<PAGE> 1
The One
Investor
Program
Annual Report
For the year ended June 30, 1998
The One Group Investor Growth Fund
The One Group Investor Growth & Income Fund
The One Group Investor Balanced Fund
The One Group Investor Conservative Growth Fund
THE ONE GROUP
----------------------
FAMILY OF MUTUAL FUNDS
<PAGE> 2
IMPORTANT CUSTOMER INFORMATION. INVESTMENT PRODUCTS:
- are not deposits or obligations of, or guaranteed by,
BANC ONE CORPORATION or any of its affiliates, [FDIC LOGO
WITH SLASH
- are not insured by the FDIC, and THOUGH IT]
- are subject to investment risks, including possible
loss of the principal amount invested.
<PAGE> 3
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
Portfolio Performance Review............................................... 2
Schedules of Portfolio Investments......................................... 8
Statements of Assets and Liabilities....................................... 12
Statements of Operations................................................... 13
Statements of Changes in Net Assets........................................ 14
Notes to Financial Statements.............................................. 16
Financial Highlights....................................................... 22
Report of Independent Accountants.......................................... 38
1
<PAGE> 4
The One Group Investor Funds
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUNDS PERFORM?
For the year ended June 30, 1998, The One Group Investor Funds posted the
following total returns for their respective Fiduciary share class:
- - The One Group Investor Growth Fund, 23.81%
- - The One Group Investor Growth and Income Fund, 20.34%
- - The One Group Investor Balanced Fund, 17.02%
- - The One Group Investor Conservative Growth Fund, 12.73%
For information on other share classes and performance comparisons to indexes,
please see pages 4-7.
HOW DID THE BOND AND STOCK MARKETS PERFORM?
The bond market continued to benefit from low inflation, which helped push
interest rates down and bond prices up. Furthermore, events in Asia contributed
to a weakening global economy, which in turn helped support favorable bond
market conditions in the United States.
The stock market continued to provide better-than-average investment returns,
thanks to low inflation, moderate economic growth and strong corporate earnings
growth. In addition, a favorable bond market contributed to the stock market's
strength by allowing price/earnings (P/E) multiple expansion. That is, the
declining interest rate environment allowed companies to realize greater
profits, and stock prices increased on these favorable earnings results.
For more than four years, large-capitalization growth stocks have led the
domestic market surge, outperforming smaller-company stocks and value-oriented
stocks. Investors continued to favor larger companies due to their earnings
reliability and stock liquidity.
DID THE SITUATION IN ASIA INFLUENCE STOCK RETURNS?
Beginning in late 1997, many larger, multinational companies, particularly in
the semiconductor, energy and commodities sectors, felt the effects of the Asian
markets' meltdown. With too much capital and investment generating excess
capacity, lower prices led to insufficient profits. As a result, currencies
declined and market returns plummeted for most Asian markets.
WERE THERE ANY OTHER NOTABLE PERFORMANCES OVERSEAS?
Many European markets experienced a comeback, with strong one-year performance
from Italy, up 63%; Spain up 50%; Germany, up 46%; and France, up 43%.
WHAT WAS YOUR OVERALL ASSET ALLOCATION STRATEGY?
Each of the Investor Funds maintained relatively strong exposure to equity funds
(depending, of course, on each fund's overall investment objective and asset
allocation parameters), which enabled the funds to participate in the ongoing
stock market rally and post attractive overall returns. In addition, each Fund's
allocation toward the bond market was slightly greater than what we consider to
be average exposure.
WHY WAS THAT?
We implemented this strategy based on our ongoing research efforts, which showed
that stocks, on a valuation basis, continued to be more expensive than bonds. We
felt that this presented some additional risks for stocks. At the same time,
earnings momentum remained strong. We therefore made only a slight shift toward
fixed income funds in order to gain some downside protection from the stock
market's high valuations. The average fund allocations during the period were as
follows:
- - The One Group Investor Growth Fund: 86% equity funds; 13% fixed income funds;
1% money market funds
- - The One Group Investor Growth and Income Fund: 66% equity funds; 33% fixed
income funds; 1% money market funds
- - The One Group Investor Balanced Fund: 46% equity funds; 53% fixed income
funds; 1% money market funds
- - The One Group Conservative Growth Fund: 26% equity funds; 72% fixed income
funds; 2% money market funds
WHAT WERE YOUR KEY STRATEGIES IN THE EQUITY ARENA?
The Investor Funds enjoyed varying exposure, depending on the overall investment
objective, to the following equity styles: large capitalization,
mid-capitalization, small capitalization and international. Within each style,
individual stock selection remains the core of our management process. We
modestly adjusted our asset allocations to include in-
2
<PAGE> 5
The One Group Investor Funds
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
ternational stocks, giving the funds an opportunity to take advantage of lower
valuations in Asia and continued economic recovery in Europe. Our international
exposure is now between 5% and 11%, with the greatest exposure in The One Group
Investor Growth Fund. This ongoing approach toward diversification helped limit
risk while offering return opportunities from different market segments.
WHAT WERE YOUR KEY STRATEGIES WITHIN THE FIXED INCOME MARKET?
Within the fixed income funds, our efforts centered on maintaining a low-risk
profile by keeping durations at or near their average levels. (Duration is a
measure of a fund's price sensitivity to interest rate changes. A longer
duration indicates greater sensitivity; a shorter duration indicates less.)
Instead of making "bets" on interest rate movements by significantly altering
duration, we prefer to concentrate on the yield component of total return.
Over the past year, our fund managers focused on select investments in the
corporate, asset-backed and mortgage-backed sectors. This allowed the funds to
capture the yield advantages that these securities generally offered compared to
Treasury securities. At the same time, they focused on maintaining portfolios
with good average credit quality.
WHAT IS YOUR OUTLOOK FOR THE FUNDS?
Economic activity is critical to the funds' performance because the economy
drives earnings. The current economic expansion, now in its eighth year, is one
of the longest in history. Looking ahead to fiscal 1999, we expect U.S. economic
growth to remain positive, but to slow down from recent levels. Corporate
earnings should continue to grow, but perhaps not at the pace we've seen
recently.
We also believe that inflation will remain low, leading to a stable or lower
interest rate environment. As such, we believe there will be little opportunity
for price volatility to significantly influence bond market returns.
Asia remains the one wild card. An unforeseen depression in any of these
countries could spill over and put a squeeze on U.S. growth. We believe that a
depression is unlikely, however, because Japan's economic package should provide
guidance for the country and establish an outline for deregulation. These moves
should bring Japan closer to financial reform and improve the banking system.
Given the extraordinary equity gains of the last several years, it is not
realistic to expect this pace to continue. Going forward, we think the equity
market will be a bit more selective, which would make individual security
selection even more important.
We currently don't anticipate making any significant changes to our asset
allocation strategies. But we will continue to monitor the economic climate for
inflationary pressures and valuation levels in the financial markets. We also
will keep close tabs on the situation in Asia and how events there may affect
the funds' investments.
/s/ Richard R. Jandrain III
Richard R. Jandrain III
Senior Managing Director of Equity Securities
Director, Asset Allocation Committee
Please refer to the prospectus and the accompanying financial statements for
more information about your Fund.
3
<PAGE> 6
The One Group Investor Growth Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Fiduciary 23.81% 24.49%
</TABLE>
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Fiduciary
Value of $10,000 Investment
<S> <C> <C> <C>
12/96 $10,000 $10,000 $10,000
6/97 $11,945 $10,680 $11,350
6/98 $15,462 $12,724 $14,053
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 23.44% 23.78%
Class A* 17.87% 20.17%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class A* Class A
Value of $10,000 Investment
<S> <C> <C> <C> <C>
12/96 $10,000 $10,000 $ 9,550 $10,000
6/97 $11,945 $10,680 $10,776 $11,284
6/98 $15,462 $12,724 $13,303 $13,929
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 22.52% 23.91%
Class B** 18.52% 21.61%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class B** Class B
<S> <C> <C> <C> <C>
Value of $10,000 Investment
12/96 $10,000 $10,000 $10,000 $10,000
6/97 $11,945 $10,680 $11,388 $11,388
6/98 $15,462 $12,724 $13,552 $13,952
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 22.42% 22.42%
Class C** 21.42% 21.42%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class C** Class C
<S> <C> <C> <C> <C>
Value of $10,000 Investment
7/97 $10,000 $10,000 $10,000 $10,000
6/98 $12,944 $11,914 $12,141 $12,241
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Growth Fund is measured against the S&P 1500
Index, an unmanaged index generally representative of the performance of large
and small companies in the US stock market. Investors are unable to purchase the
index directly, although they can invest in the underlying securities. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management. By contrast, the performance
of the fund reflects the deduction of these value-added services as well as the
deduction of sales charges on Class A Shares and applicable contingent deferred
sales charges on Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns of
the Lipper General Equity Funds Universe (75%), the Lipper International Funds
Universe (10%), and the Lipper Intermediate US Government Bond Funds Universe
(15%). The Lipper Universes consist of the equally weighted average monthly
return of all the funds within the category.
4
<PAGE> 7
The One Group Investor Growth & Income Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Fiduciary 20.34% 20.40%
</TABLE>
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Fiduciary
Value of $10,000 Investment
<S> <C> <C> <C>
12/96 $10,000 $10,000 $10,000
6/97 $11,945 $10,535 $11,087
6/98 $15,462 $12,342 $13,342
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 20.18% 20.73%
Class A* 14.76% 17.21%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class A* Class A
Value of $10,000 Investment
<S> <C> <C> <C> <C>
12/96 $10,000 $10,000 $9,550 $10,000
6/97 $11,945 $10,535 $10,648 $11,150
6/98 $15,462 $12,342 $12,797 $13,399
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 19.13% 19.72%
Class B** 15.13% 17.38%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class B** Class B
Value of $10,000 Investment
<S> <C> <C> <C> <C>
12/96 $10,000 $10,000 $10,000 $10,000
6/97 $11,945 $10,535 $11,102 $11,102
6/98 $15,462 $12,342 $12,825 $13,225
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 19.08% 19.08%
Class C** 18.08% 18.08%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class C** Class C
Value of $10,000 Investment
<S> <C> <C> <C> <C>
7/97 $10,000 $10,000 $10,000 $10,000
6/98 $12,944 $11,715 $11,808 $11,908
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Growth & Income Fund is measured against the S&P
1500 Index, an unmanaged index generally representative of the performance of
large and small companies in the US stock market. Investors are unable to
purchase the index directly, although they can invest in the underlying
securities. The performance of the index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management. By
contrast, the performance of the fund reflects the deduction of these
value-added services as well as the deduction of sales charges on Class A Shares
and applicable contingent deferred sales charges on Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns of
the Lipper General Equity Funds Universe (60%), the Lipper International Funds
Universe (5%), and the Lipper Intermediate US Government Bond Funds Universe
(35%). The Lipper Universes consist of the equally weighted average monthly
return of all the funds within the category.
5
<PAGE> 8
The One Group Investor Balanced Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Fiduciary 17.02% 16.60%
</TABLE>
<TABLE>
<CAPTION>
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Aggregate Bond Lipper Mix Fiduciary
<S> <C> <C> <C>
Value of $10,000 Investment
12/96 $10,000 $10,000 $10,000
6/97 $10,323 $10,390 $10,848
6/98 $11,219 $11,890 $12,694
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 16.62% 16.29%
Class A* 11.39% 12.90%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class A* Class A
<S> <C> <C> <C> <C>
Value of $10,000 Investment
12/96 $10,000 $10,000 $ 9,550 $10,000
6/97 $10,323 $10,390 $10,353 $10,841
6/98 $11,219 $11,890 $12,074 $12,641
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 15.85% 15.67%
Class B** 11.85% 13.28%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class B** Class B
<S> <C> <C> <C> <C>
Value of $10,000 Investment
12/96 $10,000 $10,000 $10,000 $10,000
6/97 $10,323 $10,390 $10,822 $10,822
6/98 $11,219 $11,890 $12,136 $12,536
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 15.66% 15.66%
Class C** 14.66% 14.66%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class C** Class C
<S> <C> <C> <C> <C>
Value of $10,000 Investment
7/97 $10,000 $10,000 $10,000 $10,000
6/98 $10,868 $11,444 $11,466 $11,566
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Balanced Fund is measured against the Lehman
Brothers Intermediate Aggregate Bond Index, an unmanaged index comprised of US
Government, mortgage, corporate and asset-backed securities with maturities of
one to ten years. Investors are unable to purchase the index directly, although
they can invest in the underlying securities. The performance of the index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management. By contrast, the performance of the fund reflects the
deduction of these value-added services as well as the deduction of sales
charges on Class A Shares and applicable contingent deferred sales charges on
Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns of
the Lipper General Equity Funds Universe (40%), the Lipper International Funds
Universe (5%), and the Lipper Intermediate US Government Bond Funds Universe
(55%). The Lipper Universes consist of the equally weighted average monthly
return of all the funds within the category.
6
<PAGE> 9
The One Group Investor Conservative Growth Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Fiduciary 12.73% 12.15%
</TABLE>
<TABLE>
<CAPTION>
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Aggregate Bond Lipper Mix Fiduciary
<S> <C> <C> <C>
Value of $10,000 Investment
12/96 $10,000 $10,000 $10,000
6/97 $10,323 $10,243 $10,600
6/98 $11,219 $11,444 $11,949
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 12.38% 11.56%
Class A* 7.29% 8.31%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class A* Class A
<S> <C> <C> <C> <C>
Value of $10,000 Investment
12/96 $10,000 $10,000 $ 9,550 $10,000
6/97 $10,323 $10,243 $10,072 $10,546
6/98 $11,219 $11,444 $11,320 $11,852
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 11.53% 10.90%
Class B** 7.53% 8.46%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class B** Class B
<S> <C> <C> <C> <C>
Value of $10,000 Investment
12/96 $10,000 $10,000 $10,000 $10,000
6/97 $10,323 $10,243 $10,530 $10,530
6/98 $11,219 $11,444 $11,344 $11,744
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 11.48% 11.48%
Class C** 10.48% 10.48%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class C** Class C
<S> <C> <C> <C> <C>
Value of $10,000 Investment
7/97 $10,000 $10,000 $10,000 $10,000
6/98 $10,868 $11,172 $11,048 $11,148
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Conservative Growth Fund is measured against the
Lehman Brothers Intermediate Aggregate Bond Index, an unmanaged index comprised
of US Government, mortgage, corporate and asset-backed securities with
maturities of one to ten years. Investors are unable to purchase the index
directly, although they can invest in the underlying securities. The performance
of the index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management. By contrast, the performance of the fund
reflects the deduction of these value-added services as well as the deduction of
sales charges on Class A Shares and applicable contingent deferred sales charges
on Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns of
the Lipper General Equity Funds Universe (20%), the Lipper International Funds
Universe (5%), and the Lipper Intermediate US Government Bond Funds Universe
(75%). The Lipper Universes consist of the equally weighted average monthly
return of all the funds within the category.
7
<PAGE> 10
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (98.4%):
1,853 The One Group Disciplined Value Fund
Fiduciary Class...................... $ 31,315
840 The One Group Government Bond Fund
Fiduciary Class...................... 8,489
1,473 The One Group Growth Opportunities Fund
Fiduciary Class...................... 33,163
890 The One Group Income Bond Fund
Fiduciary Class...................... 8,464
417 The One Group Intermediate Bond Fund
Fiduciary Class...................... 4,219
1,352 The One Group International Equity
Index Fund Fiduciary Class........... 24,301
1,437 The One Group Large Company Growth Fund
Fiduciary Class...................... 32,631
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
1,812 The One Group Large Company Value Fund
Fiduciary Class...................... $ 30,264
402 The One Group Limited Volatility Fund
Fiduciary Class...................... 4,223
614 The One Group Prime Money Market Fund
Fiduciary Class...................... 614
688 The One Group Small Capitalization Fund
Fiduciary Class...................... 8,296
2,315 The One Group Value Growth Fund
Fiduciary Class...................... 31,278
--------
Total Investment Companies 217,257
--------
Total (Cost $199,115) (a) $217,257
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $220,699.
(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 $103. 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...................... $18,727
Unrealized depreciation...................... (688)
-------
Net unrealized appreciation.................. $18,039
=======
</TABLE>
See notes to financial statements.
8
<PAGE> 11
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Growth & Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (98.6%):
1,426 The One Group Disciplined Value Fund
Fiduciary Class...................... $ 24,091
2,202 The One Group Government Bond Fund
Fiduciary Class...................... 22,263
1,133 The One Group Growth Opportunities Fund
Fiduciary Class...................... 25,514
2,334 The One Group Income Bond Fund
Fiduciary Class...................... 22,199
1,311 The One Group Intermediate Bond Fund
Fiduciary Class...................... 13,269
1,161 The One Group International Equity
Index Fund Fiduciary Class........... 20,855
1,184 The One Group Large Company Growth Fund
Fiduciary Class...................... 26,899
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
1,494 The One Group Large Company Value Fund
Fiduciary Class...................... $ 24,945
843 The One Group Limited Volatility Fund
Fiduciary Class...................... 8,861
718 The One Group Prime Money Market Fund
Fiduciary Class...................... 718
361 The One Group Small Capitalization Fund
Fiduciary Class...................... 4,351
449 The One Group Ultra Short-Term Income
Fund Fiduciary Class................. 4,430
2,082 The One Group Value Growth Fund
Fiduciary Class...................... 28,127
--------
Total Investment Companies 226,522
--------
Total (Cost $208,652) (a) $226,522
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $229,831.
(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 $380. 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...................... $17,785
Unrealized depreciation...................... (295)
-------
Net unrealized appreciation.................. $17,490
=======
</TABLE>
See notes to financial statements.
9
<PAGE> 12
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (97.8%):
800 The One Group Disciplined Value Fund
Fiduciary Class...................... $ 13,523
3,302 The One Group Government Bond Fund
Fiduciary Class...................... 33,384
636 The One Group Growth Opportunities Fund
Fiduciary Class...................... 14,321
3,294 The One Group Income Bond Fund
Fiduciary Class...................... 31,328
1,734 The One Group Intermediate Bond Fund
Fiduciary Class...................... 17,544
796 The One Group International Equity
Index Fund Fiduciary Class........... 14,306
760 The One Group Large Company Growth Fund
Fiduciary Class...................... 17,256
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
958 The One Group Large Company Value Fund
Fiduciary Class...................... $ 16,002
1,116 The One Group Limited Volatility Fund
Fiduciary Class...................... 11,724
956 The One Group Prime Money Market Fund
Fiduciary Class...................... 956
792 The One Group Ultra Short-Term Income
Fund Fiduciary Class................. 7,816
1,530 The One Group Value Growth Fund
Fiduciary Class...................... 20,675
--------
Total Investment Companies 198,835
--------
Total (Cost $184,322) (a) $198,835
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $203,278.
(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 $175. 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...................... $14,522
Unrealized depreciation...................... (184)
-------
Net unrealized appreciation.................. $14,338
=======
</TABLE>
See notes to financial statements.
10
<PAGE> 13
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Conservative Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES (99.2%):
99 The One Group Disciplined Value Fund
Fiduciary Class....................... $ 1,666
2,093 The One Group Government Bond Fund
Fiduciary Class....................... 21,164
78 The One Group Growth Opportunities Fund
Fiduciary Class....................... 1,764
1,864 The One Group Income Bond Fund Fiduciary
Class................................. 17,726
146 The One Group Income Equity Fund
Fiduciary Class....................... 3,516
1,080 The One Group Intermediate Bond Fund
Fiduciary Class....................... 10,934
245 The One Group International Equity Index
Fund Fiduciary Class.................. 4,405
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
205 The One Group Large Company Growth Fund
Fiduciary Class....................... $ 4,649
258 The One Group Large Company Value Fund
Fiduciary Class....................... 4,311
641 The One Group Limited Volatility Fund
Fiduciary Class....................... 6,739
1,686 The One Group Prime Money Market Fund
Fiduciary Class....................... 1,686
341 The One Group Ultra Short-Term Income
Fund Fiduciary Class.................. 3,369
264 The One Group Value Growth Fund
Fiduciary Class....................... 3,565
-------
Total Investment Companies 85,494
-------
Total (Cost $82,599) (a) $85,494
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $86,167.
(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 $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...................... $2,906
Unrealized depreciation...................... (85)
------
Net unrealized appreciation.................. $2,821
======
</TABLE>
See notes to financial statements.
11
<PAGE> 14
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1998
(Amounts in Thousands, except per share amounts)
<TABLE>
<CAPTION>
INVESTOR INVESTOR
INVESTOR GROWTH & INVESTOR CONSERVATIVE
GROWTH INCOME BALANCED GROWTH
FUND FUND FUND FUND
-------- --------- -------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost $199,115; $208,652; $184,322;
and $82,599, respectively)................................ $217,257 $226,522 $198,835 $85,494
Cash........................................................ 1,265 819 2,113 357
Dividends receivable........................................ 188 400 535 306
Receivable from brokers for investments sold................ 1,500 1,500 1,000 --
Receivable for capital shares issued........................ 735 1,099 1,472 385
Receivable from advisor..................................... 31 9 -- 26
Prepaid expenses and other assets........................... 1 1 1 7
-------- -------- -------- -------
TOTAL ASSETS................................................ 220,977 230,350 203,956 86,575
-------- -------- -------- -------
LIABILITIES:
Dividends payable........................................... 84 300 463 272
Payable for capital shares redeemed......................... 42 33 55 42
Accrued expenses and other payables:
Investment advisory fees................................ 9 9 8 --
12b-1 fees.............................................. 70 78 64 36
Other................................................... 73 99 88 58
-------- -------- -------- -------
TOTAL LIABILITIES........................................... 278 519 678 408
-------- -------- -------- -------
NET ASSETS:
Capital..................................................... 197,904 207,764 185,728 82,826
Undistributed (distributions in excess of) net investment
income.................................................... 2,138 2,062 1,413 180
Accumulated undistributed net realized gains (losses) from
investment transactions................................... 2,515 2,135 1,624 266
Net unrealized appreciation (depreciation) from
investments............................................... 18,142 17,870 14,513 2,895
-------- -------- -------- -------
NET ASSETS.................................................. $220,699 $229,831 $203,278 $86,167
======== ======== ======== =======
NET ASSETS:
Fiduciary............................................... $ 86,355 $ 98,060 $93,557 $30,352
Class A................................................. 55,057 39,874 32,605 12,538
Class B................................................. 70,515 85,468 70,463 39,489
Class C................................................. 8,772 6,429 6,653 3,788
-------- -------- -------- -------
Total....................................................... $220,699 $229,831 $203,278 $86,167
======== ======== ======== =======
OUTSTANDING UNITS OF BENEFICIAL INTEREST (SHARES):
Fiduciary............................................... 6,451 7,802 7,925 2,745
Class A................................................. 4,130 3,143 2,755 1,136
Class B................................................. 5,237 6,761 5,963 3,575
Class C................................................. 658 513 565 343
-------- -------- -------- -------
Total....................................................... 16,476 18,219 17,208 7,799
======== ======== ======== =======
Net Asset Value:
Fiduciary Offering and redemption price per share....... $ 13.39 $ 12.57 $ 11.81 $ 11.06
======== ======== ======== =======
Class A Redemption price per share...................... $ 13.33 $ 12.69 $ 11.83 $ 11.04
======== ======== ======== =======
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)..................................... $ 13.96 $ 13.29 $ 12.39 $ 11.56
======== ======== ======== =======
Class B Offering price per share (a).................... $ 13.47 $ 12.64 $ 11.82 $ 11.05
======== ======== ======== =======
Class C Offering price per share (a).................... $ 13.34 $ 12.54 $ 11.77 $ 11.03
======== ======== ======== =======
</TABLE>
- ------------
(a) Redemption price per Class B and Class C share varies based on length of
time shares are held.
See notes to financial statements.
12
<PAGE> 15
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1998
(Amounts in Thousands)
<TABLE>
<CAPTION>
INVESTOR
INVESTOR INVESTOR GROWTH INVESTOR CONSERVATIVE
GROWTH FUND & INCOME FUND BALANCED FUND GROWTH FUND
----------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Distribution income........................ $ 1,410 $ 3,175 $ 4,519 $2,126
------- ------- ------- ------
EXPENSES:
Investment advisory fees................... 57 67 65 23
Administration fees........................ 114 134 129 46
12b-1 fees (Class A)....................... 78 64 45 18
12b-1 fees (Class B)....................... 327 391 297 162
12b-1 fees (Class C)....................... 41 24 27 19
Custodian and accounting fees.............. 11 12 10 16
Legal and audit fees....................... 6 7 6 4
Trustees' fees and expenses................ 1 2 2 1
Transfer agent fees........................ 126 105 80 68
Registration and filing fees............... 69 86 90 69
Printing costs............................. 19 26 24 9
Other...................................... 4 4 3 2
------- ------- ------- ------
Total expenses before waivers.............. 853 922 778 437
Less waivers and reimbursements............ (202) (193) (163) (151)
------- ------- ------- ------
Net Expenses............................... 651 729 615 286
------- ------- ------- ------
Net Investment Income...................... 759 2,446 3,904 1,840
------- ------- ------- ------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment
transactions............................. 7,240 6,961 5,351 808
Net change in unrealized appreciation
(depreciation) from investments.......... 14,046 14,037 10,033 2,434
------- ------- ------- ------
Net realized/unrealized gains (losses) from
investments.............................. 21,286 20,998 15,384 3,242
------- ------- ------- ------
Change in net assets resulting from
operations............................... $22,045 $23,444 $19,288 $5,082
======= ======= ======= ======
</TABLE>
See notes to financial statements.
13
<PAGE> 16
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
INVESTOR INVESTOR GROWTH
GROWTH FUND & INCOME FUND
----------------------- -----------------------
YEAR DECEMBER 10, YEAR DECEMBER 10,
ENDED 1996 THROUGH ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997(a) 1998 1997(a)
-------- ------------ -------- ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............................. $ 759 $ 256 $ 2,446 $ 556
Net realized gains (losses)....................... 7,240 (59) 6,961 (87)
Net change in unrealized appreciation
(depreciation) from investments................ 14,046 4,096 14,037 3,833
-------- ------- -------- -------
Change in net assets resulting from operations........ 22,045 4,293 23,444 4,302
-------- ------- -------- -------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income........................ (544) (227) (1,586) (494)
From net realized gains........................... (1,180) -- (1,513) --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income........................ (172) (14) (357) (24)
From net realized gains........................... (471) -- (348) --
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income........................ (38) (15) (472) (38)
From net realized gains........................... (776) -- (761) --
DISTRIBUTIONS TO CLASS C SHAREHOLDERS:
From net investment income........................ (5) -- (31) --
From net realized gains........................... (101) -- (55) --
-------- ------- -------- -------
Change in net assets from shareholder distributions... (3,287) (256) (5,123) (556)
-------- ------- -------- -------
CAPITAL TRANSACTIONS:
Proceeds from shares issued....................... 165,696 41,705 177,644 58,244
Proceeds from shares issued in conversion......... 10,702 -- 12,936 --
Dividends reinvested.............................. 2,757 25 3,682 49
Cost of shares redeemed........................... (20,622) (2,359) (39,570) (5,221)
-------- ------- -------- -------
Change in net assets from share transactions.......... 158,533 39,371 154,692 53,072
-------- ------- -------- -------
Change in net assets.................................. 177,291 43,408 173,013 56,818
NET ASSETS:
Beginning of period............................... 43,408 -- 56,818 --
-------- ------- -------- -------
End of period..................................... $220,699 $43,408 $229,831 $56,818
======== ======= ======== =======
SHARE TRANSACTIONS:
Issued............................................ 13,101 4,079 14,884 5,697
Issued in conversion.............................. 922 -- 1,150 --
Reinvested........................................ 232 3 319 4
Redeemed.......................................... (1,634) (227) (3,325) (510)
-------- ------- -------- -------
Change in shares...................................... 12,621 3,855 13,028 5,191
======== ======= ======== =======
</TABLE>
- ------------
(a) Period from commencement of operations.
See notes to financial statements.
14
<PAGE> 17
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
INVESTOR INVESTOR CONSERVATIVE
BALANCED FUND GROWTH FUND
----------------------- -----------------------
YEAR DECEMBER 10, YEAR DECEMBER 10,
ENDED 1996 THROUGH ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997(a) 1998 1997(a)
-------- ------------ -------- ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income.............................. $ 3,904 $ 1,187 $ 1,840 $ 333
Net realized gains (losses)........................ 5,351 (67) 808 9
Net change in unrealized appreciation
(depreciation) from investments................. 10,033 4,480 2,434 461
-------- ------- ------- -------
Change in net assets resulting from operations......... 19,288 5,600 5,082 803
-------- ------- ------- -------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income......................... (2,708) (1,132) (980) (296)
From net realized gains............................ (1,584) -- (205) --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income......................... (414) (15) (215) (14)
From net realized gains............................ (185) -- (29) --
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income......................... (717) (40) (572) (23)
From net realized gains............................ (441) -- (120) --
DISTRIBUTIONS TO CLASS C SHAREHOLDERS:
From net investment income......................... (65) -- (67) --
From net realized gains............................ (37) -- (17) --
-------- ------- ------- -------
Change in net assets from shareholder distributions.... (6,151) (1,187) (2,211) (333)
-------- ------- ------- -------
CAPITAL TRANSACTIONS:
Proceeds from shares issued........................ 130,231 78,898 71,233 21,496
Proceeds from shares issued in conversion.......... 6,532 -- 707 --
Dividends reinvested............................... 3,506 49 1,170 41
Cost of shares redeemed............................ (30,131) (3,357) (8,767) (3,054)
-------- ------- ------- -------
Change in net assets from share transactions........... 110,138 75,590 64,343 18,483
-------- ------- ------- -------
Change in net assets................................... 123,275 80,003 67,214 18,953
NET ASSETS:
Beginning of period................................ 80,003 -- 18,953 --
-------- ------- ------- -------
End of period...................................... $203,278 $80,003 $86,167 $18,953
======== ======= ======= =======
SHARE TRANSACTIONS:
Issued............................................. 11,443 7,850 6,600 2,132
Issued in conversion............................... 600 -- 67 --
Reinvested......................................... 315 5 109 5
Redeemed........................................... (2,677) (328) (811) (303)
-------- ------- ------- -------
Change in shares....................................... 9,681 7,527 5,965 1,834
======== ======= ======= =======
</TABLE>
- ------------
(a) Period from commencement of operations.
See notes to financial statements.
15
<PAGE> 18
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998
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 Balanced Fund and the
Investor Conservative Growth Fund (individually a "Fund", collectively the
"Funds") only.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Investor Growth Fund 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 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 Balanced Fund 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.
Investor Conservative Growth Fund 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.
</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
16
<PAGE> 19
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1998
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 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, Class A, Class B, Class C
and Service Class. Currently, the Trust consists of thirty-three active
Funds. The Funds are each authorized to issue 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' prospectus.
Certain redemptions of Class B and Class C Shares are subject to contingent
deferred sales charges in accordance with the Funds' prospectus. 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 ended June 30, 1998 and 1997:
Continued
17
<PAGE> 20
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1998
<TABLE>
<CAPTION>
INVESTOR
INVESTOR GROWTH &
GROWTH FUND INCOME FUND
----------------------- -----------------------
YEAR DECEMBER 10, YEAR DECEMBER 10,
ENDED 1996 THROUGH ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997(a) 1998 1997(a)
-------- ------------ -------- ------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $47,160 $30,381 $61,976 $45,181
Proceeds from shares issued in conversion................. 10,702 -- 12,936 --
Dividends reinvested...................................... 1,220 11 1,780 13
Cost of shares redeemed................................... (13,523) (2,252) (32,898) (4,561)
------- ------- ------- -------
Change in net assets from Fiduciary Share transactions.... $45,559 $28,140 $43,794 $40,633
======= ======= ======= =======
CLASS A SHARES:
Proceeds from shares issued............................... $50,360 $ 4,125 $35,814 $ 4,604
Dividends reinvested...................................... 621 7 653 14
Cost of shares redeemed................................... (3,719) (19) (3,170) (606)
------- ------- ------- -------
Change in net assets from Class A Share transactions...... $47,262 $ 4,113 $33,297 $ 4,012
======= ======= ======= =======
CLASS B SHARES:
Proceeds from shares issued............................... $59,863 $ 7,199 $73,655 $ 8,459
Dividends reinvested...................................... 810 7 1,171 22
Cost of shares redeemed................................... (3,085) (88) (3,333) (54)
------- ------- ------- -------
Change in net assets from Class B Share transactions...... $57,588 $ 7,118 $71,493 $ 8,427
======= ======= ======= =======
CLASS C SHARES (b):
Proceeds from shares issued............................... $ 8,313 $ 6,199
Dividends reinvested...................................... 106 78
Cost of shares redeemed................................... (295) (169)
------- -------
Change in net assets from Class C Share transactions...... $ 8,124 $ 6,108
======= =======
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 3,722 3,000 5,278 4,443
Issued in conversion...................................... 922 -- 1,150 --
Reinvested................................................ 103 1 155 1
Redeemed.................................................. (1,080) (217) (2,777) (448)
------- ------- ------- -------
Change in Fiduciary Shares................................ 3,667 2,784 3,806 3,996
======= ======= ======= =======
CLASS A SHARES:
Issued.................................................... 3,973 397 2,960 443
Reinvested................................................ 52 1 56 1
Redeemed.................................................. (291) (2) (260) (57)
------- ------- ------- -------
Change in Class A Shares.................................. 3,734 396 2,756 387
======= ======= ======= =======
CLASS B SHARES:
Issued.................................................... 4,734 682 6,126 811
Reinvested................................................ 68 1 101 2
Redeemed.................................................. (240) (8) (274) (5)
------- ------- ------- -------
Change in Class B Shares.................................. 4,562 675 5,953 808
======= ======= ======= =======
CLASS C SHARES (b):
Issued.................................................... 672 520
Reinvested................................................ 9 7
Redeemed.................................................. (23) (14)
------- -------
Change in Class C Shares.................................. 658 513
======= =======
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Class C shares commenced operations on July 1, 1997.
Continued
18
<PAGE> 21
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1998
<TABLE>
<CAPTION>
INVESTOR
INVESTOR CONSERVATIVE
BALANCED FUND GROWTH FUND
----------------------- -----------------------
YEAR DECEMBER 10, YEAR DECEMBER 10,
ENDED 1996 THROUGH ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997(a) 1998 1997(a)
-------- ------------ -------- ------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $29,880 $71,345 $18,972 $17,645
Proceeds from shares issued in conversion................. 6,532 -- 707 --
Dividends reinvested...................................... 1,866 15 338 18
Cost of shares redeemed................................... (25,609) (3,309) (6,167) (2,999)
-------- ------- ------- -------
Change in net assets from Fiduciary Share transactions.... $12,669 $68,051 $13,850 $14,664
======== ======= ======= =======
CLASS A SHARES:
Proceeds from shares issued............................... $30,496 $ 2,092 $11,834 $ 1,283
Dividends reinvested...................................... 518 9 192 8
Cost of shares redeemed................................... (1,837) -- (1,084) (29)
-------- ------- ------- -------
Change in net assets from Class A Share transactions...... $29,177 $ 2,101 $10,942 $ 1,262
======== ======= ======= =======
CLASS B SHARES:
Proceeds from shares issued............................... $63,523 $ 5,461 $36,712 $ 2,568
Dividends reinvested...................................... 1,034 25 571 15
Cost of shares redeemed................................... (2,638) (48) (1,395) (26)
-------- ------- ------- -------
Change in net assets from Class B Share transactions...... $61,919 $ 5,438 $35,888 $ 2,557
======== ======= ======= =======
CLASS C SHARES (b):
Proceeds from shares issued............................... $ 6,332 $ 3,715
Dividends reinvested...................................... 88 69
Cost of shares redeemed................................... (47) (121)
-------- -------
Change in net assets from Class C Share transactions...... $ 6,373 $ 3,663
======== =======
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 2,648 7,112 1,763 1,750
Issued in conversion...................................... 600 -- 67 --
Reinvested................................................ 169 2 32 2
Redeemed.................................................. (2,282) (324) (572) (297)
-------- ------- ------- -------
Change in Fiduciary Shares................................ 1,135 6,790 1,290 1,455
======== ======= ======= =======
CLASS A SHARES:
Issued.................................................... 2,665 203 1,092 128
Reinvested................................................ 46 1 18 1
Redeemed.................................................. (160) -- (100) (3)
-------- ------- ------- -------
Change in Class A Shares.................................. 2,551 204 1,010 126
======== ======= ======= =======
CLASS B SHARES:
Issued.................................................... 5,569 535 3,397 254
Reinvested................................................ 92 2 53 2
Redeemed.................................................. (231) (4) (128) (3)
-------- ------- ------- -------
Change in Class B Shares.................................. 5,430 533 3,322 253
======== ======= ======= =======
CLASS C SHARES (b):
Issued.................................................... 561 348
Reinvested................................................ 8 6
Redeemed.................................................. (4) (11)
-------- -------
Change in Class C Shares.................................. 565 343
======== =======
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Class C Shares commenced operations on July 1, 1997.
Continued
19
<PAGE> 22
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1998
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and Banc One Investment Advisors Corporation (the "Advisor") are
parties to an investment advisory agreement under which the Advisor is
entitled to receive an annual fee, computed daily and paid monthly, equal to
0.05% of the average net assets of the Investor Growth Fund, the Investor
Growth & Income Fund, the Investor Balanced Fund and the Investor
Conservative Growth 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, Class B and Class C 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
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 year ended June 30, 1998, the Distributor received
$11,735,166 from commissions earned on sales of Class A Shares and
redemptions of Class B and Class C Shares, of which, the Distributor
re-allowed $11,715,655 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 year ended June 30, 1998, 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 ADVISOR
------------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Growth Fund................. $22 $114 $22 $44
Investor Growth & Income Fund........ 18 134 18 23
Investor Balanced Fund............... 12 129 13 9
Investor Conservative Growth Fund.... 19 46 5 81
</TABLE>
Continued
20
<PAGE> 23
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1998
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, 1998 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -------
<S> <C> <C>
Investor Growth Fund................................... $153,667 $ 4,603
Investor Growth & Income Fund.......................... 171,063 15,032
Investor Balanced Fund................................. 120,907 12,386
Investor Conservative Growth Fund...................... 64,328 1,447
</TABLE>
6. CONVERSION OF COMMON TRUST FUNDS:
On December 19, 1997 the net assets of certain common trust funds managed by
the Advisor were exchanged 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
SHARES NET ASSETS VALUE PER UNREALIZED
ISSUED CONVERTED SHARE ISSUED APPRECIATION
------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Investor Growth Fund................................. 922 $10,702 $11.61 $--
Investor Growth & Income Fund........................ 1,150 12,936 11.25 --
Investor Balanced Fund............................... 600 6,532 10.89 --
Investor Conservative Growth Fund.................... 67 707 10.56 --
</TABLE>
7. 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, 1998
(amounts in thousands):
<TABLE>
<CAPTION>
20% 28%
FUND AMOUNT AMOUNT
---- ------ ------
<S> <C> <C>
Investor Growth Fund.................................... $196 $1,246
Investor Growth & Income Fund........................... 204 1,307
Investor Balanced Fund.................................. 167 1,008
Investor Conservative Growth Fund....................... 32 189
</TABLE>
ELIGIBLE DISTRIBUTIONS:
The Trust designates the following percentage of distributions eligible for
the dividends received deductions for corporations.
<TABLE>
<CAPTION>
FUND AMOUNT
---- ----------
<S> <C>
Investor Growth Fund........................................ 20.66%
Investor Growth & Income Fund............................... 14.84%
Investor Balanced Fund...................................... 10.65%
Investor Conservative Growth Fund........................... 7.14%
</TABLE>
Continued
21
<PAGE> 24
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
FUND
-----------------------
FIDUCIARY
-----------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 11.25 $ 10.00
------- -------
Investment Activities
Net investment income..................................... 0.12 0.09
Net realized and unrealized gains (losses) from
investments............................................ 2.49 1.25
------- -------
Total from Investment Activities....................... 2.61 1.34
------- -------
Distributions
Net investment income..................................... (0.12) (0.09)
Net realized gains........................................ (0.35) --
------- -------
Total Distributions.................................... (0.47) (0.09)
------- -------
NET ASSET VALUE,
END OF PERIOD............................................. $ 13.39 $ 11.25
======= =======
Total Return................................................ 23.81% 13.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $86,355 $31,318
Ratio of expenses to average net assets................... 0.20% 0.20%(c)
Ratio of net investment income to average net assets...... 1.04% 1.70%(c)
Ratio of expenses to average net assets*.................. 0.36% 0.77%(c)
Ratio of net investment income to average net assets*..... 0.88% 1.13%(c)
Portfolio turnover (d).................................... 4.05% 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> 25
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
FUND
-----------------------
CLASS A
-----------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 11.21 $10.00
------- ------
Investment Activities
Net investment income..................................... 0.10 0.07
Net realized and unrealized gains (losses) from
investments............................................ 2.47 1.21
------- ------
Total from Investment Activities....................... 2.57 1.28
------- ------
Distributions
Net investment income..................................... (0.10) (0.07)
Net realized gains........................................ (0.35) --
------- ------
Total Distributions.................................... (0.45) (0.07)
------- ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 13.33 $11.21
======= ======
Total Return (Excludes Sales Charge)........................ 23.44% 12.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $55,057 $4,439
Ratio of expenses to average net assets................... 0.45% 0.46%(c)
Ratio of net investment income to average net assets...... 0.78% 1.82%(c)
Ratio of expenses to average net assets*.................. 0.70% 1.62%(c)
Ratio of net investment income to average net assets*..... 0.53% 0.66%(c)
Portfolio turnover (d).................................... 4.05% 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> 26
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
FUND
-----------------------
CLASS B
-----------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 11.34 $10.00
------- ------
Investment Activities
Net investment income..................................... 0.02 0.04
Net realized and unrealized gains (losses) from
investments............................................ 2.48 1.34
------- ------
Total from Investment Activities....................... 2.50 1.38
------- ------
Distributions
Net investment income..................................... (0.02) (0.04)
Net realized gains........................................ (0.35) --
------- ------
Total Distributions.................................... (0.37) (0.04)
------- ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 13.47 $11.34
======= ======
Total Return (Excludes Sales Charge)........................ 22.52% 13.88%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $70,515 $7,651
Ratio of expenses to average net assets................... 1.20% 1.20%(c)
Ratio of net investment income to average net assets...... 0.04% 0.97%(c)
Ratio of expenses to average net assets*.................. 1.35% 2.18%(c)
Ratio of net investment income to average net assets*..... (0.11%) (0.01%)(c)
Portfolio turnover (d).................................... 4.05% 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> 27
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
FUND
--------
CLASS C
--------
YEAR
ENDED
JUNE 30,
1998(a)
--------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $11.25
------
Investment Activities
Net investment income..................................... 0.02
Net realized and unrealized gains (losses) from
investments............................................ 2.45
------
Total from Investment Activities....................... 2.47
------
Distributions
Net investment income..................................... (0.03)
Net realized gains........................................ (0.35)
------
Total Distributions.................................... (0.38)
------
NET ASSET VALUE,
END OF PERIOD............................................. $13.34
======
Total Return (Excludes Sales Charge)........................ 22.42%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $8,772
Ratio of expenses to average net assets................... 1.20%
Ratio of net investment income to average net assets...... 0.04%
Ratio of expenses to average net assets*.................. 1.35%
Ratio of net investment income to average net assets*..... (0.11%)
Portfolio turnover (b).................................... 4.05%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations on July 1, 1997.
(b) 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> 28
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
& INCOME
FUND
-----------------------
FIDUCIARY
-----------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 10.93 $ 10.00
------- -------
Investment Activities
Net investment income..................................... 0.25 0.15
Net realized and unrealized gains (losses) from
investments............................................ 1.92 0.93
------- -------
Total from Investment Activities....................... 2.17 1.08
------- -------
Distributions
Net investment income..................................... (0.25) (0.15)
Net realized gains........................................ (0.28) --
------- -------
Total Distributions.................................... (0.53) (0.15)
------- -------
NET ASSET VALUE,
END OF PERIOD............................................. $ 12.57 $ 10.93
======= =======
Total Return................................................ 20.34% 10.87%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $98,060 $43,660
Ratio of expenses to average net assets................... 0.20% 0.20%(c)
Ratio of net investment income to average net assets...... 2.17% 2.78%(c)
Ratio of expenses to average net assets*.................. 0.34% 0.66%(c)
Ratio of net investment income to average net assets*..... 2.03% 2.32%(c)
Portfolio turnover (d).................................... 11.38% 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> 29
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
& INCOME
FUND
-----------------------
CLASS A
-----------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 11.02 $10.00
------- ------
Investment Activities
Net investment income..................................... 0.22 0.12
Net realized and unrealized gains (losses) from
investments............................................ 1.95 1.02
------- ------
Total from Investment Activities....................... 2.17 1.14
------- ------
Distributions
Net investment income..................................... (0.22) (0.12)
Net realized gains........................................ (0.28) --
------- ------
Total Distributions.................................... (0.50) (0.12)
------- ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 12.69 $11.02
======= ======
Total Return (Excludes Sales Charge)........................ 20.18% 11.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $39,874 $4,262
Ratio of expenses to average net assets................... 0.45% 0.46%(c)
Ratio of net investment income to average net assets...... 1.91% 2.67%(c)
Ratio of expenses to average net assets*.................. 0.67% 1.26%(c)
Ratio of net investment income to average net assets*..... 1.69% 1.87%(c)
Portfolio turnover (d).................................... 11.38% 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> 30
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
& INCOME
FUND
-----------------------
CLASS B
-----------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 11.00 $10.00
------- ------
Investment Activities
Net investment income..................................... 0.14 0.09
Net realized and unrealized gains (losses) from
investments............................................ 1.92 1.00
------- ------
Total from Investment Activities....................... 2.06 1.09
------- ------
Distributions
Net investment income..................................... (0.14) (0.09)
Net realized gains........................................ (0.28) --
------- ------
Total Distributions.................................... (0.42) (0.09)
------- ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 12.64 $11.00
======= ======
Total Return (Excludes Sales Charge)........................ 19.13% 11.02%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $85,468 $8,896
Ratio of expenses to average net assets................... 1.20% 1.21%(c)
Ratio of net investment income to average net assets...... 1.15% 1.94%(c)
Ratio of expenses to average net assets*.................. 1.32% 1.89%(c)
Ratio of net investment income to average net assets*..... 1.03% 1.26%(c)
Portfolio turnover (d).................................... 11.38% 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.
28
<PAGE> 31
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
& INCOME
FUND
--------
CLASS C
--------
YEAR
ENDED
JUNE 30,
1998(a)
--------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $10.93
------
Investment Activities
Net investment income..................................... 0.14
Net realized and unrealized gains (losses) from
investments............................................ 1.90
------
Total from Investment Activities....................... 2.04
------
Distributions
Net investment income..................................... (0.15)
Net realized gains........................................ (0.28)
------
Total Distributions.................................... (0.43)
------
NET ASSET VALUE,
END OF PERIOD............................................. $12.54
======
Total Return (Excludes Sales Charge)........................ 19.08%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $6,429
Ratio of expenses to average net assets................... 1.20%
Ratio of net investment income to average net assets...... 1.14%
Ratio of expenses to average net assets*.................. 1.31%
Ratio of net investment income to average net assets*..... 1.03%
Portfolio turnover (b).................................... 11.38%
</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 on July 1, 1997.
(b) 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> 32
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
BALANCED
FUND
------------------------
FIDUCIARY
------------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 10.63 $ 10.00
------- -------
Investment Activities
Net investment income..................................... 0.37 0.21
Net realized and unrealized gains (losses) from
investments............................................ 1.39 0.63
------- -------
Total from Investment Activities....................... 1.76 0.84
------- -------
Distributions
Net investment income..................................... (0.36) (0.21)
Net realized gains........................................ (0.22) --
------- -------
Total Distributions.................................... (0.58) (0.21)
------- -------
NET ASSET VALUE,
END OF PERIOD............................................. $ 11.81 $ 10.63
======= =======
Total Return................................................ 17.02% 8.48%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $93,557 $72,155
Ratio of expenses to average net assets................... 0.20% 0.20%(c)
Ratio of net investment income to average net assets...... 3.31% 3.84%(c)
Ratio of expenses to average net assets*.................. 0.32% 0.56%(c)
Ratio of net investment income to average net assets*..... 3.19% 3.48%(c)
Portfolio turnover (d).................................... 9.71% 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.
30
<PAGE> 33
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
BALANCED
FUND
------------------------
CLASS A
------------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 10.66 $10.00
------- ------
Investment Activities
Net investment income..................................... 0.34 0.17
Net realized and unrealized gains (losses) from
investments............................................ 1.39 0.66
------- ------
Total from Investment Activities....................... 1.73 0.83
------- ------
Distributions
Net investment income..................................... (0.34) (0.17)
Net realized gains........................................ (0.22) --
------- ------
Total Distributions.................................... (0.56) (0.17)
------- ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 11.83 $10.66
======= ======
Total Return (Excludes Sales Charge)........................ 16.62% 8.41%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $32,605 $2,176
Ratio of expenses to average net assets................... 0.45% 0.47%(c)
Ratio of net investment income to average net assets...... 3.01% 3.78%(c)
Ratio of expenses to average net assets*.................. 0.66% 1.12%(c)
Ratio of net investment income to average net assets*..... 2.80% 3.13%(c)
Portfolio turnover (d).................................... 9.71% 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> 34
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
BALANCED
FUND
------------------------
CLASS B
------------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 10.65 $10.00
------- ------
Investment Activities
Net investment income..................................... 0.26 0.16
Net realized and unrealized gains (losses) from
investments............................................ 1.39 0.65
------- ------
Total from Investment Activities....................... 1.65 0.81
------- ------
Distributions
Net investment income..................................... (0.26) (0.16)
Net realized gains........................................ (0.22) --
------- ------
Total Distributions.................................... (0.48) (0.16)
------- ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 11.82 $10.65
======= ======
Total Return (Excludes Sales Charge)........................ 15.85% 8.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $70,463 $5,672
Ratio of expenses to average net assets................... 1.20% 1.22%(c)
Ratio of net investment income to average net assets...... 2.26% 2.93%(c)
Ratio of expenses to average net assets*.................. 1.31% 1.73%(c)
Ratio of net investment income to average net assets*..... 2.15% 2.42%(c)
Portfolio turnover (d).................................... 9.71% 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> 35
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
BALANCED
FUND
--------
CLASS C
--------
YEAR
ENDED
JUNE 30,
1998(a)
--------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $10.63
------
Investment Activities
Net investment income..................................... 0.26
Net realized and unrealized gains (losses) from
investments............................................ 1.37
------
Total from Investment Activities....................... 1.63
------
Distributions
Net investment income..................................... (0.27)
Net realized gains........................................ (0.22)
------
Total Distributions.................................... (0.49)
------
NET ASSET VALUE,
END OF PERIOD............................................. $11.77
======
Total Return (Excludes Sales Charge)........................ 15.66%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $6,653
Ratio of expenses to average net assets................... 1.20%
Ratio of net investment income to average net assets...... 2.24%
Ratio of expenses to average net assets*.................. 1.30%
Ratio of net investment income to average net assets*..... 2.14%
Portfolio turnover (b).................................... 9.71%
</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) Period from commencement of operations on July 1, 1997.
(b) 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> 36
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
CONSERVATIVE
GROWTH FUND
------------------------
FIDUCIARY
------------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 10.33 $ 10.00
------- -------
Investment Activities
Net investment income..................................... 0.46 0.26
Net realized and unrealized gains (losses) from
investments............................................ 0.82 0.33
------- -------
Total from Investment Activities....................... 1.28 0.59
------- -------
Distributions
Net investment income..................................... (0.45) (0.26)
Net realized gains........................................ (0.10) --
------- -------
Total Distributions.................................... (0.55) (0.26)
------- -------
NET ASSET VALUE,
END OF PERIOD............................................. $ 11.06 $ 10.33
======= =======
Total Return................................................ 12.73% 6.00%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $30,352 $15,038
Ratio of expenses to average net assets................... 0.20% 0.20%(c)
Ratio of net investment income to average net assets...... 4.43% 4.92%(c)
Ratio of expenses to average net assets*.................. 0.56% 1.46%(c)
Ratio of net investment income to average net assets*..... 4.07% 3.66%(c)
Portfolio turnover (d).................................... 3.22% 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.
34
<PAGE> 37
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
CONSERVATIVE
GROWTH FUND
------------------------
CLASS A
------------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 10.32 $10.00
------- ------
Investment Activities
Net investment income..................................... 0.43 0.22
Net realized and unrealized gains (losses) from
investments............................................ 0.82 0.32
------- ------
Total from Investment Activities....................... 1.25 0.54
------- ------
Distributions
Net investment income..................................... (0.43) (0.22)
Net realized gains........................................ (0.10) --
------- ------
Total Distributions.................................... (0.53) (0.22)
------- ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 11.04 $10.32
======= ======
Total Return (Excludes Sales Charge)........................ 12.38% 5.46%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $12,538 $1,299
Ratio of expenses to average net assets................... 0.45% 0.47%(c)
Ratio of net investment income to average net assets...... 4.12% 4.76%(c)
Ratio of expenses to average net assets*.................. 0.82% 3.05%(c)
Ratio of net investment income to average net assets*..... 3.75% 2.18%(c)
Portfolio turnover (d).................................... 3.22% 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.
35
<PAGE> 38
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
CONSERVATIVE
GROWTH FUND
------------------------
CLASS B
------------------------
YEAR DECEMBER 10,
ENDED 1996 THROUGH
JUNE 30, JUNE 30,
1998 1997(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 10.33 $10.00
------- ------
Investment Activities
Net investment income..................................... 0.37 0.19
Net realized and unrealized gains (losses) from
investments............................................ 0.81 0.33
------- ------
Total from Investment Activities....................... 1.18 0.52
------- ------
Distributions
Net investment income..................................... (0.36) (0.19)
Net realized gains........................................ (0.10) --
------- ------
Total Distributions.................................... (0.46) (0.19)
------- ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 11.05 $10.33
======= ======
Total Return (Excludes Sales Charge)........................ 11.53% 5.30%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $39,489 $2,616
Ratio of expenses to average net assets................... 1.20% 1.21%(c)
Ratio of net investment income to average net assets...... 3.37% 4.06%(c)
Ratio of expenses to average net assets*.................. 1.47% 3.52%(c)
Ratio of net investment income to average net assets*..... 3.10% 1.75%(c)
Portfolio turnover (d).................................... 3.22% 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.
36
<PAGE> 39
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
CONSERVATIVE
GROWTH FUND
------------
CLASS C
------------
YEAR
ENDED
JUNE 30,
1998(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $10.33
------
Investment Activities
Net investment income..................................... 0.35
Net realized and unrealized gains (losses) from
investments............................................ 0.81
------
Total from Investment Activities....................... 1.16
------
Distributions
Net investment income..................................... (0.36)
Net realized gains........................................ (0.10)
------
Total Distributions.................................... (0.46)
------
NET ASSET VALUE,
END OF PERIOD............................................. $11.03
======
Total Return (Excludes Sales Charge)........................ 11.48%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $3,788
Ratio of expenses to average net assets................... 1.20%
Ratio of net investment income to average net assets...... 3.39%
Ratio of expenses to average net assets*.................. 1.47%
Ratio of net investment income to average net assets*..... 3.12%
Portfolio turnover (b).................................... 3.22%
</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 on July 1, 1997.
(b) 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.
37
<PAGE> 40
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Investor Growth Fund, the
Investor Growth and Income Fund, the Investor Balanced Fund and the Investor
Conservative Growth Fund (four series of The One Group Family of Mutual Funds),
at June 30, 1998, the results of each of their operations for the period then
ended, the changes in each of their net assets for the periods presented and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of The One Group Family of Mutual Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at June
30, 1998 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
August 18, 1998
38
<PAGE> 41
Important Customer Information.
Please Read:
Shares of The One Group:
- - are not deposits or obligations
of, or guaranteed by BANC One
CORPORATION or its affiliates
- - are not insured or guaranteed by the
FDIC or by any other governmental
agency or government-sponsored
agency of the federal government
or any state
- - are subject to investment risks,
including possible loss of the
principal amount invested.
Banc One Investment Advisors
Corporation, a registered investment
advisor and an indirect subsidiary of
BANC ONE CORPORATION, serves
as an investment advisor to The One
Group, for which it receives advisory
fees. The One Group is distributed by
The One Group Services Company,
3435 Stelzer Road, Columbus,
Ohio 43219, which is not affiliated
with BANC ONE CORPORATION and
is not a bank. Contact us at our web
site address: www.onegroup.com or
e-mail us at [email protected]
For more complete information on
any of The One Group Funds, includ-
ing management fees and expenses,
you may obtain a prospectus from
The One Group Services Company.
Read the prospectus carefully
before investing.
BANC ONE
INVESTMENT
ADVISORS
CORPORATION
[BANC ONE LOGO]
