,800 Health Facility Financing Authority,
Rehabilitation Hospital, Inc.,
4.20%, 11/1/20, LOC: National Bank
of Detroit*....................... 14,800
5,600 Indianapolis Economic Development
Revenue, Children's Museum
Project, 4.15%, 10/1/25, LOC:
National Bank of Detroit*......... 5,600
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ --------
WEEKLY DEMAND NOTES, CONTINUED:
Indiana, continued:
$ 3,600 Jasper Economic Development Revenue,
Best Chairs, Inc. Project, AMT,
4.40%, 3/1/19, LOC:
PNC Bank*......................... $ 3,600
14,035 Rockport, PCR, Indiana & Michigan
Electric Co., Series A, 4.20%,
8/1/14, LOC: Swiss Bank*.......... 14,035
--------
42,035
--------
Kentucky (0.5%):
2,500 Mayfield, League of Cities Lease
Finance Program 96, 4.30%, 7/1/26,
LOC: PNC Bank*.................... 2,500
--------
Michigan (6.0%):
16,800 Higher Education Student Loan,
Series B, AMT, 4.25%, 10/1/13,
AMBAC*............................ 16,800
800 State Strategic Fund, Limited
Obligation Revenue, Environmental
Quality, AMT, 4.30%, 5/1/05, LOC:
Comerica Bank*.................... 800
1,560 State Strategic Fund, Limited
Obligation, Wayne Disposal Oakland
Project, AMT, 4.30%, 3/1/05, LOC:
Credit Suisse-First Boston*....... 1,560
11,800 Wayne County Airport Revenue
(Detriot Airport), Series B, AMT,
4.20%, 12/1/16, LOC: Bayerische
Landesbank*....................... 11,800
--------
30,960
--------
Nevada (5.1%):
10,000 Clark County, IDR, Nevada Power Co.
Project, Series A, 4.30%, 10/1/30,
LOC: Barclays Bank*............... 10,000
5,000 Clark County, Limited Tax GO, 1996
Las Vegas Convention Trust
Receipts, 4.30%, 7/1/26, FSA*..... 5,000
2,215 Clark County, PCR, Nevada Power Co.
Project, Series C, 4.20%, 10/1/30,
LOC: Barclays Bank*............... 2,215
9,300 Lancaster County, Hospital
Authority, Bryan Memorial
Hospital, 4.45%, 6/1/12, MBIA*.... 9,300
--------
26,515
--------
</TABLE>
Continued
13
<PAGE> 588
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Ohio (7.5%):
$ 6,700 Cuyahoga County, Cleveland Clinic
Foundation, 4.05%, 1/1/26, LOC:
Morgan Guaranty*.................. $ 6,700
3,000 Hamilton County, Health Alliance of
Cincinnati, Series B, 4.15%,
1/1/18, MBIA*..................... 3,000
5,000 Hamilton County, Health Alliance of
Cincinnati, Series F, 4.05%,
1/1/18, MBIA*..................... 5,000
6,300 State Air Quality Development
Authority, JMG Funding Ltd.
Partnership, AMT, 4.20%, 4/1/29,
LOC: Societe Generale*............ 6,300
2,800 State Air Quality Development
Revenue Bond, Timken Co. Project,
AMT, 4.15%, 6/1/01, LOC: Credit
Suisse*........................... 2,800
5,500 State Water Development Authority
Revenue, Timken Co. Project,
4.15%, 5/1/07, LOC: Wachovia
Bank*............................. 5,500
4,625 Student Loan Funding Corp., 4.15%,
12/29/98, LOC: Bank of America*... 4,625
2,800 Student Loan Funding Corp., Loan
Revenue, Series A-3, AMT, 4.30%,
1/1/07, LOC: National
Westminister*..................... 2,800
2,000 Water Development Authority, Timken
Co. Project, 4.15%, 6/1/01, LOC:
Credit Suisse*.................... 2,000
--------
38,725
--------
Pennsylvania (0.8%):
4,000 Allegheny County, Hospital Revenue,
General Hospital Obligation Group,
Series B, 4.15%, 9/1/20, LOC:
Morgan Guaranty*.................. 4,000
--------
Rhode Island (1.0%):
5,000 State Student Loan Revenue Bond #3,
AMT, 4.25%, 6/1/26, LOC: National
Westminister*..................... 5,000
--------
South Carolina (0.3%):
1,700 Cherokee County, Industrial Revenue,
Oshkosh Truck Corp. Project, AMT,
4.35%, 8/1/19, LOC: Bank of Nova
Scotia*........................... 1,700
--------
Tennessee (0.7%):
3,800 Oak Ridge Industrial Development
Board, Economic Development
Revenue, Limited Obligation,
4.20%, 5/1/09, LOC: ABN AMRO*..... 3,800
--------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ --------
WEEKLY DEMAND NOTES, CONTINUED:
Texas (10.5%):
$14,100 Capital Health Facilities
Development Corp., Island on Lake
Travis Ltd. Project, AMT, 4.25%,
12/1/16, LOC: Credit Suisse*...... $ 14,100
6,500 Lower Colorado River Authority,
Texas Electricity Revenue, 4.15%,
1/1/13, MBIA*..................... 6,500
10,000 Panhandle Plains Higher Education
Inc., Student Loan Revenue, Series
A, 4.25%, 6/1/21, LOC: Sallie
Mae*.............................. 10,000
8,400 Panhandle Plains Higher Education
Inc., Student Loan Revenue, Series
A, AMT, 4.25%, 6/1/23, LOC: Sallie
Mae*.............................. 8,400
14,900 San Antonio Health Facilities
Development Corp., Hospital
Revenue, Warm Springs
Rehabilitation Foundation, Series
A, 4.30%, 6/1/08, LOC:
NationsBank*...................... 14,900
--------
53,900
--------
Utah (1.3%):
6,600 Salt Lake City Airport Revenue, Sub-
Series A, 4.20%, 6/1/98, LOC:
Credit Suisse*.................... 6,600
--------
Washington (2.6%):
4,425 Pierce County, NN Baking Co., AMT,
4.30%, 7/1/03, LOC: U.S. Bank of
Washington*....................... 4,425
6,600 Port Vancouver, United Grain Corp.,
Series 84A, 4.35%, 12/1/09, LOC:
Sumitomo Bank, Ltd.*.............. 6,600
2,500 State GO, Municipal Securities,
Trust Receipts, 4.30%, 7/1/16*,
LOC: Societe General.............. 2,500
--------
13,525
--------
West Virginia (1.3%):
2,300 Marion County Community Solid Waste
Disposal Facility Revenue, Grant
Town, AMT, 4.30%, 10/1/17, LOC:
National Westminster*............. 2,300
4,600 Marion County, Community Solid Waste
Disposal Facility Revenue, Grant
Town, 4.25%, 10/1/17, LOC:
National Westminster*............. 4,600
--------
6,900
--------
Total Weekly Demand Notes 327,990
--------
Total (Amortized Cost--$524,569) (a) $524,569
========
</TABLE>
Continued
14
<PAGE> 589
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
- ------------
Percentages indicated are based on net assets of $515,605.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based upon an index of market rates. The
rate reflected on the Schedule of Portfolio Investments is the rate in effect
at June 30, 1997.
<TABLE>
<S> <C>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BAN Bond Anticipation Notes
FGIC Insured by Financial Guaranty Insurance Corp.
FNMA Insured by Federal National Mortgage Association
FSA Insured by Financial Security Assurance
GO General Obligation
IDR Industrial Development Revenue
LOC Letter of Credit
MBIA Insured by Municipal Bond Insurance Association
PCR Pollution Control Revenue
</TABLE>
See notes to financial statements.
15
<PAGE> 590
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
<S> <C> <C>
ANTICIPATION NOTES (14.2%):
Ohio (14.2%):
$ 675 Butler County, BAN, 4.10%,
3/20/98.......................... $ 677
2,000 Cleveland, 1996-A Cleveland Stadium
Project, BAN, 4.50%, 10/15/97.... 2,004
1,000 Dublin City School District Notes,
4.33%, 5/13/98................... 1,003
2,090 Kent City Service Center, BAN,
4.50%, 4/9/98.................... 2,096
2,175 Pickerington, Limited Tax GO, BAN,
4.13%, 6/26/98................... 2,179
750 Richland County, Clear Fork Valley
Local School District, BAN,
4.20%, 9/25/97................... 751
600 Union County, Limited Tax GO, BAN,
4.17%, 6/25/98................... 602
1,500 University of Cincinnati, BAN,
4.25%, 8/28/97................... 1,501
1,500 University of Cincinnati, General
Receipts, BAN, 4.25%, 3/19/98.... 1,506
-------
Total Anticipation Notes 12,319
-------
DAILY DEMAND NOTES (12.5%):
Ohio (12.5%):
1,300 Franklin County, Franciscan
Sister-- St. Anthony Health
System, 4.00%, 7/1/15, LOC:
Chemical Bank*................... 1,300
200 Paulding, Solid Waste, Lafarge
Corp., 4.00%, 8/1/26, LOC: Royal
Bank of Canada*.................. 200
4,000 State Air Quality Development
Authority, Cincinnati Gas &
Electric Co., 5.50%, 12/1/15,
LOC: Union Bank of
Switzerland*..................... 4,000
4,000 State PCR, British Petroleum,
4.05%, 5/1/22*................... 4,000
900 Twinsburg, IDR, United Stationers
Project, 4.40%, 12/1/11, LOC: PNC
Bank*............................ 900
500 Water Development Authority, Series
B, Mead Paper Co., 4.00%,
11/1/15, LOC: Swiss Bank*........ 500
-------
Total Daily Demand Notes 10,900
-------
MONTHLY DEMAND NOTES (6.7%):
Ohio (6.7%):
5,800 Housing Finance Agency, Kenwood
Retirement Project, 3.70%,
12/1/15, LOC: Morgan Guaranty*... 5,800
-------
Total Monthly Demand Notes 5,800
-------
MUNICIPAL BONDS (1.2%):
Ohio (1.2%):
1,000 Columbus, GO, 6.75%, 7/1/97........ 1,000
-------
Total Municipal Bonds 1,000
--------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- --------
PUT BOND (4.6%):
Ohio (4.6%):
$ 4,000 Housing Finance Agency, Series 1997
A-2, AMT, 3.65%, 3/2/98, AIG:
Guaranteed Investment Contract... $ 4,000
-------
Total Put Bond 4,000
-------
TAX FREE COMMERCIAL PAPER (4.6%):
Ohio (2.3%):
1,000 Air Quality Development Authority,
CEI Co., Series B, 3.80%,
8/13/97, FGIC.................... 1,000
1,000 Water Development Authority, CEI
Co., 3.70%, 7/15/97, FGIC........ 1,000
-------
2,000
-------
Puerto Rico (2.3%):
2,000 Government Development Bank, 3.75%,
7/15/97.......................... 2,000
-------
Total Tax Free Commercial Paper 4,000
-------
WEEKLY DEMAND NOTES (54.4%):
Ohio (54.4%):
1,000 Butler County, Meadow Ridge
Apartments, AMT, 4.15%, 11/15/30,
FNMA Collateral Agreement*....... 1,000
2,000 Butler County, Middletown Hospital
Facilities, 4.15%, 11/1/17, LOC:
Star Bank, N.A.*................. 2,000
300 Cuyahoga County, IDR, Allen Group,
Inc., 4.25%, 4/1/12, LOC:
Dresdner Bank*................... 300
1,600 Cuyahoga County, IDR, Allen Group,
Inc., 4.10%, 12/1/15, LOC: Union
Bank of Switzerland*............. 1,600
3,200 Franklin County, Hospital Revenue,
Holy Cross Health Systems, 4.15%,
6/1/16, LIQ: Morgan Guaranty..... 3,200
1,500 Franklin County, Hospital Revenue,
Lutheran City, Inc. Project,
4.15%, 5/1/15, LOC: National Bank
of
Detroit*......................... 1,500
1,400 Franklin County, Inland Products,
Inc., 4.40%, 6/1/04, LOC: PNC
Bank*............................ 1,400
2,000 Franklin County, Ohio Multifamily
Housing Revenue, Stonebridge
Apartments, 4.40%, 6/1/27, LOC:
Star Bank, N.A.*................. 2,000
2,000 Geauga County, IDR, General Signal
Corp., 4.30%, 4/1/04, LOC:
Wachovia*........................ 2,000
400 Hamilton County, Economic
Development Revenue, Cincinnati
Performing Arts Center, 4.20%,
6/15/05, LOC: Fifth Third
Bank*............................ 400
</TABLE>
Continued
16
<PAGE> 591
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
<S> <C> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Ohio, continued:
$ 3,325 Hamilton County, Health Alliance of
Cincinnati, Series B, 4.15%,
1/1/18, MBIA*.................... $ 3,325
2,000 Hamilton County, Hospital
Facilities Revenue, Bethesda
Hospital,
4.00%, 2/15/24, LOC:
Rabobank Nederland*.............. 2,000
1,500 Hamilton County, Hospital
Facilities Revenue, Children's
Hospital Medical Center, 4.15%,
5/15/17, LOC: PNC Bank *......... 1,500
3,000 Housing Finance Agency, Spring
Valley Apartments, 4.25%,
12/15/29, LOC: Key Bank*......... 3,000
500 Montgomery County, Sisters of
Charity Health Care, 4.15%,
5/15/25, LIQ: Toronto
Dominion*........................ 500
2,295 Ohio State University, General
Receipts, Series B, 4.15%,
12/1/06*......................... 2,295
1,000 Ross County, Ohio Hospital
Facilities, Medical Center
Project, 4.15%, 12/1/20, LOC:
Fifth Third*..................... 1,000
1,000 State Air Quality Development
Authority, JMG Funding Ltd.
Partnership, AMT, 4.20%, 4/1/29,
LOC: Societe Generale*........... 1,000
2,300 State Air Quality Development
Authority, JMG Funding Ltd.
Partnership, Series A, AMT,
4.20%, 4/1/28, LOC: Societe
Generale*........................ 2,300
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- --------
WEEKLY DEMAND NOTES, CONTINUED:
Ohio, continued:
$ 3,000 State Air Quality Development
Revenue Bond, Timken Co. Project,
AMT, 4.15%, 6/1/01, LOC: Credit
Suisse*.......................... $ 3,000
950 State Higher Educational
Facilities, Mount Union College,
4.15%, 9/1/20, LOC: National Bank
of Detroit*...................... 950
3,000 State Higher Educational
Facilities, Oberlin College,
4.00%, 10/1/15, SBPA: Morgan
Guaranty*........................ 3,000
2,000 Student Loan Funding Corp., 4.15%,
12/29/98, LOC: Bank of
America*......................... 2,000
2,000 Student Loan Funding Corp., 4.30%,
1/1/07, LOC: National
Westminister Bank*............... 2,000
2,000 Water Development Authority, Timken
Co. Project, 4.15%, 6/1/01, LOC:
Credit Suisse*................... 2,000
2,100 Wooster, IDR, Allen Group, Inc.,
4.40%, 12/1/10, LOC: Union Bank
of Switzerland*.................. 2,100
--------
Total Weekly Demand Notes 47,370
--------
Total (Amortized Cost--$85,389) (a) $ 85,389
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $86,921.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based an index of market rates. The rate
reflected on the Schedule of Portfolio Investments is the rate in effect at
June 30, 1997.
<TABLE>
<S> <C>
AMT Alternative Minimum Tax Paper
BAN Bond Anticipated Notes
FGIC Insured by Financial Guaranty Insurance Corp.
FNMA Insured by Federal National Mortgage Association
GO General Obligation
IDR Industrial Development Revenue
LIQ Liquidity Agreement
LOC Letter of Credit
MBIA Insured by Municipal Bond Insurance Association
PCR Pollution Control Revenue
SBPA Standby Bond Purchase Agreement
</TABLE>
See notes to financial statements.
17
<PAGE> 592
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
<S> <C> <C> <C> <C>
U.S.
TREASURY OHIO
SECURITIES MUNICIPAL MUNICIPAL
MONEY MARKET PRIME MONEY MONEY MARKET MONEY MARKET
FUND MARKET FUND FUND FUND
------------ ---------- ------------ ------------
ASSETS:
Investments, at amortized cost.............. $ 593,499 $2,743,172 $524,569 $ 85,389
Repurchase agreements, at cost.............. 2,185,989 119,096 -- --
---------- ---------- -------- --------
Total....................................... 2,779,488 2,862,268 524,569 85,389
Cash........................................ -- -- 1,513 1,323
Interest receivable......................... 5,867 9,048 3,715 499
Receivable for shares issued................ -- 39,508 -- --
Prepaid expenses and other assets........... 813 401 83 1
---------- ---------- -------- --------
TOTAL ASSETS................................ 2,786,168 2,911,225 529,880 87,212
---------- ---------- -------- --------
LIABILITIES:
Dividends payable........................... 11,437 12,944 1,482 239
Payable to brokers for investments
purchased................................. -- -- 12,581 --
Accrued expenses and other payables:
Investment advisory fees............... 554 698 110 18
Administration fees.................... 367 374 72 8
12b-1 fees............................. 108 67 9 7
Accounting and transfer agent fees..... -- 3 -- 5
Other.................................. 113 107 21 14
---------- ---------- -------- --------
TOTAL LIABILITIES........................... 12,579 14,193 14,275 291
---------- ---------- -------- --------
NET ASSETS:
Capital..................................... 2,773,395 2,897,025 515,748 87,012
Undistributed (distributions in excess of)
net investment income..................... 43 7 (130) (75)
Accumulated undistributed net realized gains
(losses) from investment transactions..... 151 -- (13) (16)
---------- ---------- -------- --------
NET ASSETS.................................. $2,773,589 $2,897,032 $515,605 $ 86,921
========== ========== ======== ========
Net Assets
Fiduciary.............................. $2,243,376 $2,563,768 $467,420 $ 56,442
Class A................................ 530,164 332,646 48,185 30,479
Class B................................ 49 618 -- --
---------- ---------- -------- --------
Total....................................... $2,773,589 $2,897,032 $515,605 $ 86,921
========== ========== ======== ========
Outstanding units of beneficial interest
Fiduciary.............................. 2,243,208 2,563,763 467,546 56,481
Class A................................ 530,136 332,643 48,200 30,506
Class B................................ 49 619 -- --
---------- ---------- -------- --------
Total....................................... 2,773,393 2,897,025 515,746 86,987
========== ========== ======== ========
Net asset value--offering and redemption
price per share (Fiduciary, Class A and
Class B shares)........................... $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
</TABLE>
See notes to financial statements.
18
<PAGE> 593
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C> <C> <C> <C>
U.S.
TREASURY OHIO
SECURITIES MUNICIPAL MUNICIPAL
MONEY MARKET PRIME MONEY MONEY MARKET MONEY MARKET
FUND MARKET FUND FUND FUND
------------ ------------ ------------ ------------
INVESTMENT INCOME:
Interest income............................. $133,807 $154,583 $ 18,652 $3,112
Dividend income............................. -- -- 168 67
Income from securities lending.............. 204 9 -- --
-------- -------- -------- ------
TOTAL INCOME................................ 134,011 154,592 18,820 3,179
-------- -------- -------- ------
EXPENSES:
Investment advisory fees.................... 8,665 9,724 1,836 268
Administration fees......................... 4,093 4,594 867 148
12b-1 fees (Class A)........................ 1,191 1,178 148 128
12b-1 fees (Class B)........................ -- 2 -- --
Custodian and accounting fees............... 192 177 16 14
Legal and audit fees........................ 93 106 18 4
Organization costs.......................... -- -- -- 1
Trustees' fees and expenses................. 26 29 5 1
Transfer agent fees......................... 470 266 7 20
Registration and filing fees................ 384 438 114 14
Printing costs.............................. 132 146 29 5
Other....................................... 70 81 4 1
-------- -------- -------- ------
Total expense before waivers................ 15,316 16,741 3,044 604
Less waivers................................ (3,135) (2,504) (681) (152)
-------- -------- -------- ------
NET EXPENSES................................ 12,181 14,237 2,363 452
-------- -------- -------- ------
Net Investment Income....................... 121,830 140,355 16,457 2,727
-------- -------- -------- ------
REALIZED GAINS (LOSSES) FROM INVESTMENT
TRANSACTIONS:
Net realized gains (losses) from investment
transactions.............................. 190 27 (10) (15)
-------- -------- -------- ------
Net increase in net assets resulting from
operations................................ $122,020 $140,382 $ 16,447 $2,712
======== ======== ======== ======
</TABLE>
See notes to financial statements.
19
<PAGE> 594
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
U.S. TREASURY
SECURITIES MONEY PRIME MONEY MUNICIPAL MONEY OHIO MUNICIPAL MONEY
MARKET FUND MARKET FUND MARKET FUND MARKET FUND
------------------------- ------------------------- ------------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment
income......... $ 121,830 $ 80,358 $ 140,355 $ 130,413 $ 16,457 $ 19,034 $ 2,727 $ 2,941
Net realized
gains (losses)
from investment
transactions... 190 (9) 27 9 (10) (4) (15) --
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
Change in net assets
resulting from
operations......... 122,020 80,349 140,382 130,422 16,447 19,030 2,712 2,941
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
DISTRIBUTIONS TO
FIDUCIARY
SHAREHOLDERS:
From net
investment
income......... (105,790) (75,330) (124,100) (116,410) (15,228) (17,075) (1,662) (1,588)
In excess of net
investment
income......... -- -- -- -- -- -- -- (22)
From net realized
gains from
investment
transactions... (5) -- -- -- -- (4) -- --
DISTRIBUTIONS TO
CLASS A
SHAREHOLDERS:
From net
investment
income......... (16,039) (5,012) (16,246) (13,976) (1,229) (1,947) (1,065) (1,353)
In excess of net
investment
income......... -- -- -- -- -- -- -- (19)
DISTRIBUTIONS TO
CLASS B
SHAREHOLDERS:
From net
investment
income......... (1) -- (9) -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
Change in net assets
from shareholder
distributions...... (121,835) (80,342) (140,355) (130,386) (16,457) (19,026) (2,727) (2,982)
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
CAPITAL
TRANSACTIONS:
Proceeds from
shares
issued......... 6,413,072 4,000,794 6,677,852 5,382,651 1,311,970 1,409,174 359,395 337,815
Proceeds from
shares issued
in connection
with
acquisition.... -- 356,742 -- -- -- -- -- --
Dividends
reinvested..... 9,274 4,792 16,726 14,099 1,285 1,889 1,067 1,337
Cost of shares
redeemed....... (5,604,396) (3,683,695) (6,299,509) (5,062,234) (1,308,167) (1,394,801) (370,573) (329,660)
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
Change in net assets
from share
transactions....... 817,950 678,633 395,069 334,516 5,088 16,262 (10,111) 9,492
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
Change in Net
Assets............. 818,135 678,640 395,096 334,552 5,078 16,266 (10,126) 9,451
NET ASSETS:
Beginning of
period......... 1,955,454 1,276,814 2,501,936 2,167,384 510,527 494,261 97,047 87,596
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
End of period.... $2,773,589 $1,955,454 $2,897,032 $2,501,936 $ 515,605 $ 510,527 $ 86,921 $ 97,047
========== ========= ========== ========== ========== ========== ========= =========
SHARE TRANSACTIONS:
Issued........... 6,413,072 4,000,794 6,677,852 5,382,651 1,311,970 1,409,174 359,395 337,815
Issued in
connection with
acquisition.... -- 356,742 -- -- -- -- -- --
Reinvested....... 9,274 4,792 16,726 14,099 1,285 1,889 1,067 1,337
Redeemed......... (5,604,396) (3,683,695) (6,299,509) (5,062,234) (1,308,167) (1,394,801) (370,573) (329,660)
========== ========= ========== ========== ========== ========== ======== ========
Change in shares.... 817,950 678,633 395,069 334,516 5,088 16,262 (10,111) 9,492
========== ========= ========== ========== ========== ========== ======== ========
Undistributed
(distributions in
excess of) net
investment income
included in net
assets:
End of Period.... $ 43 $ 43 7 $ 7 $ (130) $ (127) $ (75) $ (51)
========== ========== ========== ========== ========== ========== ========= =========
</TABLE>
See notes to financial statements.
20
<PAGE> 595
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a diversified, open-end investment
company established as a Massachusetts business trust. The accompanying
financial statements and financial highlights are those of the U.S. Treasury
Securities Money Market Fund, the Prime Money Market Fund, the Municipal
Money Market Fund, and the Ohio Municipal Money Market Fund (individually, a
"Fund"; collectively, the "Funds") only. Each Fund is a diversified mutual
fund, except the Ohio Municipal Money Market Fund which is non-diversified.
The Trust entered into an Agreement and Plan of Reorganization (the
"Agreement") with the Paragon Portfolio ("Paragon"), a Massachusetts business
trust. Pursuant to the Agreement all of the assets and liabilities of each
Paragon Fund transferred to a fund of The One Group in exchange for shares of
the corresponding fund of The One Group. Changes in net assets and financial
highlights for periods prior to the reorganization, March 25, 1996, are
presented for the funds of The One Group only.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
------------------------------------------- ------------------------------------------------
<S> <C>
U.S. Treasury Securities Money Market Fund Current income with liquidity and stability of
principal.
Prime Money Market Fund Current income with liquidity and stability of
principal.
Municipal Money Market Fund As high a level of current interest income
exempt from Federal income taxes as is
consistent with the preservation of capital and
stability of principal.
Ohio Municipal Money Market Fund As high a level of current interest income
exempt from Federal income taxes and Ohio
personal income tax as is consistent with the
preservation of capital and stability of
principal.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Securities are valued utilizing the amortized cost method permitted in
accordance with Rule 2a-7 under the 1940 Act. Under the amortized cost
method, discount or premium is amortized on a constant basis to the maturity
of the security. In addition, the Funds may not (a) purchase any instrument
with a remaining maturity greater than thirteen months unless such instrument
is subject to a demand feature, or (b) maintain a dollar-weighted average
maturity which exceeds 90 days.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that Banc
One Investment Advisors Corporation (the "Advisor") has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Fund
requires that the securities purchased in a repurchase transaction be
transferred to the
Continued
21
<PAGE> 596
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a counterparty default. The seller, under the
repurchase agreement, is required to maintain the value of the securities
held at not less than the repurchase price, including accrued interest.
Repurchase agreements are considered to be loans by a fund under the 1940
Act.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net realized
gains or losses on sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on
the accrual basis. Interest income, including any discount or premium, is
accrued as earned using the effective interest method.
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities in
which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn interest on securities lent while simultaneously seeking to
earn interest on the investment of collateral. Collateral is marked to market
daily to provide a level collateral at least equal to the market value of
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines established
by the Board of Trustees and when, in the judgment of the Advisor, the
consideration which can be earned currently from such securities loans
justifies the attendant risk. Loans are subject to termination by the Funds
or the borrower at any time, and are, therefore, not considered to be
illiquid investments. As of June 30, 1997, the following Fund had securities
with the following amortized cost on loan (amount in thousands):
<TABLE>
<CAPTION>
AMORTIZED COST
OF LOANED
SECURITIES
---------------
<S> <C>
U.S. Treasury Securities Money Market Fund................... $307,101
</TABLE>
The loaned securities were fully collateralized by cash and U.S.
Government securities as of June 30, 1997.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one fund of
the Trust are allocated among the respective Funds. Each class of shares
bears its pro-rata portion of expenses attributable to its series, except
that each class separately bears expenses related specifically to that
class, such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly.
Net income for this purpose consists of interest accrued and discount
earned (including both original issue discount and market discount) less
amortization of any market premium and accrued expenses. Net realized
capital gains, if any, are distributed at least annually. Dividends are
declared separately for each class. No class has preferential
Continued
22
<PAGE> 597
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
dividend rights; differences in per share dividend rates are generally
due to differences in separate class expenses.
Net investment income and net capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments of expiring capital loss carryforwards and deferrals
of certain losses. Permanent book and tax differences, if any, have been
reclassified among the components of net assets.
FEDERAL INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment
company by complying with the provisions available to certain investment
companies as defined in applicable sections of the Internal Revenue Code,
and to make distributions of net investment income and net realized
capital gains sufficient to relieve it from all, or substantially all,
federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more. The Trust is registered to offer forty series
and five classes of shares: Fiduciary, Class A, Class B, Class C and Service.
Currently, the Trust consists of thirty three active funds and not all funds
can offer all classes of shares. During the year ended June 30, 1995, Service
Shares transferred to Class A Shares. As of June 30, 1997 there were no
shareholders in Class C or the Service Class of the Funds. Shareholders are
entitled to one vote for each full share held and will vote in the aggregate
and not by class or series, except as otherwise expressly required by law or
when the Board of Trustees has determined that the matter to be voted on
affects only the interest of shareholders of a particular class or series.
The following is a summary of transactions in Fund shares for the fiscal
years ending June 30, 1997 and 1996:
<TABLE>
<CAPTION>
(Amounts in Thousands)
U.S. TREASURY SECURITIES PRIME MONEY
MONEY MARKET FUND MARKET FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $4,920,570 $ 3,573,870 $4,681,923 $ 4,119,886
Proceeds from shares issued in connection with
acquisition............................................. -- 333,798 -- --
Dividends reinvested...................................... 521 345 1,986 1,683
Cost of shares redeemed................................... (4,522,461) (3,241,505) (4,306,729) (3,900,430)
---------- ----------- ---------- -----------
Change in net assets from Fiduciary share transactions.... 398,630 666,508 377,180 221,139
========== =========== ========== ===========
CLASS A SHARES:
Proceeds from shares issued............................... $1,492,429 $ 426,924 $1,994,727 $ 1,262,765
Proceeds from shares issued in connection with
acquisition............................................. -- 22,944 -- --
Dividends reinvested...................................... 8,752 4,447 14,734 12,416
Cost of shares redeemed................................... (1,081,910) (442,190) (1,992,191) (1,161,804)
---------- ----------- ---------- -----------
Change in net assets from Class A share transactions...... $ 419,271 $ 12,125 $ 17,270 $ 113,377
========== =========== ========== ===========
CLASS B SHARES:
Proceeds from shares issued............................... $ 73 $ 1,202
Dividends reinvested...................................... 1 6
Cost of shares redeemed................................... (25) (589)
---------- ----------
Change in net assets from Class B share transactions...... $ 49 $ 619
========== ==========
</TABLE>
Continued
23
<PAGE> 598
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
U.S. TREASURY SECURITIES PRIME MONEY
MONEY MARKET FUND MARKET FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 4,920,570 3,573,870 4,681,923 4,119,886
Issued in connection with acquisition..................... -- 333,798 -- --
Reinvested................................................ 521 345 1,986 1,683
Redeemed.................................................. (4,522,461) (3,241,505) (4,306,729) (3,900,430)
---------- ----------- ---------- -----------
Change in Fiduciary Shares................................ 398,630 666,508 377,180 221,139
========== =========== ========== ===========
CLASS A SHARES:
Issued.................................................... 1,492,429 426,924 1,994,727 1,262,765
Issued in connection with acquisition..................... -- 22,944 -- --
Reinvested................................................ 8,752 4,447 14,734 12,416
Redeemed.................................................. (1,081,910) (442,190) (1,992,191) (1,161,804)
---------- ----------- ---------- -----------
Change in Class A Shares.................................. 419,271 12,125 17,270 113,377
========== =========== ========== ===========
CLASS B SHARES:
Issued.................................................... 73 1,202
Reinvested................................................ 1 6
Redeemed.................................................. (25) (589)
---------- ----------
Change in Class B Shares.................................. 49 619
========== ==========
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET OHIO MUNICIPAL MONEY
FUND MARKET FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $1,104,184 $ 1,109,221 $ 178,921 $ 165,403
Dividends reinvested...................................... 138 114 87 62
Cost of shares redeemed................................... (1,096,700) (1,087,267) (178,473) (161,325)
---------- ----------- ---------- -----------
Change in net assets from Fiduciary share transactions.... $ 7,622 $ 22,068 $ 535 $ 4,140
========== =========== ========== ===========
CLASS A SHARES:
Proceeds from shares issued............................... $ 207,786 $ 299,953 $ 180,474 $ 172,412
Dividends reinvested...................................... 1,147 1,775 980 1,275
Cost of shares redeemed................................... (211,467) (307,534) (192,100) (168,335)
---------- ----------- ---------- -----------
Change in net assets from Class A share transactions...... $ (2,534) $ (5,806) $ (10,646) $ 5,352
========== =========== ========== ===========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 1,104,184 1,109,221 178,921 165,403
Reinvested................................................ 138 114 87 62
Redeemed.................................................. (1,096,700) (1,087,267) (178,473) (161,325)
---------- ----------- ---------- -----------
Change in Fiduciary Shares................................ 7,622 22,068 535 4,140
========== =========== ========== ===========
</TABLE>
Continued
24
<PAGE> 599
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET OHIO MUNICIPAL MONEY
FUND MARKET FUND
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Issued.................................................... 207,786 299,953 180,474 172,412
Reinvested................................................ 1,147 1,775 980 1,275
Redeemed.................................................. (211,467) (307,534) (192,100) (168,335)
---------- ----------- ---------- -----------
Change in Class A Shares.................................. (2,534) (5,806) (10,646) 5,352
========== =========== ========== ===========
</TABLE>
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor, are parties to an investment advisory agreement
under which the Advisor is entitled to receive an annual fee, computed daily
and paid monthly, equal to 0.35% of the average daily net assets of the U.S.
Treasury Securities Money Market Fund, the Prime Money Market Fund and the
Municipal Money Market Fund and 0.30% of the average daily net assets of the
Ohio Municipal Money Market Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administration agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly, at an annual rate of 0.20% on
each Fund's average daily net assets on the first $1.5 billion of Trust net
assets (excluding the Investor Growth Fund, the Investor Growth & Income
Fund, the Investor Conservative Growth Fund and the Investor Balanced Fund
(the "Investor Funds") and the Treasury Only Money Market Fund and the
Government Money Market Fund--the "Institutional Money Market Funds"); 0.18%
on the next $0.5 billion of Trust net assets (excluding the Investor Funds
and the Institutional Money Market Funds); and 0.16% on Trust net assets
(excluding the Investor Funds and the Institutional Money Market Funds) over
$2 billion. The Advisor also serves as Sub-Administrator to each Fund of the
Trust, pursuant to an agreement between the Administrator and the Advisor.
Pursuant to this agreement, the Advisor performs many of the Administrator's
duties, for which the Advisor receives a fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A Shares, Class B Shares and Service Class Shares are
subject to distribution and shareholder services plans (the "Plans") pursuant
to Rule 12b-1 under the 1940 Act. As provided in the Plan, the Trust will pay
the Distributor a fee of 0.35% of the average daily net assets of Class A
shares of each of the Funds, 1.00% of the average daily net assets of Class B
and C 0.75% of the average daily net assets of the Service Class Shares of
each of the Funds. The Distributor has voluntarily agreed to limit payments
under the Plan to 0.25% of average daily net assets of the Class A Shares of
each Fund and 0.55% of average daily net assets of the Service Class Shares
of each Fund. Up to 0.25% of the fees payable under the Plan may be used as
compensation of shareholder services by the Distributor and/or financial
institutions and intermediaries. Fees paid under the Plan may be applied by
the Distributor toward (i) compensation for its services in connection with
distribution assistance or provision of shareholder services; or (ii)
payments to financial institutions and intermediaries such as banks
(including affiliates of the Advisor), brokers, dealers and other
institutions, including the Distributor's affiliates and subsidiaries as
compensation for services or reimbursement of expenses incurred in connection
with distribution assistance or provision of shareholder services. Fiduciary
Class Shares of each Fund are offered without distribution fees.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
25
<PAGE> 600
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
The Advisor, Administrator and the Distributor voluntarily agreed to waive a
portion of their fees and to reimburse the Funds for certain expenses. For
the year ended June 30, 1997, fees in the following amounts were waived from
the Funds (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT 12B-1 FEES
ADVISORY FEES ADMINISTRATION WAIVED
WAIVED FEES WAIVED CLASS A
------------- -------------- ----------
<S> <C> <C> <C>
U.S. Treasury Securities Money Market Fund................. $ 2,743 $ 52 $340
Prime Money Market Fund.................................... 1,899 269 336
Municipal Money Market Fund................................ 594 45 42
Ohio Municipal Money Market Fund........................... 36 79 37
</TABLE>
5. CONCENTRATION OF CREDIT RISK:
The Ohio Municipal Money Market Fund invests primarily in debt obligations
issued by the State of Ohio and its political subdivisions, agencies and
public authorities to obtain funds for various public purposes. The Fund is
more susceptible to economic and political factors adversely affecting
issuers of Ohio's specific municipal securities than are municipal bond funds
that are not concentrated in these issuers to the same extent.
6. REORGANIZATION:
The Trust entered an Agreement and Plan of Reorganization with Paragon
pursuant to which all of the assets and liabilities of each Paragon Fund
transferred to a fund of The One Group in exchange for shares of the
corresponding fund of The One Group. The Paragon Treasury Money Market Fund
transferred its assets and liabilities to the U.S. Treasury Securities Money
Market Fund. The reorganization, which qualified as a tax-free exchange for
federal income tax purposes, was completed on March 25, 1996 following
approval by shareholders of the Paragon Portfolio at a special shareholder
meeting. The following is a summary of shares outstanding, net assets and net
asset value per share immediately before and after the reorganization:
<TABLE>
<CAPTION>
BEFORE REORGANIZATION
---------------------------- REORGANIZATION
U.S. --------------
PARAGON TREASURY U.S. TREASURY
TREASURY SECURITIES SECURITIES
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------ ------------ --------------
<S> <C> <C> <C>
Shares (000)....................... 356,742 1,735,489 2,092,231
Net Assets (000)................... $356,742 $1,735,505 $2,092,247
Net Asset Value:
Fiduciary..................... $ 1.00 $ 1.00
Class A....................... $ 1.00 $ 1.00 $ 1.00
</TABLE>
Continued
26
<PAGE> 601
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
7. FEDERAL TAX INFORMATION (UNAUDITED):
At June 30, 1997, the following Funds had capital loss carryforwards which
are available to offset future capital gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
OHIO
MUNICIPAL MUNICIPAL
MONEY MONEY
MARKET FUND MARKET FUND
----------- -----------
<S> <C> <C>
Expiring in 2003................................... $-- $--(b)
Expiring in 2004................................... 3 --(b)
Expiring in 2005................................... 10 8
</TABLE>
Capital losses incurred after October 31 within the Fund's fiscal year are
deemed to arise on the first business day of the following fiscal year. The
Ohio Municipal Money Market Fund incurred and will elect to defer such
capital losses in the amount of approximately $7,000.
Distributions declared from tax-exempt income during the fiscal year ended
June 30, 1997 are as follows (amounts in thousands):
<TABLE>
<S> <C>
Municipal Money Market Fund....................................... $16,231
Ohio Municipal Money Market Fund.................................. $ 2,741
</TABLE>
(b) Amounts less than $1,000.
27
<PAGE> 602
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES MONEY MARKET FUND
--------------------------------------------------------------
FIDUCIARY
--------------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- -------- --------
<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................................ 0.050 0.052 0.050 0.030 0.029
---------- ---------- ---------- -------- --------
Less: Distributions
Net investment income................................ (0.050)(a) (0.052) (0.050) (0.030) (0.029)
---------- ---------- ---------- -------- --------
NET ASSET VALUE,
END OF PERIOD........................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ======== ========
Total Return........................................... 5.07% 5.34% 5.07% 3.01% 2.89%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................... $2,243,376 $1,844,590 $1,178,091 $969,326 $492,862
Ratio of expenses to average net assets.............. 0.46% 0.42% 0.41% 0.40% 0.45%
Ratio of net investment income to average net
assets............................................. 4.95% 5.17% 4.96% 3.02% 2.85%
Ratio of expenses to average net assets*............. 0.57% 0.56% 0.59% 0.58% 0.67%
Ratio of net investment income to average net
assets*............................................ 4.84% 5.03% 4.78% 2.84% 2.63%
</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) Includes $.000002 short term capital gain.
See notes to financial statements.
28
<PAGE> 603
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES MONEY MARKET FUND
-----------------------------------------------------
CLASS A
-----------------------------------------------------
YEARS ENDED JUNE 30,
-----------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- ------- ------- -------
<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....................................... 0.047 0.050 0.047 0.027 0.026
-------- -------- ------- ------- -------
Less: Distributions
Net investment income....................................... (0.047)(a) (0.050) (0.047) (0.027) (0.026)
-------- -------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD............................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======= ======= =======
Total Return.................................................. 4.81% 5.08% 4.81% 2.76% 2.63%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................... $530,164 $110,864 $98,723 $53,423 $30,759
Ratio of expenses to average net assets..................... 0.72% 0.67% 0.66% 0.63% 0.65%
Ratio of net investment income to average net assets........ 4.71% 4.92% 4.71% 2.81% 2.52%
Ratio of expenses to average net assets*.................... 0.93% 0.91% 0.94% 0.87% 1.02%
Ratio of net investment income to average net assets*....... 4.50% 4.68% 4.43% 2.57% 2.15%
</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) Includes $.000002 short term capital gain.
See notes to financial statements.
29
<PAGE> 604
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES
MONEY MARKET FUND
------------------------
CLASS B
------------------------
NOVEMBER 21,
1996 TO
JUNE 30,
1997(a)
-----------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................. $1.000
------
Investment Activities
Net investment income................................................................ 0.024
------
Less: Distributions
Net investment income................................................................ (0.024)(b)
------
NET ASSET VALUE,
END OF PERIOD........................................................................ $1.000
=======================
Total Return........................................................................... 2.44%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................................... $ 49
Ratio of expenses to average net assets.............................................. 1.48%(d)
Ratio of net investment income to average net assets................................. 3.97%(d)
Ratio of expenses to average net assets*............................................. 1.59%(d)
Ratio of net investment income to average net assets*................................ 3.86%(d)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Includes $.000002 short term capital gain.
(c) Not annualized.
(d) Annualized.
See notes to financial statements.
30
<PAGE> 605
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
----------------------------------------------------------------
FIDUCIARY
----------------------------------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- --------
<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.............................. 0.051 0.054 0.052 0.031 0.030
---------- ---------- ---------- ---------- --------
Less: Distributions
Net investment income.............................. (0.051) (0.054) (0.052) (0.031) (0.030)
---------- ---------- ---------- ---------- --------
NET ASSET VALUE,
END OF PERIOD...................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ========
Total Return......................................... 5.20% 5.49% 5.34% 3.19% 3.09%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $2,563,768 $2,186,562 $1,965,416 $1,600,876 $979,275
Ratio of expenses to average net assets............ 0.48% 0.44% 0.41% 0.40% 0.44%
Ratio of net investment income to average net
assets........................................... 5.08% 5.34% 5.27% 3.18% 3.05%
Ratio of expenses to average net assets*........... 0.56% 0.55% 0.57% 0.59% 0.62%
Ratio of net investment income to average net
assets*.......................................... 5.00% 5.23% 5.12% 2.99% 2.87%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
31
<PAGE> 606
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
------------------------------------------------------
CLASS A
------------------------------------------------------
YEARS ENDED JUNE 30,
------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- ------- -------
<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...................................... 0.048 0.051 0.050 0.027 0.030
-------- -------- -------- ------- -------
Less: Distributions
Net investment income...................................... (0.048) (0.051) (0.050) (0.027) (0.030)
-------- -------- -------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======= =======
Total Return................................................. 4.94% 5.22% 5.08% 2.93% 2.83%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $332,646 $315,374 $201,968 $74,759 $61,106
Ratio of expenses to average net assets.................... 0.73% 0.69% 0.67% 0.65% 0.65%
Ratio of net investment income to average net assets....... 4.83% 5.09% 5.02% 2.92% 2.67%
Ratio of expenses to average net assets*................... 0.91% 0.90% 0.92% 0.90% 0.99%
Ratio of net investment income to average net assets*...... 4.65% 4.88% 4.77% 2.67% 2.33%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
32
<PAGE> 607
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
-----------------------
CLASS B
-----------------------
NOVEMBER 21,
1996 TO
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................ $ 1.000
-------
Investment Activities
Net investment income.............................................................. 0.026
-------
Less: Distributions
Net investment income.............................................................. (0.026)
-------
NET ASSET VALUE,
END OF PERIOD...................................................................... $ 1.000
============
Total Return......................................................................... 2.63%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................................. $ 618
Ratio of expenses to average net assets............................................ 1.51%(c)
Ratio of net investment income to average net assets............................... 4.16%(c)
Ratio of expenses to average net assets*........................................... 1.59%(c)
Ratio of net investment income to average net assets*.............................. 4.08%(c)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
33
<PAGE> 608
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET FUND
--------------------------------------------------------
FIDUCIARY
--------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<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.................................... 0.031 0.033 0.032 0.021 0.021
-------- -------- -------- -------- --------
Less: Distributions
Net investment income.................................... (0.031) (0.033) (0.032) (0.021) (0.021)
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD............................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total Return............................................... 3.19% 3.34% 3.28% 2.16% 2.15%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $467,420 $459,807 $437,743 $352,702 $175,277
Ratio of expenses to average net assets.................. 0.43% 0.41% 0.41% 0.40% 0.46%
Ratio of net investment income to average net assets..... 3.16% 3.29% 3.26% 2.13% 2.12%
Ratio of expenses to average net assets*................. 0.55% 0.59% 0.59% 0.60% 0.66%
Ratio of net investment income to average net assets*.... 3.04% 3.11% 3.08% 1.93% 1.92%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
34
<PAGE> 609
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET FUND
---------------------------------------------------
CLASS A
---------------------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<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......................................... 0.029 0.030 0.030 0.021 0.019
------- ------- ------- ------- -------
Less: Distributions
Net investment income......................................... (0.029) (0.030) (0.030) (0.021) (0.019)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD................................................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return.................................................... 2.97% 3.08% 3.02% 1.96% 1.89%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................. $48,185 $50,720 $56,518 $41,595 $18,932
Ratio of expenses to average net assets....................... 0.68% 0.66% 0.66% 0.65% 0.66%
Ratio of net investment income to average net assets.......... 2.91% 3.04% 3.01% 1.92% 1.82%
Ratio of expenses to average net assets*...................... 0.90% 0.94% 0.94% 0.91% 1.01%
Ratio of net investment income to average net assets*......... 2.69% 2.76% 2.73% 1.66% 1.47%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
35
<PAGE> 610
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET FUND
----------------------------------------------------
FIDUCIARY
----------------------------------------------------
JUNE 9,
YEARS ENDED JUNE 30, 1993 TO
---------------------------------------- JUNE 30,
1997 1996 1995 1994 1993(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........................................ 0.032 0.033 0.032 0.022 0.013
------- ------- ------- ------- -------
Less: Distributions
Net investment income........................................ (0.032) (0.032) (0.032) (0.022) (0.013)
In excess of net investment income........................... -- (0.001) -- -- --
------- ------- ------- ------- -------
Total Distributions........................................ (0.032) (0.033) (0.032) (0.022) (0.013)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD................................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return................................................... 3.22% 3.34% 3.20% 2.25% 2.14% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................ $56,442 $55,915 $51,806 $55,375 $ 3,500
Ratio of expenses to average net assets...................... 0.40% 0.41% 0.41% 0.34% 0.08% (b)
Ratio of net investment income to average net assets......... 3.17% 3.19% 3.13% 2.29% 2.07% (b)
Ratio of expenses to average net assets*..................... 0.53% 0.71% 0.60% 0.57% 0.51% (b)
Ratio of net investment income to average net assets*........ 3.04% 2.89% 2.94% 2.06% 1.64% (b)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
See notes to financial statements.
36
<PAGE> 611
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET FUND
-------------------------------------------------------
CLASS A
-------------------------------------------------------
JANUARY 26,
YEARS ENDED JUNE 30, 1993 TO
---------------------------------------- JUNE 30,
1997 1996 1995 1994 1993(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...................................... 0.029 0.030 0.029 0.021 0.009
------- ------- ------- ------- -------
Less: Distributions
Net investment income...................................... (0.029) (0.029) (0.029) (0.021) (0.009)
In excess of net investment income......................... -- (0.001) -- -- --
------- ------- ------- ------- -------
Total Distributions...................................... (0.029) (0.030) (0.029) (0.021) (0.009)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return................................................. 2.96% 3.08% 2.98% 2.09% 2.34%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $30,479 $41,132 $35,790 $37,356 $25,125
Ratio of expenses to average net assets.................... 0.65% 0.66% 0.63% 0.44% 0.26%(b)
Ratio of net investment income to average net assets....... 2.90% 2.94% 2.91% 2.05% 2.03%(b)
Ratio of expenses to average net assets*................... 0.88% 1.06% 0.95% 0.94% 0.92%(b)
Ratio of net investment income to average net assets*...... 2.67% 2.54% 2.59% 1.55% 1.37%(b)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
See notes to financial statements.
37
<PAGE> 612
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
U.S. Treasury Securities Money Market Fund, the Prime Money Market Fund, the
Municipal Money Market Fund and the Ohio Municipal Money Market Fund (four
series of The One Group Family of Mutual Funds), including the schedules of
portfolio investments, as of June 30, 1997, and the related statements of
operations, statements of changes in net assets, and the financial highlights
for each of the periods presented. These financial statements and financial
highlights are the responsibility of The One Group Family of Mutual Funds'
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
U.S. Treasury Securities Money Market Fund, the Prime Money Market Fund, the
Municipal Money Market Fund and the Ohio Municipal Money Market Fund as of June
30, 1997, the results of their operations, the changes in their net assets and
the financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
38
<PAGE> 613
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES (99.5%):
380 The One Group Disciplined Value Fund
Fiduciary Class......................... $ 5,946
205 The One Group Government Bond Fund
Fiduciary Class......................... 1,985
320 The One Group Growth Opportunities Fund
Fiduciary Class......................... 6,228
84 The One Group Gulf South Growth Fund
Fiduciary Class......................... 916
168 The One Group Income Bond Fund Fiduciary
Class................................... 1,583
120 The One Group Intermediate Bond Fund
Fiduciary Class......................... 1,186
236 The One Group International Equity Index
Fund Fiduciary Class.................... 3,993
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
345 The One Group Large Company Growth Fund
Fiduciary Class......................... $ 6,704
430 The One Group Large Company Value Fund
Fiduciary Class......................... 6,365
75 The One Group Limited Volatility Fund
Fiduciary Class......................... 789
392 The One Group Prime Money Market Fund
Fiduciary Class......................... 392
616 The One Group Value Growth Fund
Fiduciary Class......................... 7,093
-------
Total Investment Companies 43,180
-------
Total (Cost--$39,084) (a) $43,180
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $43,408.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $4. Cost for federal income tax purposes differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation......................... $4,129
Unrealized depreciation......................... (37)
------
Net unrealized appreciation..................... $4,092
======
</TABLE>
See notes to financial statements.
10
<PAGE> 614
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Growth & Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES (99.4%):
398 The One Group Disciplined Value Fund
Fiduciary Class......................... $ 6,237
656 The One Group Government Bond Fund
Fiduciary Class......................... 6,361
336 The One Group Growth Opportunities Fund
Fiduciary Class......................... 6,533
561 The One Group Income Bond Fund Fiduciary
Class................................... 5,284
319 The One Group Intermediate Bond Fund
Fiduciary Class......................... 3,166
245 The One Group International Equity Index
Fund Fiduciary Class.................... 4,146
368 The One Group Large Company Growth Fund
Fiduciary Class......................... 7,161
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
459 The One Group Large Company Value Fund
Fiduciary Class......................... $ 6,797
201 The One Group Limited Volatility Fund
Fiduciary Class......................... 2,107
523 The One Group Prime Money Market Fund
Fiduciary Class......................... 523
106 The One Group Ultra Short-Term Income
Fund Fiduciary Class.................... 1,051
617 The One Group Value Growth Fund
Fiduciary Class......................... 7,100
-------
Total Investment Companies 56,466
-------
Total (Cost--$52,633) (a) $56,466
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $56,818.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $102. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation......................... $3,841
Unrealized depreciation......................... (110)
------
Net unrealized appreciation..................... $3,731
======
</TABLE>
See notes to financial statements.
11
<PAGE> 615
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Conservative Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES (99.7%):
13 The One Group Disciplined Value Fund
Fiduciary Class......................... $ 197
514 The One Group Government Bond Fund
Fiduciary Class......................... 4,986
11 The One Group Growth Opportunities Fund
Fiduciary Class......................... 207
410 The One Group Income Bond Fund Fiduciary
Class................................... 3,864
37 The One Group Income Equity Fund
Fiduciary Class......................... 813
241 The One Group Intermediate Bond Fund
Fiduciary Class......................... 2,389
49 The One Group International Equity Index
Fund Fiduciary Class.................... 825
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
53 The One Group Large Company Growth Fund
Fiduciary Class......................... $ 1,039
67 The One Group Large Company Value Fund
Fiduciary Class......................... 986
140 The One Group Limited Volatility Fund
Fiduciary Class......................... 1,468
365 The One Group Prime Money Market Fund
Fiduciary Class......................... 365
74 The One Group Ultra Short-Term Income
Fund Fiduciary Class.................... 732
90 The One Group Value Growth Fund
Fiduciary Class......................... 1,030
-------
Total Investment Companies 18,901
-------
Total (Cost--$18,440) (a) $18,901
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $18,953.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $30. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation......................... $ 498
Unrealized depreciation......................... (67)
------
Net unrealized appreciation..................... $ 431
======
</TABLE>
See notes to financial statements.
12
<PAGE> 616
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES (99.9%):
314 The One Group Disciplined Value Fund
Fiduciary Class......................... $ 4,910
1,500 The One Group Government Bond Fund
Fiduciary Class......................... 14,533
264 The One Group Growth Opportunities Fund
Fiduciary Class......................... 5,143
1,214 The One Group Income Bond Fund Fiduciary
Class................................... 11,438
768 The One Group Intermediate Bond Fund
Fiduciary Class......................... 7,616
253 The One Group International Equity Index
Fund Fiduciary Class.................... 4,274
399 The One Group Large Company Growth Fund
Fiduciary Class......................... 7,749
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
497 The One Group Large Company Value Fund
Fiduciary Class......................... $ 7,357
436 The One Group Limited Volatility Fund
Fiduciary Class......................... 4,562
755 The One Group Prime Money Market Fund
Fiduciary Class......................... 755
307 The One Group Ultra Short-Term Income
Fund Fiduciary Class.................... 3,035
742 The One Group Value Growth Fund
Fiduciary Class......................... 8,539
-------
Total Investment Companies 79,911
-------
Total (Cost--$75,431) (a) $79,911
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $80,003.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $23. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation......................... $4,694
Unrealized depreciation......................... (237)
------
Net unrealized appreciation..................... $4,457
======
</TABLE>
See notes to financial statements.
13
<PAGE> 617
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
INVESTOR
INVESTOR INVESTOR GROWTH CONSERVATIVE INVESTOR
GROWTH FUND & INCOME FUND GROWTH FUND BALANCED FUND
------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost $39,084; $52,633;
$18,440; and $75,431; respectively).......... $43,180 $ 56,466 $18,901 $79,911
Cash........................................... 57 62 -- 30
Dividends receivable........................... 83 150 76 273
Receivable for capital shares issued........... 183 312 63 95
Receivable from Administrator.................. 12 11 11 11
Prepaid expenses and other assets.............. -- 2 6 4
------------- ------- ----------- -------------
TOTAL ASSETS................................... 43,515 57,003 19,057 80,324
------------- ------- ----------- -------------
LIABILITIES:
Cash overdraft................................. -- -- 1 --
Dividends payable.............................. 70 137 72 260
Payable for capital shares redeemed............ -- 7 -- 1
Accrued expenses and other payables:
Investment advisory fees................... -- -- -- 1
12b-1 fees................................. 7 7 2 4
Other...................................... 30 34 29 55
------------- ------- ----------- -------------
TOTAL LIABILITIES.............................. 107 185 104 321
------------- ------- ----------- -------------
NET ASSETS:
Capital........................................ 39,371 53,072 18,483 75,590
Accumulated undistributed net realized
gains/(losses) from investment
transactions................................. (59) (87) 9 (67)
Unrealized appreciation (depreciation) from
investments.................................. 4,096 3,833 461 4,480
------------- ------- ----------- -------------
NET ASSETS..................................... $43,408 $ 56,818 $18,953 $80,003
============= ======== =========== =============
NET ASSETS:
Fiduciary.................................. $31,318 $ 43,660 $15,038 $72,155
Class A.................................... 4,439 4,262 1,299 2,176
Class B.................................... 7,651 8,896 2,616 5,672
------------- ------- ----------- -------------
Total...................................... $43,408 $ 56,818 $18,953 $80,003
============= ======== =========== =============
OUTSTANDING UNITS OF BENEFICIAL INTEREST
(SHARES):
Fiduciary.................................. 2,784 3,996 1,455 6,790
Class A.................................... 396 387 126 204
Class B.................................... 675 808 253 533
------------- ------- ----------- -------------
Total...................................... 3,855 5,191 1,834 7,527
============= ======== =========== =============
Net Asset Value:
Fiduciary
Offering and redemption price per
share................................ $ 11.25 $ 10.93 $ 10.33 $ 10.63
============= ======== =========== =============
Class A
Redemption price per share............. $ 11.21 $ 11.02 $ 10.32 $ 10.66
============= ======== =========== =============
Maximum sales charge................... 4.50% 4.50% 4.50% 4.50%
============= ======== =========== =============
Maximum offering price per share
(100%/(100%-maximum sales charge) of
net asset value adjusted to nearest
cent)................................ $ 11.74 11.54 $ 10.81 $ 11.16
============= ======== =========== =============
Class B
Offering price per share (a)........... $ 11.34 $ 11.00 $ 10.33 $ 10.65
============= ======== =========== =============
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
14
<PAGE> 618
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
INVESTOR
INVESTOR INVESTOR GROWTH CONSERVATIVE INVESTOR
GROWTH FUND & INCOME FUND GROWTH FUND BALANCED FUND
------------- ---------------- -------------- -------------
DECEMBER 10, DECEMBER 10, DECEMBER 10, DECEMBER 10,
1996 THROUGH 1996 THROUGH 1996 THROUGH 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997(a) 1997(a) 1997(a) 1997(a)
------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Distribution income................. $ 302 $ 616 $352 $ 1,261
------------- ------- ------ -------------
EXPENSES:
Investment advisory fees............ 8 10 3 16
Administration fees................. 16 20 7 31
12b-1 fees (Class A)................ 2 3 1 1
12b-1 fees (Class B)................ 14 17 5 12
Custodian and accounting fees....... 14 14 13 17
Legal and audit fees................ 4 2 4 4
Transfer agent fees................. 12 14 16 16
Registration and filing fees........ 43 44 42 42
Printing costs...................... 15 20 7 30
Other............................... 17 17 16 20
------------- ------- ------ -------------
Total expenses before
waivers/reimbursements............ 145 161 114 189
Less waivers/reimbursements......... (99) (101) (95) (115)
------------- ------- ------ -------------
NET EXPENSES........................ 46 60 19 74
------------- ------- ------ -------------
Net Investment Income............... 256 556 333 1,187
------------- ------- ------ -------------
REALIZED/UNREALIZED LOSSES FROM
INVESTMENTS:
Net realized gains/(losses) from
investment transactions........... (59) (87) 9 (67)
Net change in unrealized
appreciation (depreciation) from
investments....................... 4,096 3,833 461 4,480
------------- ------- ------ -------------
Net realized/unrealized gains from
investments....................... 4,037 3,746 470 4,413
------------- ------- ------ -------------
Change in net assets resulting from
operations........................ $ 4,293 $4,302 $803 $ 5,600
============= =========== ========= =============
</TABLE>
- ------------
(a) Period from commencement of operations.
See notes to financial statements.
15
<PAGE> 619
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
INVESTOR
INVESTOR INVESTOR GROWTH CONSERVATIVE INVESTOR
GROWTH FUND & INCOME FUND GROWTH FUND BALANCED FUND
------------- ---------------- ------------- -------------
DECEMBER 10, DECEMBER 10, DECEMBER 10, DECEMBER 10,
1996 THROUGH 1996 THROUGH 1996 THROUGH 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997(a) 1997(a) 1997(a) 1997(a)
------------- ---------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income........... $ 256 $ 556 $ 333 $ 1,187
Net realized gains/(losses) from
investment transactions....... (59) (87) 9 (67)
Net change in unrealized
appreciation (depreciation)
from investments.............. 4,096 3,833 461 4,480
------------- ---------------- ------------- -------------
Change in net assets resulting from
operations......................... 4,293 4,302 803 5,600
------------- ---------------- ------------- -------------
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment income...... (227) (494) (296) (1,132)
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS:
From net investment income...... (14) (24) (14) (15)
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS:
From net investment income...... (15) (38) (23) (40)
------------- ---------------- ------------- -------------
Change in net assets from shareholder
distributions...................... (256) (556) (333) (1,187)
------------- ---------------- ------------- -------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued..... 41,705 58,244 21,496 78,898
Dividends reinvested............ 25 49 41 49
Cost of shares redeemed......... (2,359) (5,221) (3,054) (3,357)
------------- ---------------- ------------- -------------
Change in net assets from share
transactions....................... 39,371 53,072 18,483 75,590
------------- ---------------- ------------- -------------
Change in Net Assets................. 43,408 56,818 18,953 80,003
NET ASSETS:
Beginning of period............. -- -- -- --
------------- ---------------- ------------- -------------
End of period................... $43,408 $ 56,818 $18,953 $80,003
============= ================ ============= =============
SHARE TRANSACTIONS:
Issued.......................... 4,079 5,697 2,132 7,850
Reinvested...................... 3 4 5 5
Redeemed........................ (227) (510) (303) (328)
------------- ---------------- ------------- -------------
Change in shares..................... 3,855 5,191 1,834 7,527
============= ================ ============= =============
</TABLE>
- ------------
(a) Period from commencement of operations.
See notes to financial statements.
16
<PAGE> 620
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Investor Growth Fund,
the Investor Growth & Income Fund, the Investor Conservative Growth Fund and
the Investor Balanced Fund (individually a "Fund", collectively the "Funds")
only. The Funds are each offered in Fiduciary Class, Class A, Class B and
Class C Shares. Class A Shares are subject to initial sales charges, imposed
at the time of purchase, in accordance with the Funds' prospectuses. Certain
redemptions of Class B and Class C Shares are subject to contingent deferred
sales charges in accordance with the Funds' prospectuses.
The Funds investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Investor Growth Fund The Fund seeks long-term capital appreciation by investing
primarily in a diversified group of The One Group mutual
funds which invest primarily in equity securities.
Investor Growth & Income Fund The Fund seeks long-term capital appreciation and growth of
income by investing primarily in a diversified group of The
One Group mutual funds which invest primarily in equity
securities.
Investor Conservative Growth Fund The Fund seeks income and capital appreciation by investing
primarily in a diversified group of The One Group mutual
funds which invest primarily in equity and fixed income
securities.
Investor Balanced Fund The Fund seeks high total return consistent with the
preservation of capital by investing primarily in a
diversified group of The One Group mutual funds which
invest primarily in equity and fixed income securities.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Investments in The One Group mutual funds (the "Underlying Funds") are
valued at the closing net asset value per share of each Underlying Fund
on the day of valuation. Short-term investments maturing in 60 days or
less are valued at amortized cost, which approximates market value.
SECURITY TRANSACTIONS AND RELATED INCOME
Purchases and sales of the underlying funds are accounted for on a trade
date basis. Net realized gains or losses on sales of the underlying funds
are determined on the specific identification cost method. Other income
and expenses are recognized on the accrual basis. Distributions from the
underlying funds and dividends to the Funds' shareholders are recorded on
the ex-dividend date.
Continued
17
<PAGE> 621
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one fund of
the Trust are allocated among the respective Funds. Each class of shares
bears its pro-rata portion of expenses attributable to its series, except
that each class separately bears expenses related specifically to that
class, such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid monthly for
the Funds. Net realized capital gains, if any, are distributed at least
annually. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for expiring capital loss
carryforwards and deferrals of certain losses. Permanent book and tax
basis differences, which affect shareholder distributions, will be
reclassified to additional paid-in capital.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies as defined in applicable sections of the Internal
Revenue Code, and to make distributions from net investment income and
from net realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more classes. The Trust is registered to offer forty
series and five classes of shares: Fiduciary, Class A, Class B, Class C and
Service. Currently, the Trust consists of thirty three active funds, and not
all funds can offer all classes of shares. During the year ended June 30,
1997, there were no shareholders in Class C or the Service Class of the
Funds. Shareholders are entitled to one vote for each full share held and
will vote in the aggregate and not by class or series, except as otherwise
expressly required by law or when the Board of Trustees has determined that
the matter to be voted on affects only the interest of shareholders of a
particular class or series. The following is a summary of transactions in
Fund shares for the period from December 10, 1996 (commencement of
operations) through June 30, 1997:
Continued
18
<PAGE> 622
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
INVESTOR INVESTOR
INVESTOR GROWTH & CONSERVATIVE INVESTOR
GROWTH FUND INCOME FUND GROWTH FUND BALANCED FUND
------------ ------------ ------------ -------------
DECEMBER 10, DECEMBER 10, DECEMBER 10, DECEMBER 10,
1996 THROUGH 1996 THROUGH 1996 THROUGH 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997(a) 1997(a) 1997(a) 1997(a)
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued..................... $ 30,381 $ 45,181 $ 17,645 $71,345
Dividends reinvested............................ 11 13 18 15
Cost of shares redeemed......................... (2,252) (4,561) (2,999) (3,309)
------------ ------------ ------------ -------------
Change in net assets from Fiduciary share
transactions.................................. $ 28,140 $ 40,633 $ 14,664 $68,051
============ ============ ============ =============
CLASS A SHARES:
Proceeds from shares issued..................... $ 4,125 $ 4,604 $ 1,283 $ 2,092
Dividends reinvested............................ 7 14 8 9
Cost of shares redeemed......................... (19) (606) (29) --
------------ ------------ ------------ -------------
Change in net assets from Class A share
transactions.................................. $ 4,113 $ 4,012 $ 1,262 $ 2,101
============ ============ ============ =============
CLASS B SHARES:
Proceeds from shares issued..................... $ 7,199 $ 8,459 $ 2,568 $ 5,461
Dividends reinvested............................ 7 22 15 25
Cost of shares redeemed......................... (88) (54) (26) (48)
------------ ------------ ------------ -------------
Change in net assets from Class B share
transactions.................................. $ 7,118 $ 8,427 $ 2,557 $ 5,438
============ ============ ============ =============
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.......................................... 3,000 4,443 1,750 7,112
Reinvested...................................... 1 1 2 2
Redeemed........................................ (217) (448) (297) (324)
------------ ------------ ------------ -------------
Change in Fiduciary Shares...................... 2,784 3,996 1,455 6,790
============ ============ ============ =============
CLASS A SHARES:
Issued.......................................... 397 443 128 203
Reinvested...................................... 1 1 1 1
Redeemed........................................ (2) (57) (3) --
------------ ------------ ------------ -------------
Change in Class A Shares........................ 396 387 126 204
============ ============ ============ =============
CLASS B SHARES:
Issued.......................................... 682 811 254 535
Reinvested...................................... 1 2 2 2
Redeemed........................................ (8) (5) (3) (4)
------------ ------------ ------------ -------------
Change in Class B Shares........................ 675 808 253 533
============ ============ ============ =============
</TABLE>
- ------------
(a) Period from commencement of operations.
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and Banc One Investment Advisors Corporation (the "Advisor") are
parties to an investment advisory agreement under which the Advisor is
entitled to receive an annual fee, computed daily and paid monthly, equal
Continued
19
<PAGE> 623
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
to 0.05% of the average net assets of the Investor Growth Fund, the Investor
Growth & Income Fund, the Investor Conservative Growth Fund and the Investor
Balanced Fund, respectively.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administrative agreement under which the Administrator provides services for
a fee that is computed daily and payable monthly, at an annual rate of 0.10%
on the first $500 million of each Fund's average daily net assets, 0.075% of
each Fund's average daily net assets between $500 million and $1 billion, and
0.05% of each Fund's average daily net assets when Fund assets exceed $1
billion. The Advisor also serves as Sub-Administrator to each fund of the
Trust, pursuant to an agreement between the Administrator and the Advisor.
Pursuant to this agreement, the Advisor performs many of the Administrator's
duties, for which the Advisor receives a fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A Shares, Class B Shares and, Class C Shares are
subject to a distribution and shareholder services plan (the "Plan") pursuant
to Rule 12b-1 under the 1940 Act. As provided in the Plans, the Trust will
pay the Distributor a fee of 0.35% of the average daily net assets of Class A
Shares of each of the Funds and 1.00% of the average daily net assets of the
Class B Shares and Class C Shares of each of the Funds. Currently, the
Distributor has voluntarily agreed to limit payments under the Plans to 0.25%
of average daily net assets of the Class A Shares of each Fund. Up to 0.25%
of the fees payable under the Plans may be used as compensation for
shareholder services by the Distributor and/or financial institutions and
intermediaries. Fees paid under the Plans may be applied by the Distributor
toward (i) compensation for its services in connection with distribution
assistance or provision of shareholder services; or (ii) payments to
financial institutions and intermediaries such as banks, (including
affiliates of the Advisor), brokers, dealers and other institutions,
including the Distributor's affiliates and subsidiaries as compensation for
services or reimbursement of expenses incurred in connection with
distribution assistance or provision of shareholder services. Fiduciary Class
Shares of each Fund are offered without distribution fees. For the period
ended June 30, 1997, the Distributor received $1,185,022 from commissions
earned on sales of Class A Shares and redemptions of Class B Shares, of
which, the Distributor re-allowed $1,181,695 to affiliated broker-dealers of
the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees and to reimburse the Funds for certain
expenses. For the period ended June 30, 1997, fees in the following amounts
were waived and reimbursed from the funds (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT 12B-1 FEES FEES
ADVISORY FEES ADMINISTRATION WAIVED REIMBURSED BY
WAIVED FEES WAIVED CLASS A ADMINISTRATOR
------------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Growth Fund................. $ 6 $16 $ 1 $76
Investor Growth & Income Fund........ 8 20 1 72
Investor Conservative Growth Fund.... 2 7 --* 86
Investor Balanced Fund............... 13 31 --* 71
</TABLE>
* Amount less than $1,000.
Continued
20
<PAGE> 624
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the period
ended June 30, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
PURCHASES SALES
--------- ------
<S> <C> <C>
Investor Growth Fund.................................... $43,799 $5,047
Investor Growth & Income Fund........................... 58,388 6,429
Investor Conservative Growth Fund....................... 21,221 3,432
Investor Balanced Fund.................................. 81,364 6,622
</TABLE>
6. FEDERAL TAX INFORMATION (UNAUDITED):
Capital losses incurred after October 31 within the Fund's fiscal year may be
deferred and treated as occurring on the first day of the following fiscal
year. The following deferred losses will be treated as arising on the first
day of the fiscal year ending June 30, 1998 (amounts in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT
---- ------
<S> <C>
Investor Growth Fund.............................................. $ 55
Investor Balanced Fund............................................ 44
</TABLE>
ELIGIBLE DISTRIBUTIONS:
The Trust designates the following percentage of distributions eligible for
the dividends received deductions for corporations.
<TABLE>
<CAPTION>
FUND PERCENTAGE
---- ----------
<S> <C>
Investor Growth Fund........................................... 66.75%
Investor Growth & Income Fund.................................. 52.15%
Investor Conservative Growth Fund.............................. 34.78%
Investor Balanced Fund......................................... 45.62%
</TABLE>
Continued
21
<PAGE> 625
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
FUND
------------
FIDUCIARY
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $ 10.00
------------
Investment Activities
Net investment income............................................................... 0.09
Net realized and unrealized gains (losses) from investments......................... 1.25
------------
Total from Investment Activities................................................. 1.34
------------
Distributions
From net investment income.......................................................... (0.09)
------------
Total Distributions.............................................................. (0.09)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $ 11.25
============
Total Return.......................................................................... 13.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $ 31,318
Ratio of expenses to average net assets............................................. 0.20%(c)
Ratio of net investment income to average net assets................................ 1.70%(c)
Ratio of expenses to average net assets*............................................ 0.77%(c)
Ratio of net investment income to average net assets*............................... 1.13%(c)
Portfolio turnover (d).............................................................. 18.49%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
22
<PAGE> 626
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
FUND
------------
CLASS A
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.07
Net realized and unrealized gains (losses) from investments......................... 1.21
------------
Total from Investment Activities................................................. 1.28
------------
Distributions
From net investment income.......................................................... (0.07)
------------
Total Distributions.............................................................. (0.07)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $11.21
============
Total Return (Excludes Sales Charge).................................................. 12.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $4,439
Ratio of expenses to average net assets............................................. 0.46%(c)
Ratio of net investment income to average net assets................................ 1.82%(c)
Ratio of expenses to average net assets*............................................ 1.62%(c)
Ratio of net investment income to average net assets*............................... 0.66%(c)
Portfolio turnover (d).............................................................. 18.49%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
23
<PAGE> 627
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
FUND
------------
CLASS B
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.04
Net realized and unrealized gains (losses) from investments......................... 1.34
------------
Total from Investment Activities................................................. 1.38
------------
Distributions
From net investment income.......................................................... (0.04)
------------
Total Distributions.............................................................. (0.04)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $11.34
============
Total Return (Excludes Sales Charge).................................................. 13.88%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $7,651
Ratio of expenses to average net assets............................................. 1.20%(c)
Ratio of net investment income to average net assets................................ 0.97%(c)
Ratio of expenses to average net assets*............................................ 2.18%(c)
Ratio of net investment income to average net assets*............................... (0.01%)(c)
Portfolio turnover (d).............................................................. 18.49%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
24
<PAGE> 628
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
& INCOME
FUND
------------
FIDUCIARY
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997 (a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $ 10.00
------------
Investment Activities
Net investment income............................................................... 0.15
Net realized and unrealized gains from investments.................................. 0.93
------------
Total from Investment Activities................................................. 1.08
------------
Distributions
From net investment income.......................................................... (0.15)
------------
Total Distributions.............................................................. (0.15)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $ 10.93
============
Total Return.......................................................................... 10.87%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $ 43,660
Ratio of expenses to average net assets............................................. 0.20%(c)
Ratio of net investment income to average net assets................................ 2.78%(c)
Ratio of expenses to average net assets *........................................... 0.66%(c)
Ratio of net investment income to average net assets*............................... 2.32%(c)
Portfolio turnover(d)............................................................... 18.07%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
25
<PAGE> 629
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
& INCOME
FUND
------------
CLASS A
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997 (a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.12
Net realized and unrealized gains from investments.................................. 1.02
------------
Total from Investment Activities................................................. 1.14
------------
Distributions
From net investment income.......................................................... (0.12)
------------
Total Distributions.............................................................. (0.12)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $11.02
============
Total Return (Excludes Sales Charge).................................................. 11.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $4,262
Ratio of expenses to average net assets............................................. 0.46%(c)
Ratio of net investment income to average net assets................................ 2.67%(c)
Ratio of expenses to average net assets*............................................ 1.26%(c)
Ratio of net investment income to average net assets*............................... 1.87%(c)
Portfolio turnover(d)............................................................... 18.07%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
26
<PAGE> 630
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
& INCOME
FUND
------------
CLASS B
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997 (a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.09
Net realized and unrealized gains (losses) from investments......................... 1.00
------------
Total from Investment Activities................................................. 1.09
------------
Distributions
From net investment income.......................................................... (0.09)
------------
Total Distributions.............................................................. (0.09)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $11.00
============
Total Return (Excludes Sales Charge).................................................. 11.02%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $8,896
Ratio of expenses to average net assets............................................. 1.21%(c)
Ratio of net investment income to average net assets................................ 1.94%(c)
Ratio of expenses to average net assets*............................................ 1.89%(c)
Ratio of net investment income to average net assets*............................... 1.26%(c)
Portfolio turnover(d)............................................................... 18.07%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
27
<PAGE> 631
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
CONSERVATIVE
GROWTH FUND
------------
FIDUCIARY
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $ 10.00
------------
Investment Activities
Net investment income............................................................... 0.26
Net realized and unrealized gains (losses) from investments......................... 0.33
------------
Total from Investment Activities................................................. 0.59
------------
Distributions
From net investment income.......................................................... (0.26)
------------
Total Distributions.............................................................. (0.26)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $ 10.33
============
Total Return.......................................................................... 6.00%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $ 15,038
Ratio of expenses to average net assets............................................. 0.20%(c)
Ratio of net investment income to average net assets................................ 4.92%(c)
Ratio of expenses to average net assets*............................................ 1.46%(c)
Ratio of net investment income to average net assets*............................... 3.66%(c)
Portfolio turnover (d).............................................................. 28.46%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
28
<PAGE> 632
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
CONSERVATIVE
GROWTH FUND
------------
CLASS A
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.22
Net realized and unrealized gains (losses) from investments......................... 0.32
------------
Total from Investment Activities................................................. 0.54
------------
Distributions
From net investment income.......................................................... (0.22)
------------
Total Distributions.............................................................. (0.22)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $10.32
============
Total Return (Excludes Sales Charge).................................................. 5.46%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $1,299
Ratio of expenses to average net assets............................................. 0.47%(c)
Ratio of net investment income to average net assets................................ 4.76%(c)
Ratio of expenses to average net assets*............................................ 3.05%(c)
Ratio of net investment income to average net assets*............................... 2.18%(c)
Portfolio turnover (d).............................................................. 28.46%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
29
<PAGE> 633
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
CONSERVATIVE
GROWTH FUND
------------
CLASS B
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.19
Net realized and unrealized gains (losses) from investments......................... 0.33
------------
Total from Investment Activities................................................. 0.52
------------
Distributions
From net investment income.......................................................... (0.19)
------------
Total Distributions.............................................................. (0.19)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $10.33
============
Total Return (Excludes Sales Charge).................................................. 5.30%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $2,616
Ratio of expenses to average net assets............................................. 1.21%(c)
Ratio of net investment income to average net assets................................ 4.06%(c)
Ratio of expenses to average net assets*............................................ 3.52%(c)
Ratio of net investment income to average net assets*............................... 1.75%(c)
Portfolio turnover (d).............................................................. 28.46%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
30
<PAGE> 634
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
BALANCED
FUND
------------
FIDUCIARY
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $ 10.00
------------
Investment Activities
Net investment income............................................................... 0.21
Net realized and unrealized gains from investments.................................. 0.63
------------
Total from Investment Activities................................................. 0.84
------------
Distributions
From net investment income.......................................................... (0.21)
------------
Total Distributions.............................................................. (0.21)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $ 10.63
============
Total Return.......................................................................... 8.48%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $ 72,155
Ratio of expenses to average net assets............................................. 0.20%(c)
Ratio of net investment income to average net assets................................ 3.84%(c)
Ratio of expenses to average net assets*............................................ 0.56%(c)
Ratio of net investment income to average net assets*............................... 3.48%(c)
Portfolio turnover (d).............................................................. 12.20%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
31
<PAGE> 635
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
BALANCED
FUND
------------
CLASS A
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.17
Net realized and unrealized gains from investments.................................. 0.66
------------
Total from Investment Activities................................................. 0.83
------------
Distributions
From net investment income.......................................................... (0.17)
------------
Total Distributions.............................................................. (0.17)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $10.66
============
Total Return (Excludes Sales Charge).................................................. 8.41%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $2,176
Ratio of expenses to average net assets............................................. 0.47%(c)
Ratio of net investment income to average net assets................................ 3.78%(c)
Ratio of expenses to average net assets*............................................ 1.12%(c)
Ratio of net investment income to average net assets*............................... 3.13%(c)
Portfolio turnover (d).............................................................. 12.20%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
32
<PAGE> 636
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
BALANCED
FUND
------------
CLASS B
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.16
Net realized and unrealized gains from investments.................................. 0.65
------------
Total from Investment Activities................................................. 0.81
------------
Distributions
From net investment income.......................................................... (0.16)
------------
Total Distributions.............................................................. (0.16)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $10.65
============
Total Return (Excludes Sales Charge).................................................. 8.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $5,672
Ratio of expenses to average net assets............................................. 1.22%(c)
Ratio of net investment income to average net assets................................ 2.93%(c)
Ratio of expenses to average net assets*............................................ 1.73%(c)
Ratio of net investment income to average net assets*............................... 2.42%(c)
Portfolio turnover (d).............................................................. 12.20%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
33
<PAGE> 637
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
Investor Growth Fund, the Investor Growth & Income Fund, the Investor
Conservative Growth Fund and the Investor Balanced Fund (four series of The One
Group Family of Mutual Funds), including the schedules of portfolio investments,
as of June 30, 1997, and the related statements of operations, statements of
changes in net assets and the financial highlights for the period then ended.
These financial statements and financial highlights are the responsibility of
The One Group Family of Mutual Funds' management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Investor Growth Fund, the Investor Growth & Income Fund, the Investor
Conservative Growth Fund and the Investor Balanced Fund as of June 30, 1997, the
results of their operations, the changes in their net assets and the financial
highlights for the period then ended, in conformity with generally accepted
accounting principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
34
<PAGE> 638
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Treasury Only Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS (98.5%):
U.S. Treasury Bills (16.4%):
$ 14,807 7/24/97............................ $ 14,757
13,783 8/7/97 (b)......................... 13,709
5,178 8/14/97............................ 5,146
5,864 8/21/97............................ 5,822
9,830 8/28/97............................ 9,753
2,593 9/4/97............................. 2,569
12,225 9/11/97............................ 12,102
6,186 9/18/97............................ 6,117
3,942 11/13/97........................... 3,864
5,000 3/5/98............................. 4,816
--------
78,655
--------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- --------
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Notes (82.1%):
$ 8,418 8.50%, 7/15/97..................... $ 8,428
196,434 5.88%, 7/31/97 (b)................. 196,555
20,000 5.50%, 7/31/97..................... 20,001
20,000 8.63%, 8/15/97 (b)................. 20,076
50,000 6.50%, 8/15/97 (b)................. 50,071
50,000 6.00%, 8/31/97..................... 50,014
50,000 5.75%, 9/30/97..................... 50,052
--------
395,197
--------
Total U.S. Treasury Obligations 473,852
--------
Total (Amortized Cost--$473,852) (a) $473,852
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $480,860.
(a) Represents cost for financial reporting purposes and differs from cost for
federal income tax by $8.
(b) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
6
<PAGE> 639
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES (76.7%):
Federal Farm Credit Bank (3.2%):
$ 10,000 5.61%, 11/13/97.................... $ 9,790
25,000 5.45%, 3/3/98...................... 24,952
---------
34,742
---------
Federal Home Loan Bank (4.8%):
10,000 5.80%, 8/12/97..................... 9,998
7,000 5.83%, 12/19/97.................... 7,009
9,750 5.99%, 2/9/98...................... 9,765
25,000 6.12%, 4/17/98..................... 24,996
---------
51,768
---------
Federal Home Loan Mortgage Corp. (6.9%):
50,000 5.50%, 7/2/97...................... 49,993
25,000 5.95%, 6/19/98..................... 24,988
---------
74,981
---------
Federal National Mortgage Assoc. (47.0%):
88,790 5.36%, 7/10/97..................... 88,670
65,000 5.50%, 7/18/97..................... 64,831
19,750 5.64%, 9/3/97...................... 19,735
30,000 5.26%, 9/3/97*..................... 29,997
23,000 5.26%, 9/9/97*..................... 23,001
39,785 5.56%, 9/24/97..................... 39,263
25,000 5.59%, 10/14/97.................... 24,592
25,000 5.65%, 11/3/97..................... 24,510
17,955 5.45%, 11/6/97..................... 17,934
20,000 5.40%, 12/5/97..................... 19,988
25,000 5.52%, 12/18/97.................... 24,348
25,000 5.48%, 1/2/98...................... 24,978
25,000 6.02%, 4/15/98..................... 24,981
48,420 5.89%, 5/21/98..................... 48,382
4,000 5.25%, 6/2/99*..................... 4,000
20,000 5.25%, 7/26/99*.................... 20,000
10,000 5.25%, 9/22/99*.................... 10,000
---------
509,210
---------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
U.S. GOVERNMENT AGENCY SECURITIES, CONTINUED
Student Loan Marketing Assoc. (14.8%):
$ 25,000 5.32%, 8/4/97*..................... $ 25,001
25,000 5.26%, 8/21/97*.................... 25,001
40,000 5.24%, 11/24/97*................... 40,001
25,000 5.26%, 9/28/98*.................... 25,000
25,000 5.26%, 11/10/98*................... 25,000
10,000 5.28%, 1/13/99*.................... 9,999
10,000 5.29%, 8/2/99*..................... 9,997
---------
159,999
---------
Total U.S. Government Agency Securities 830,700
---------
REPURCHASE AGREEMENTS (23.4%):
73,289 Aubrey G. Lanston & Co., 5.40%,
7/1/97 (collateralized by $56,614
various U.S. Treasury Bonds,
8.75% - 9.88%,
11/15/15 - 5/15/17, market value
$75,446)......................... 73,289
45,000 HSBC Securities, 5.90%, 7/1/97
(collateralized by $46,015
various U.S. Government
Securities, 5.01% - 9.25%,
6/8/98 - 6/27/07, market value
$45,901)......................... 45,000
35,000 Lehman Brothers, 6.13%, 7/1/97
(collateralized by $32,742
various U.S. Government
Securities, 0.00% - 9.05%,
6/10/98 - 8/12/19, market value
$35,691)......................... 35,000
100,000 Prudential Securities, 6.10%,
7/1/97 (collateralized by
$139,882 various U.S. Government
Securities, 0.00% - 7.89%,
7/22/97 - 2/1/25, market value
$102,738) 100,000
---------
Total Repurchase Agreements 253,289
---------
Total (Amortized Cost--$1,083,989) (a) $1,083,989
=========
</TABLE>
- ------------
Percentages indicated are based on net assets of $1,083,438.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based upon an index of market rates. The
rate reflected on the Schedule of Portfolio Investments is the rate in effect
at June 30, 1997.
See notes to financial statements.
7
<PAGE> 640
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands,
except per share amounts)
<S> <C> <C>
TREASURY ONLY GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
------------- ------------
ASSETS:
Investments, at amortized cost......................................... $ 473,852 $ 830,700
Repurchase agreements, at cost......................................... -- 253,289
----------- ------------
Total.................................................................. 473,852 1,083,989
Cash................................................................... 66 1
Interest receivable.................................................... 9,211 4,723
Deferred organization costs............................................ 3 20
Prepaid expenses and other assets...................................... 8 122
----------- ------------
TOTAL ASSETS........................................................... 483,140 1,088,855
----------- ------------
LIABILITIES:
Dividends payable...................................................... 2,179 5,090
Accrued expenses and other payables:
Investment advisory fees.......................................... 34 77
Administration fees............................................... 21 48
Accounting and transfer agent fees................................ 2 2
Other............................................................. 44 200
----------- ------------
TOTAL LIABILITIES...................................................... 2,280 5,417
----------- ------------
NET ASSETS:
Capital................................................................ 480,952 1,083,623
Accumulated undistributed net realized losses from investment
transactions......................................................... (92) (185)
----------- ------------
NET ASSETS............................................................. $ 480,860 $ 1,083,438
=========== ============
Outstanding shares of beneficial interest.............................. 480,950 1,083,623
=========== ============
Net Asset Value:
Offering and redemption price per share.............................. $1.00 $1.00
======= ======
</TABLE>
See notes to financial statements.
8
<PAGE> 641
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C> <C>
TREASURY ONLY GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
------------- -------------
INVESTMENT INCOME:
Interest income........................................................ $25,226 $57,712
Income from securities lending......................................... 145 13
---------- ----------
TOTAL INCOME........................................................... 25,371 57,725
---------- ----------
EXPENSES:
Investment advisory fees............................................... 385 849
Administration fees.................................................... 241 530
Custodian and accounting fees.......................................... 23 2
Legal and audit fees................................................... 11 19
Organization costs..................................................... 4 21
Trustees' fees and expenses............................................ 3 5
Transfer agent fees.................................................... 7 1
Registration and filing fees........................................... 58 1
Printing costs......................................................... 8 2
Other.................................................................. 2 7
---------- ----------
TOTAL EXPENSES......................................................... 742 1,437
---------- ----------
Net Investment Income.................................................. 24,629 56,288
---------- ----------
REALIZED LOSSES FROM INVESTMENT TRANSACTIONS:
Net realized losses from investment transactions....................... (16) (119)
---------- ----------
Net increase in net assets resulting from operations................... $24,613 $56,169
========== ==========
</TABLE>
See notes to financial statements.
9
<PAGE> 642
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C> <C> <C> <C>
TREASURY ONLY MONEY GOVERNMENT MONEY
MARKET FUND MARKET FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income........................ $ 24,629 $ 18,797 $ 56,288 $ 42,135
Net realized gains (losses) from investment
transactions............................... (16) (76) (119) 8
----------- ----------- ----------- -----------
Change in net assets resulting from operations.... 24,613 18,721 56,169 42,143
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income................... (24,629) (18,797) (56,288) (42,135)
In excess of net realized gains from
investment transactions.................... -- (21) -- --
----------- ----------- ----------- -----------
Change in net assets from shareholder
distributions................................... (24,629) (18,818) (56,288) (42,135)
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued.................. 1,603,666 1,135,597 4,075,935 2,638,822
Dividends reinvested......................... 3,409 2,487 11,375 10,663
Cost of shares redeemed...................... (1,542,160) (1,010,723) (3,859,366) (2,514,579)
----------- ----------- ----------- -----------
Change in net assets from share transactions...... 64,915 127,361 227,944 134,906
----------- ----------- ----------- -----------
Change in Net Assets.............................. 64,899 127,264 227,825 134,914
NET ASSETS:
Beginning of period.......................... 415,961 288,697 855,613 720,699
----------- ----------- ----------- -----------
End of period................................ $ 480,860 $ 415,961 $ 1,083,438 $ 855,613
=========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued....................................... 1,603,664 1,135,597 4,075,935 2,638,822
Reinvested................................... 3,409 2,487 11,375 10,663
Redeemed..................................... (1,542,160) (1,010,723) (3,859,366) (2,514,579)
----------- ----------- ----------- -----------
Change in shares.................................. 64,913 127,361 227,944 134,906
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
10
<PAGE> 643
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Treasury Only Money
Market Fund and the Government Money Market Fund (individually a "Fund",
collectively the "Funds") only. The Funds are diversified mutual funds and
are not offered in multiple classes.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
-------------------------------- ---------------------------------------------------------
<S> <C>
Treasury Only Money Market Fund High current income with liquidity and stability of
principal with the added assurance of a fund that does
not purchase securities that are subject to repurchase
agreements.
Government Money Market Fund High current income with liquidity and stability of
principal.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Securities are valued utilizing the amortized cost method permitted in
accordance with Rule 2a-7 under the 1940 Act. Under the amortized cost
method, discount or premium is amortized on a constant basis to the
maturity of the security. In addition, the Funds may not (a) purchase any
instrument with a remaining maturity greater than thirteen months unless
such instrument is subject to a demand feature, or (b) maintain a
dollar-weighted average maturity which exceeds 90 days.
REPURCHASE AGREEMENTS
The Government Money Market Fund may invest in repurchase agreements with
institutions that Banc One Investment Advisors (the "Advisor") has
determined are creditworthy. Each repurchase agreement is recorded at
cost. The Fund requires that the securities purchased in a repurchase
agreement transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of
a counterparty default. The seller, under the repurchase agreement, is
required to maintain the value of the securities held at not less than
the repurchase price, including accrued interest. Repurchase agreements
are considered to be loans by a fund under the 1940 Act.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net
realized gains or losses from sales of securities are determined on the
specific identification cost method. Interest income and expenses are
recognized on the accrual basis. Interest income, including any discount
or premium, is accrued as earned using the effective interest method.
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities
in which they are invested pursuant to agreements requiring that the loan
be continuously secured by cash, U.S. Government or U.S.
Continued
11
<PAGE> 644
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
Government Agency securities, shares of an investment trust or mutual
fund, or any combination of cash and such securities as collateral equal
at all times to at least 100% of the market value plus accrued interest
on the securities lent. The Funds continue to earn interest on securities
lent while simultaneously seeking to earn interest on the investment of
collateral. Collateral is marked to market daily to provide a level of
collateral at least equal to the market value of securities lent. There
may be risks of delay in recovery of the securities or even loss of
rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines
established by the Board of Trustees and when, in the judgement of the
Advisor, the consideration which can be earned currently from such
securities loans justifies the attendant risk. Loans are subject to
termination by the Funds or the borrower at any time, and are, therefore,
not considered to be illiquid investments. As of June 30, 1997, the
following Fund had securities with the following amortized cost on loan
(amount in thousands):
<TABLE>
<CAPTION>
AMORTIZED COST
OF LOANED
SECURITIES
---------------
<S> <C>
Treasury Only Money Market Fund.............................. $116,076
</TABLE>
The loaned securities were fully collateralized by cash and U.S.
Government securities as of June 30, 1997.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one fund of
the Trust are allocated among the respective Funds.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly.
Net investment income for this purpose consists of interest accrued and
discount earned (including both original issue discount and market
discount) less amortization of any market premium and accrued expenses.
Net realized capital gains, if any, are distributed at least annually.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for expiring capital loss
carryforwards and deferrals of certain losses. Permanent book and tax
basis differences, if any, have been reclassified among the components of
net assets.
ORGANIZATION COSTS
Costs incurred by the Trust in connection with its organization,
including the fees and expenses of registering and qualifying its shares
for distribution have been deferred and are being amortized using the
straight-line method over a period of five years beginning with the
commencement of each Fund's operations. All such costs, which are
attributable to more than one fund of the Trust, have been allocated
among the respective funds pro-rata, based on the relative net assets of
each Fund. In the event that any of the initial shares are redeemed
during such period by any holder thereof, the related Fund will be
reimbursed by such holder for any unamortized organization costs in the
proportion as the number of initial shares being redeemed bears to the
number of initial shares outstanding at the time of redemption.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated
investment company by complying with the provisions available to certain
Continued
12
<PAGE> 645
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
investment companies as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more classes. The Trust is registered to offer forty
series and five classes of shares: Fiduciary, Class A, Class B, Class C and
Service Class. Currently, the Trust consists of thirty three active Funds
and, not all Funds can offer all classes of shares. As of June 30, 1997,
there were no shareholders in the Class C or Service Class of the Funds.
Shareholders are entitled to one vote for each full share held and will vote
in the aggregate and not by class or series, except as otherwise expressly
required by law or when the Board of Trustees has determined that the matter
to be voted on affects only the interest of shareholders of a particular
class or series.
4. INVESTMENT ADVISORY, ADMINISTRATIVE AND DISTRIBUTION AGREEMENTS:
The Trust and Advisor are parties to an investment advisory agreement under
which the Advisor is entitled to receive a fee, computed daily and paid
monthly, equal to 0.08% of the average daily net assets of each Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administrative agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly at an annual rate of 0.05% of
each Fund's average daily net assets. The Advisor also serves as
Sub-Administrator to each fund of the Trust, pursuant to an agreement between
the Administrator and the Advisor. Pursuant to this agreement, the Advisor
performs many of the Administrator's duties, for which the Advisor receives a
fee paid by the Administrator.
The One Group Services Company (the "Distributor") and the Trust are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. No compensation is paid to the Distributor for distribution
services for the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
5. FEDERAL TAX INFORMATION (UNAUDITED):
At June 30, 1997 the following Funds have capital loss carryforwards which
are available to offset future capital gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT EXPIRES
--------------------------------------------------------- ------ --------
<S> <C> <C>
Treasury Only Money Market............................... $ 18 2004
Treasury Only Money Market............................... 58 2005
Government Money Market.................................. 8 2002
Government Money Market.................................. 26 2003
Government Money Market.................................. 32 2004
Government Money Market.................................. 119 2005
</TABLE>
Capital losses incurred after October 31 within the Fund's fiscal year may be
deferred and treated as occurring on the first day of the following fiscal
year. The following deferred losses will be treated as arising on the first
day of the fiscal year ending June 30, 1998 (amounts in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT
------------------------------------------------------------------ ------
<S> <C>
Treasury Only Money Market........................................ $8
</TABLE>
13
<PAGE> 646
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TREASURY ONLY MONEY MARKET FUND
--------------------------------------------------------
APRIL
16,
YEARS ENDED JUNE 30, 1993 TO
-------------------------------------------- JUNE 30,
1997 1996 1995 1994 1993(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.................................... 0.051 0.052 0.051 0.032 0.006
-------- -------- -------- -------- -------
Distributions:
Net investment income.................................... (0.051) (0.052) (0.051) (0.032) (0.006)
-------- -------- -------- -------- -------
NET ASSET VALUE,
END OF PERIOD............................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== =======
Total Return............................................... 5.24% 5.38% 5.22% 3.23% 2.96% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $480,860 $415,961 $288,697 $217,725 $60,330
Ratio of expenses to average net assets.................. 0.15% 0.17% 0.20% 0.15% 0.07% (b)
Ratio of net investment income to average net assets..... 5.12% 5.23% 5.14% 3.23% 2.95% (b)
Ratio of expenses to average net assets*................. 0.15% 0.17% 0.21% 0.22% 0.33% (b)
Ratio of net investment income to average net assets*.... 5.12% 5.23% 5.13% 3.16% 2.69% (b)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
See notes to financial statements.
14
<PAGE> 647
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET FUND
----------------------------------------------------------
JUNE 14,
YEARS ENDED JUNE 30, 1993 TO
---------------------------------------------- JUNE 30,
1997 1996 1995 1994 1993(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................................... 0.053 0.055 0.053 0.033 0.001
---------- -------- -------- -------- --------
Distributions:
Net investment income................................... (0.053) (0.055) (0.053) (0.033) (0.001)
---------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD........................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ======== ======== ======== ========
Total Return.............................................. 5.43% 5.61% 5.41% 3.40% 3.28%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $1,083,438 $855,613 $720,699 $692,253 $244,991
Ratio of expenses to average net assets................. 0.14% 0.18% 0.21% 0.11% 0.07%(b)
Ratio of net investment income to average net assets.... 5.31% 5.46% 5.28% 3.41% 3.13%(b)
Ratio of expenses to average net assets*................ 0.14% 0.18% 0.22% 0.20% 0.33%(b)
Ratio of net investment income to average net assets*... 5.31% 5.46% 5.27% 3.32% 2.87%(b)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
See notes to financial statements.
15
<PAGE> 648
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
Treasury Only Money Market Fund and the Government Money Market Fund (two series
of The One Group Family of Mutual Funds), including the schedules of portfolio
investments, as of June 30, 1997, and the related statements of operations for
the year then ended, statements of changes in net assets for the two years in
the period then ended, and the financial highlights for each of the periods
indicated herein. These financial statements and financial highlights are the
responsibility of The One Group Family of Mutual Funds' management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury Only Money Market Fund and the Government Only Money Market Fund as of
June 30, 1997, the results of their operations, the changes in their net assets
and the financial highlights for the periods indicated herein, in conformity
with generally accepted accounting principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
16
